For entrepreneurs, mistakes costly — but helpful

Q: I think the new year is important for both looking forward — and looking back. I made a couple of fairly significant business mistakes this past year that cost me a lot of money. Nothing I can do about that now. But I can learn from my mistakes and that is what I am going to do. — Ellie

A: Good point. Yes, we all make mistakes. I have started three businesses, two of which have been successful. But, that said, I do think the one that didn't do so well in the one where I learned the most. I learned what not to do.

Turns out, we are in good company. Even the best entrepreneurs blow it sometimes. That is the nature of risk taking; some risks don't pan out. But do we learn from the mistakes? That's the key.

Let me tell you a little story:

Apple Computer was founded in Los Altos, Calif., in 1976, and by 1978 it was the world's fastest growing computer company. With the Apple II, the company had revolutionized the nascent home-computer market.

For its next act, the company decided to work on a new computer, code-named Lisa (said to be named either as an acronym for "Local Integrated Software Architecture" or, more likely, for Steve Jobs' daughter). Plans for the Lisa were crystallized when, late in 1979, Jobs visited the Xerox Corporation's Palo Alto Research Center (PARC). So moved was he by what he saw that day, that he went back a second time.

Visits that changed the world.

What really caught Jobs' eye was a prototype machine called the Alto. The Alto had unique features, features never before seen on any computer. Especially unique was its Graphical User Interface (GUI). At a time when people communicated with computers by typing arcane instructions onto a blank screen, the Alto was a visual delight, allowing users to move something called a "mouse" to point and click on things called "icons."

Jobs was convinced that he had seen the future of personal computing, and its name was the Alto. But the suits from Xerox thought differently, understanding, apparently what Jobs did not, that all of these bells and whistles made the computer cost-prohibitive. With the Alto having a price tag of about $40,000 per unit, Xerox thought it was an unmarketable, albeit enthralling, anomaly.

But Jobs was a true believer, and so he and his team set about incorporating the spirit of the Alto into Lisa. The plan was to build a revolutionary computer that would be easy to use, fun, visually striking, intuitive, graphic, and reliable. This was a tall order, especially in the prehistoric computer days of 1979.

Apple says that Lisa cost about $50 million and 200 man-years to develop.

Lisa made her debut on Jan. 19, 1983. A unique marvel she was. Consumers, used to seeing a white (or sometimes blue) typeface upon a black screen were amazed to see on Lisa a little manila folder and wastebasket. Bundled with Lisa was a suite of revolutionary clickable software programs, including a word processor, spreadsheet, and a paint program.

For the first time, a commercially available computer featured pull-down menus with commands named New, Open, Close, Save, and Print, windows that open and closed, pictures that moved by pointing and clicking, and a printer (the Image Writer.) But here's the bad news:

The Lisa sold for $9,995.

It also weighed almost 50 pounds.

It was also slow.

And big business also didn't like the name, especially at almost $10k per unit.

And software designers had a hard time writing code for it.

In the end, the Lisa was an expensive fiasco. They didn't sell. But it wasn't a total waste. Jobs learned from his mistakes and even before the Lisa II came out (renamed XL), he had secretly begun to develop a new machine, one that was smaller, faster, and a third the cost of Lisa. The unwanted Lisa was abandoned in favor of Jobs' new computer called . . .

The Macintosh.

Postscript: In September 1989, a decade after Jobs had first seen the Alto in action, the remaining 2,700 Lisas were buried in a Utah landfill.

Today's tip: Have you seen the new Steve Jobs movie by Danny Boyle and starring Michael Fassbender? If not, you should. It's excellent. Steve says check it out.

Steve Strauss, @Steve Strauss on Twitter, is a lawyer specializing in small business and entrepreneurship and has been writing for USATODAY.com for 20 years. E-mail: sstrauss@mrallbiz.com. Website: TheSelfEmployed.

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