History’s most celebrated entrepreneurs rarely tell the tidy story of overnight success. More often, their journeys are littered with spectacular failures, missteps, and products that bombed so badly they became punchlines, until the founders refused to quit. What separates these people from the rest is not that they avoided failure, but that they treated it as raw material. They dissected the wreckage, learned what the market was actually trying to tell them, and pivoted, sometimes multiple times, until they built empires on the graves of their earlier disasters. Here are some of the most instructive examples of entrepreneurs who turned flops into legendary wins.
Steve Jobs and the Apple Lisa (1983)
When Apple launched the Lisa in January 1983, it was supposed to be the future of personal computing. Priced at $9,995 (roughly $31,000 in 2025 dollars), it introduced the graphical user interface, mouse, and drop-down menus to a mass audience years before Windows did. The technology was revolutionary; the business execution was a catastrophe.
Only about 10,000 units were ever sold.
The Lisa flopped for classic reasons: it was far too expensive, marketing positioned it confusingly between hobbyists and corporations, and Apple’s own Macintosh team was simultaneously developing a cheaper machine with nearly the same features. Steve Jobs was pushed off the Lisa project and took over the Mac team instead. He carried every painful lesson from the Lisa disaster straight into the Macintosh.
The Macintosh 128K launched a year later at $2,495. It kept the GUI and mouse but slashed the price by 75 percent and came with aggressive, memorable marketing (“1984” Super Bowl ad). The Mac went on to save Apple from bankruptcy and laid the foundation for every Apple product that followed. Jobs later admitted that without the expensive failure of Lisa, the Mac would never have existed in its successful form.
Reed Hastings and the Late-Fee Nightmare That Birthed Netflix
In 1997, Reed Hastings was furious after renting Apollo 13 from Blockbuster and racking up $40 in late fees. The story has been slightly mythologized (Hastings says the fee was real but not quite that dramatic), yet the frustration was genuine enough to make him and co-founder Marc Randolph ask a simple question: what if there were no late fees at all?
Their first attempt was a DVD-by-mail service with a pay-per-rental model and no due dates. Customers hated returning discs one at a time and still paying $4 plus shipping each time. The company nearly went bankrupt in 2000. Instead of folding, Hastings made a desperate pivot: in late 2000: unlimited rentals for a flat monthly subscription fee, with no late fees and no per-movie charges. They called it the “Marquee Program” internally.
The new subscription model was instantly profitable. Blockbuster laughed it off and kept collecting billions in late fees. Ten years later, Blockbuster was in bankruptcy and Netflix was on its way to becoming a $300 billion streaming giant. The original pay-per-rental flop taught Netflix the single most important lesson in subscription economics: customers will pay more overall if they feel they are getting unlimited value and zero punishment.
Stewart Butterfield and the Gaming Disaster That Became Slack
In 2002, Stewart Butterfield co-founded a company called Ludicorp to build a massively multiplayer online game called Game Neverending. It failed to gain traction and ran out of money. The team pivoted to a photo-sharing site called Flickr as a way to keep the lights on. Flickr got acquired by Yahoo in 2005, making the founders wealthy but leaving Butterfield restless.
In 2009 he tried again with a new gaming startup called Tiny Speck. The game was called Glitch: an odd, beautiful, whimsical world that attracted a cult following but never enough players to be profitable. By 2012, Tiny Speck was preparing to shut down.
During development of Glitch, the team had built an internal chat tool because nothing on the market handled real-time communication, file sharing, search, and integrations the way they needed. When Glitch died, Butterfield looked at the chat tool and realized it was the only part of the company anyone outside the company ever expressed jealousy over.
They stripped out everything related to the game, renamed the tool Slack, and launched it in 2013. Sixteen months later Slack was valued at over $1 billion. By 2020 Salesforce bought it for $27.7 billion. Two consecutive gaming flops, one accidental invention of one of the most important enterprise tools of the decade.
