I’ve done a lot of video interviews. This is one of my favorite if not my favorite outright.
It’s only 12 minutes long and if you’re a first-time entrepreneur (or second time, frankly) I encourage you to watch it if for nothing else than to get a sense that your struggles are universal.
TechCrunch interviewed me and asked me to talk about failure. So I spoke for 12 minutes about my own failures. I made many classic first-time mistakes which makes it easier for me to spot when others make similar bad choices.
It serves both as my warning signal of which teams to avoid funding, especially if I perceive they will make critical mistakes often led by hubris or naïveté. An obvious example is if they talk about M&A deals, teams they could just “bolt on” or “doing a rollup in their industry.”
It’s why I will never fund Conference Ho’s. I know that this is driven from an unhealthy ego, self-centrism and lack of regard for running options of one’s startup.
I think failure is critical for many reasons. Mostly because it makes us better leaders.
As I’ve written before, “Good Judgment Comes from Experience, But Experience Comes from Bad Judgment.”
We learn from mistakes. We learn from losses.
In part I felt it was important to let people know that we all have failure and make mistakes.
As I’ve said before, all startups need to realize that every other company still has to see itself naked in the mirror in the morning. Stop reading their press releases or hearing their founder talk about he is crushing it. We all know that people who truly are crushing it rarely talk about it.
Once you realize that we’re all the same, all dealing with the same pressures, fears and struggles – you’ll learn to keep more focused on what you’re doing and not whatever everybody else is doing.
In my “failure interview” with TechCrunch I talked about the biggest stress that really comes from startups – dealing with all the other people with whom you work. Startups are filled with enormously talented people – often product people & engineers. As an industry we’re hardly used to talking openly about feelings or resolving conflicts.
It’s why I believe startup coaches are so important and I wish I knew more great ones. If you have great experiences please leave names in the comments section.
The Success Bias
In the end it’s easy to look back triumphantly at our startup experiences and define every move as heroic.
We of course remember the positive outcomes, the rewards, the press celebrations at key moments or at the finish line. We of course get all of the accolades if at the tape there was a financial pay day.
And with so many acquihires these days you never really know who was financially successful and who was safely landing a plane with no engines.
It’s certainly nice to look at your past accomplishments in your bio.
Yet these only tell the stories from one side of the startup ledger. They are whitewashed falsehoods that mask the struggles. They are only one aspect of the startup experience.
Even along the journey and nowhere near the destination I see many startups with their chests pumped out touting their latest deals, showing off their swish offices funded by millions of venture funding (and not necessarily yet the commensurate business success to afford said offices or perks).
I understand the temptation. In a world with too much tech hype many teams feel the need to constantly spin.
I prefer the opposite.
I prefer realism in startups. It’s part of my stump speech to first-time founders or university students.
Avoid the stupid mistake I made (and talk about in the video):
- raising too much money too quickly
- building too many features (a mile wide & an inch deep)
- getting too much press before we were ready
- focusing on M&A to fix our problems
- believing our own hype
Most of the days at a startup are a grind. While you’re in the moment it feels like there are as many failures as their are successes.
Even success feels hollow. I had a friend who was on the front page of the business section of one of the top newspapers in the country while his company was 30 days from running out of cash. And in all seriousness the article prompted his relative to hit him up for money.
Every first-time entrepreneur who has raised millions in VC will know the surrealism of people calling you a millionaire while you are figuring out whether you can really afford to pay for a vacation since your credit card is already a little bit bruised.
We put on our brave faces and turn up everyday hoping that in the end we won’t feel like frauds. In fact, I believe that one of the largest motivators for startups to avoid the ultimate failure is to avoid the humiliation of not having every positive press mention seem like you were a phony.
It’s not that you don’t believe in your ultimate outcome – you have to believe in order to be insane enough to continue the journey against all odds – it’s just that there is nagging self doubt.
There are of course also external factors you can’t control. You think investors will continue to finance you – they promised they would – but you never really know. Until you know.
In the end you don’t always get the answer you had hoped for.
Youth vs. Wisdom
In your youth you have the bravado to face uncertainty with the blind optimism that success is inevitable. In short, you don’t know what you don’t know. I keep coaching an investor friend of mine that this can be a good thing at times and that he shouldn’t be too quickly to discount lack of experience from a team with serious talent and full of ambition.
This “naive optimism” is why I believe younger entrepreneurs are more likely to produce insanely big outcomes.
Yet youth often brings a triumphalism that blindsides entrepreneurs into missing the macro picture.
It is why younger entrepreneurs are more likely to drink their own Kool-Aid, which of course is dangerous.In bull markets many credit themselves with brilliance and industry stewardship when perhaps they are merely riding an ephemeral trend fueled by speculative capital.
Age brings wisdom. Timidity, too. And sometimes cynicism. But age brings perspective. If older entrepreneurs are more cautious it’s because life’s experiences have taught them to be so.
Older entrepreneurs tend to spend cash more wisely, for example. They feel less in a rush to keep up with the Jones’s since they’ve seen a few boom-and-bust cycles and they know it’s a marathon.
I find older entrepreneurs more willing to have pragmatic debates about competition as well. They realize that there is often more to be gained by attacking the existing market structure than each other.
Older entrepreneurs tend to avoid lawsuits where possible. There is less ego. Younger people still like to fight.
And for the most part they shy away from premature press because they know the consequences of getting over one’s skis.
The Case for Realism
I try my best to blog from a realistic perspective because partly because I believe it’s important for people on the journey to have a realistic perspective and not feel ashamed at their progress or performance.
It’s why I wrote one of my most read posts – Entrepreneurshit.
Because I know many people at big & successful companies or at fast-growing startups I know that even they have struggles, doubt, insecurities, fear of failure.
If you knew that it might help you realize that your failures are not so special.
There is always a tomorrow – even after bankruptcy. A second act. A new career if not a humbled one.
That’s why I loved the TechCrunch interview.
It gave me a chance to make sure that wherever you are in your career path you would know that we’ve all been there.
Even if our bio’s don’t mention it.
Failure is ok. It’s not the same as losing or being a loser. It’s a set back.
And it’s how you handle your failures that define you more than anything else.
p.s. If any of you were at the Foundry Group rock party in San Francisco where Ryan McIntyre and Seth Levine rocked with many other VCs (David Cremin, David Pakman, who am I forgetting?) then you’ll know how heroic this TechCrunch interview really was. It came with one hell of a hangover that I blame on unnamed LPs (ahem) and on my inability to say no to a challenge (and whiskey). Which come to think of it means I’ve really learned nothing at all in my old age. It came after only a few hours of sleep in which I had a meeting in the morning with an LP who will be smiling if he reads this because he knows that I had to stand for my whole meeting with him in order to get through the meeting.