Building your first, second, third startup is a monumental learning process, because the ground is always shifting and changing beneath you. There are a lot of articles that focus on technical skills and best-practices of startup development (and these are great).
At the same time, building a startup is an emotional grind, because founders are trying to manage not only their own hopes, but those of partners, investors, and employees as well. Founders and employees put in crazy work hours – sometimes even 12-14 hour days for months, or even years, with full awareness that their business may fail. After all, 90% of startups fail – there’s a chance yours may not be the exception.
Founders used to struggle with these overwhelming feelings in silence, but lately the industry has been changing and more founders are talking about ‘the pain’. Both investors and founders were silent on the issue of failure for a long time, because both were able to save face by staying quiet. However, there’s an increasing acknowledgement that most entrepreneurs will suffer at least one failure before building a successful venture, and in fact the lessons learned from this failure can increase the likelihood of success later on.
It’s almost morbid the way in which failure is treated in entrepreneurship: ventures are rationally picked apart and decisions and environmental factors are dissected in a coolly clinical manner. While this may be a useful attitude for helping people move on, founders in the midst of a failure could perhaps benefit more from knowing that they’re not the only people to have experienced the overwhelming set of emotions that characterize being the captain of a sinking venture.
I’ve collected a few of my favorite pieces on challenge, failure, and inspiration. When failure is no longer an abstract concept that seems to only apply to you, and is instead a reality faced by many others, perhaps it’s not such a daunting prospect. The aim of this list is to help struggling or even failing founders know that they’re not alone – and even if their business doesn’t bounce back, as individuals, they certainly will.
(1) The Pain of Failure is Universal.
Inspired by: “My Startup Fails and This is What it Feels Like” by Nikki Durkin.
Durkin is the founder of 99Dresses, a startup that almost succeeded. She recently wrote a post-mortem on the emotional experience of failure and challenge – even successful founders go through terrifying periods where they don’t know whether their venture will succeed. And many ventures actually don’t.
It is brave to talk about what struggle feels like, and Durkin is able to dig into her experience and describe those feelings.
“I found postmortems of startups outlining what didn’t work and why the company went under, but I was hard pressed to find anything that talked about the emotional side of failure — how it actually feels to invest many years of your life and your blood, sweat and tears, only for your startup to fall head first off a cliff. Maybe it’s because most founders are men, and men generally don’t like talking about their feelings. Maybe it’s because failure is embarrassing.
I don’t know why this is the case, but here is my contribution to the cause: my story. This is what failure feels like. I hope it helps.”
90% of startups do fail, so Durkin is hardly the only person to watch a dream spiral and crash. To be a founder is to have a dream and to ask others to build it with you – even at the risk of lost money, lost face, and crushed ideals. Of course, you never believe your venture will failure. But if it does, it helps to know that you’re not the first to experience such a harsh reality check.
(2) You can Fail with Dignity – Be Helpful and Honest With the Partners Who Supported You.
Inspired by : “With Traction but Out of Cash, 4Chan Founder Kills Off Canvas/DrawQuest” from TechCrunch.
Investment AND traction together may not even guarantee success, if the two converge too late in the game. Canvas/Drawquest built a venture backed company around their community, Canvas, where visual artists would gather and remix pieces. Launched in 2010, Canvas almost hit product/market fit, and it gained a substantial enough following of users to gain the company a seed round, and then series A. The real kicker was Drawquest, however, which challenged artists to complete a visual quest each day – at its peak, it had 1.4 million downloads and 25 000 daily users. Legitimate traction.
So why did Canvas/Drawquest die? A startup’s survival is determined by its runway – the amount of money it has left in the bank. Canvas/Drawquest couldn’t figure out a monetization strategy quickly enough, and without a clear business value, it was difficult to arrange for acquisition. The founding team was unable to figure out a long-run revenue strategy, and so the founder, Christopher Poole (aka Moot), chose to shut down the company.
“Ultimately we decided we wouldn’t go try to raise more money – it wasn’t really on the table because we just hadn’t created enough value” says moot. That’s a rare admission of failure in the success theater startup. Most founders trumpet their funding rounds and growth milestones but slink away when things go pear-shaped. Poole’s willingness to be humble and transparent is admirable, and could increase willingness of investors to back his future projects.
Failure can be daunting, and entrepreneurs are often stubborn people who both want to believe that they can turn a startup around, and ensure that the rest of the world believes it too. This veneer is part of what powers startups through tough times. But at the risk of sounding corny, the truth can set you free: if Poole really felt that Canvas/Drawquest could not be turned into a successful business, and regularly and honestly conveyed existing challenges to investors, showing that the company had tried to solve them to no avail, then returning what money was left is a fair strategy.
Investors expect to lose some money – startups are high risk, they’re not designed to be universally successful. Entrepreneurs put so much of themselves in a startup that failure can seem personal – but just because one startup has failed, doesn’t mean that others will. If your startup is truly failing, and you’ve exercised all options to pull it together, then fail with grace – find a way to enable the people who helped you (the investors, employees, and partners) land on their feet, and position yourself for the next opportunity. Trust me, there will be something.
(3) Analyze and Process Your Failure
Founders emotionally put a lot into their company, so much so that there’s a definite aftershock when failure happens. If you can, take some time to process it. Reach out to those around you for help, if they don’t attempt to support you first.
Face the failure, and write you why you think it happened. As Peter Schlegel (formerly of Admazely) writes, he had a lot of “psychological equity invested in [his] identity as a startup founder”, making it hard for him to face the failure at first. Writing about it didn’t magically lift a weight from his shoulders, but it did help him at least accept that he had to move on.
Many startups also do a rigorous post-mortem, both to help themselves move on and to share their lessons with others. On an individual level, a post-mortem may help you come to terms with your failure – if you’re not ready to share it publicly, it may be useful to just organize those thoughts for yourself. On a group level, it benefits the whole startup community to understand where you went wrong, so that they don’t repeat the same mistakes.
Justin Kan of ‘Exec Errands’ does a pretty good post-mortem – it’s chock full of universal lessons and more than that, it showcases him as articulate, intelligent, and analytical. A post-mortem can also be an opportunity to highlight your learning to future employers, co-founders, and even investors.
In the moment and immediately after, startup failure is harsh and painful. If you’re a career entrepreneur, you will eventually bite the dust. It may not be this venture, it may be the next. Learning to fail with grace and to pick up the pieces afterwards will be just as important of a skill as running your venture, hiring, and raising investment rounds.
Still, don’t give up: your failure in one startup may teach you a crucial lesson that allows you to find success in the next.