Jack Ma and the String of Failures Before Alibaba
Jack Ma likes to say he failed more than most people even try. He was rejected from dozens of jobs (including KFC when it first came to China), flunked his college entrance exam twice, and scored 1 out of 120 on the math portion the third time (still got in). His first two internet ventures in the 1990s (China Pages and a B2B site) both fizzled.
In 1999 he launched Alibaba from his Hangzhou apartment with 17 friends and $60,000. The first version was a simple directory where Chinese manufacturers could post products for foreign buyers. It barely made money for years and was mocked by Silicon Valley investors who thought e-commerce in China was impossible.
By 2003 Alibaba was still tiny and running out of cash again. Ma launched Taobao as a consumer marketplace to compete with eBay, which had just entered China with deep pockets. eBay offered to buy Taobao; Ma refused. Instead he created Alipay (against the advice of nearly everyone) because Chinese consumers didn’t trust online payments. eBay relied on PayPal and lost the trust war.
Taobao crushed eBay in China within three years. Alibaba went public in 2014 in the largest IPO in history at the time ($25 billion). Today it is one of the ten most valuable companies on earth. Every earlier failure taught Ma something: how little Chinese small businesses were being served, how much they feared being cheated, how foreign models wouldn’t work without radical localization.
Evan Williams and the Blogging Detour That Made Twitter
Evan Williams co-founded Pyra Labs in 1999 to build project-management software. The product never took off, but the team created a simple side feature so they could communicate with early users: a short public notes. They called it Blogger.
When the dot-com bubble burst, Pyra went broke and laid off everyone except Williams. He kept Blogger running almost single-handedly, giving it away for free because he couldn’t afford servers otherwise. Google bought Blogger in 2003 for an undisclosed sum that was life-changing for Williams but tiny by Google standards.
Flush with cash, Williams co-founded Odeo in 2004 to build a podcasting platform just as Apple was about to add native podcast support to iTunes. Odeo was instantly obsolete. The company was dying when employee Jack Dorsey resurrected an old side project: a status-update service limited to 140 characters sent by SMS.
Williams initially thought the idea was stupid. He changed his mind when he saw engineers using it obsessively internally. They pivoted the entire company, renamed it Twitter, and launched in 2006. Williams became CEO, took it public, and briefly made it one of the defining platforms of the 2010s.
Roxanne Quimby and the Beeswax That Wasn’t Supposed to Be a Business
In the 1980s Roxanne Quimby was a single mother living off the grid in rural Maine. She met a beekeeper named Burt Shavitz who had surplus beeswax and no idea what to do with it. Quimby started making candles in an abandoned schoolhouse, selling them at craft fairs for $3 each.
The candles sold, but leftover wax kept piling up. One day she found an old 19th-century recipe for lip balm in a farmer’s almanac, melted the wax, added sweet almond oil, and poured it into tiny tins. She sold the first batch for $1 each at a local festival and made more money in a weekend than the candles made in a month.
Burt’s Bees lip balm became the core product. By 2007 the company was doing $3 million in sales out of a former bowling alley. Quimby eventually bought out Shavitz, moved manufacturing to North Carolina for lower costs (a controversial decision), and sold the company to Clorox in 2007 for roughly $925 million. A hobby born from literal trash (excess beeswax) became a natural-personal-care empire.
The Common Thread
These stories are dramatically different in industry, era, and personality, yet they share the same pattern:
- A big, public, expensive failure (Lisa, Blockbuster’s late fees, Glitch, Odeo, China Pages, beeswax candles that left piles of waste).
- Refusal to interpret the failure as proof of personal inadequacy or market impossibility.
- Ruthless post-mortem: what exactly went wrong, and what part of the wreck is actually valuable?
- A pivot (sometimes tiny, sometimes total) that reuses the hard-won assets (code, customer insights, manufacturing capability, brand, team).
- Relentless execution on the new insight until it scales.
Failure is only the end of the story when the entrepreneur decides it is. For these founders, every flop was just the tuition they paid to learn what the market actually wanted. The wins that followed weren’t luck; they were the compound interest on very expensive lessons.