Before Your Startup Succeeds, You’re Going To Fail
Let’s talk about what failure really means and how you learn from it
We need to dispel some commonly held notions of how important failure is on the road to success.
When people who claim to be experts on startup talk about success, failure is mentioned so often as a precursor of success that it almost seems like lip service. Well, in a lot of cases, it is. Failure is tossed around as a kind of startup street-cred.
In other words: Everyone tells you that you need to fail. Very rarely do you hear about why failure is important and how the seeds of failure become of roots of success.
This leads to something heartbreaking. I see tons of first-time entrepreneurs forcing ideas into reality on the simple notion that once their venture fails, they will succeed.
I’ve also seen older entrepreneurs who have spent a lifetime trading in failure, having failed for so long that failure just becomes what they do. It’s like the definition of insanity, they just keep failing the same way and expecting a different result… someday.
Don’t let this happen to you. Here are four ways my startup dreams were shattered, and how I built off those moments.
When No Is Not Yet
My first job out of college was a coveted position with a pretty prestigious consulting firm in a big, up-and-coming city.
And I hated every second of it.
This was the period in my life when I discovered that everything I had learned about academics and college and majors and careers and job was wrong. Well, not wrong, just not for me.
After a year of dreading every morning and watching the clock tick towards 5:00, I found a lifeline. I applied to small company I had never heard of but who were doing some amazing things. They were going to pay me a smaller salary, plus something called “equity,” to come work with the three of them. I knew this was a “startup,” but I didn’t really know what that meant.
Over three weeks, I had about a dozen awesome conversations with them, including a couple formal interviews. It was a different time back then. No mobile phones. I was doing this from pay phones on a street in a suit. Or driving back home for a “doctor’s appointment” at lunch. I took a couple vacation days for the in-person interviews.
Finally, they called me, and as I was sitting at my desk back at the awful consulting firm, they told me they were passing on me. Lifeline gone.
So I started to write an email — a nasty, passive-aggressive “here’s what you’re giving up and here’s how you’ll pay” type email — the type I’d never written before and would never even think about writing again. It was so cutting and clever that it took me three days to perfect.
And thank God, because they called me back two days after they rejected me and offered me the position.
How this failure carried forward: Now I know that “no” can sometimes be the first step to yes. Not always, but I’ve learned that the way you respond to “no” is to jam your foot in the doorway.
Even before you get a chance to hear “no,” you should prepare how you’re going to respond, and that response should be your last, best shot at getting to yes. Now, nine times out of 10, your foot is going to get crushed, but it’s a better option than burning a bridge, and in some cases it’ll even earn you respect.
When No Means You’re Doing It Wrong
The first startup I founded on my own, Intrepid Media, was the first social network and content platform for writers. At the time I dreamed it up, I had already been through the raise-grow-exit cycle twice. Now I was gonna do one on my own.
I had so many investors laugh at me.
This was mostly because back in 1999, there was no such thing as a social network or a content platform, and writers were people who worked at newspapers or magazines.
After nine months of getting my ass handed to me, I just launched the thing on my own. A year later, I asked people to start paying for it. A year later, I was making more money with Intrepid than I was at my day job.
A year later, the first investor sent me an email asking for a meeting. I took the meeting, I didn’t take the money. But not for the reason you might think.
How this failure carried forward: I turned down that investment and all the offers that came after it because Intrepid Media was never meant to be a home run. Instead, it was a base hit, and I knew I was better off stretching it into a triple on my own.
I learned that some startups are high-growth, others are slow growth, and that didn’t necessarily make them lifestyle businesses or small businesses or hobbies. It just meant that the path to get them to traction was going to be different.
Now when I start a company or join a company or advise a company, I can see pretty quickly which path the company is on. I’d always rather take the right path than the common path, because the right path will lead to the right outcome.
When No Becomes Rocket Fuel
A later startup I founded, ExitEvent, was actually meant to be a project for another company.
At that time, I had built a technical and product consulting firm off the success of Intrepid, and I had the idea of lifting the Intrepid codebase and applying it to startups. If it could work for writers, why not entrepreneurs?
Circumstances led to a large company being really interested in that idea, and we worked on a proposal for them to buy half of the new venture and start almost immediately. I spent months tailoring the code to be able to fit this model.
The day we were supposed to sign contracts, the company backed out. It was the single-most humiliating meeting I had ever been through. I kept my composure, except for one moment when, out of frustration really, I said, “You know, I’m just going to walk out of here and launch this myself.”
They wished me luck.
How this failure carried forward: I got pretty lucky.
ExitEvent went on a three year run that eclipsed even my best projections for what the original proposal offered. It was profitable almost immediately, and I sold it three years later to be able to work on another startup.
That “no,” and the way it went down, motivated me to prove everyone wrong. Now, this is not necessarily a path I’d recommend to anyone, because it comes with a pretty solid chance of blowing up in your face in a way that ends in therapy.
But if you can live with a chip on your shoulder, that can sometimes get you to new places and new ideas.
When No Means No
And then sometimes, a chip on your shoulder doesn’t help at all, but it can teach you a few things.
Zoom Culture was YouTube before YouTube, and I had joined them early to start exploring how their digital side could generate revenue. I had two ideas that achieved early success. One: A place for video auteurs to upload clips of their projects for others to see. Two: Video email using off-the-shelf compression technology and our servers.
This was 2000/2001, before good digital cameras were even standard, let alone on a phone or a laptop. Zoom Culture failed for reasons unrelated to what I was doing, but three of us got the blessing from the board to pitch a spinout based on the healthy video upload product.
While I was the creator of that product, I was young, and I let someone else do the pitch, which the investors ultimately passed on. YouTube was founded shortly after that, completely unrelated to us, by the way.
How this failure carried forward: Nothing positive came out of this and that still bothers me a little bit. But I did learn a few things.
Never put someone else out in front of your idea. I’m actually advising two companies right now where I’m trying to convince the founder that he or she doesn’t need a CEO with more gravitas.
No doesn’t mean quit. Although I had learned this already, it was hammered home in another way. We should have taken that no, advanced the idea ourselves, and come back to the table with an MVP.
But most importantly, I learned that “no” sometimes means that it just wasn’t your time. I’d love to be able to tell you that my further adventures in video tech worked out for me in another way. They did not.
So this no meant it was time to walk away and do something else. Sometimes, when your startup dreams get crushed, you just have to move on.
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