Thomas Eisenmann, professor of Business Administration at Harvard Business School teaches the management of ventures and startups. He recently published his famous annual compilation of best blog posts on startups into a book/ebook entitled Managing Startups: Best Blog Posts. O’Reilly was generous in their willingness to publish it, while donating all of their profits to Endeavor Global, a global organization that fosters entrepreneurship. So, if you click on that link and buy the book, you would be doing yourself a favor and helping a good cause. His seminal collection has been an inspiration for me, and is a must read for any entrepreneur.
Tom just wrote an excellent article, Head Games: Ego and Entrepreneurial Failure (original link, and reposted here with permission), where he talks about the causes of entrepreneurial failures, whether they are ego-driven or coming from other reasons, and he ends by suggesting how to “fail right”. In the article, Tom draws on recent blog posts from Mark Suster, Paul Graham, Peter Thiel, Steve Blank, Brad Feld, Jerry Colona, etc…and puts it all into a cohesive and practical context. This is a MUST Read, let alone for the extensive links in it.
“Ever tried. Ever failed. No matter. Try again. Fail again. Fail better.”
- They fail to recruit a great team because strong candidates can sense the founder’s ambivalence and know that resolve is required to lead a startup through its ups and downs.
- They pivot too quickly, never devoting enough effort to any one opportunity to refine their offering and gain traction. Some founders get bored easily and rapidly cycle through new ideas. Others are overly compliant: they lack the strength to say “no” to team members, investors, or customers who suggest different course corrections. Another postfrom Blank republished in Managing Startups describes Yuri, an indecisive entrepreneur who shifted strategy constantly because he was unable to distinguish between vision and hallucination and was thus “buffeted by the realities of his burn rate, declining bank account, and depressing comments from customers.” His team “was afraid to make a decision, because they couldn’t guess what Yuri wanted to do that week.”
- They scale prematurely, burning through their capital before they have achieved product-market fit, because they are unwilling to resist pressure from investors who urge them to “swing for the fences.” The anonymous author of the new blog My Startup Has 30 Days to Live, a moving real-time account of the pressures, doubts and personal costs confronting a struggling startup’s founder, acknowledges making this mistake: “I had the power to reject these suggestions, at the risk of being labeled as un-coachable… These men never put a gun to my head, never threatened me into making the decisions I did. I just didn’t challenge them.”
- They stay in stealth mode too long, missing a window of opportunity or launch a flawed product due to a lack of early customer feedback. As Paul Graham points out, such procrastination sometimes stems from a fear of being judged.
- They provoke cofounders disputes—especially when, in Livingston’s words, a cofounder’s irresolute behavior raises questions about whether he is “trustworthy or works hard enough or is competent.”
- They throw in the towel without putting up much of a fight, because they lack, in Livingston’s view, the drive and determination “to overcome the sheer variety of problems you face in a startup” or they are “immobilized by sadness when things go wrong.” As Jason Cohen says, “It’s so easy to stop. There are so many reasons to stop. And that—stopping—is how most little startups actually fail.” Andrew Montalenti adds, in a post republished in Managing Startups, that founders are likely to get “antsy” when they pursue a startup mostly to advance their career but lack personal passion for its mission.
- They follow the herd, perhaps because they are insecure about their ability to set direction. Such founders often pursue derivative ideas or copy rivals’ features, as in Cap Watkins’ post-mortem of Formspring’s failure.
- They take their eye off the ball. Mark Suster bemoans entrepreneurs who crave the limelight and lack the discipline to say “no” to offers to speak at conferences. Livingston warns founders to avoid distractions—in particular, conversations with corporate development executives who want to learn about a startup but have no real intention of pursuing a deal.
- They fail to recruit a great team because they don’t recognize their own shortcomings or they are unwilling to delegate. According to Kets de Vries, they also may be prone to driving away talented colleagues by scapegoating or by viewing employees in extreme terms, putting some on a pedestal while vilifying others.
- They fail to pivot because, in some cases, an overconfident entrepreneur simply cannot comprehend that customers might be rejecting their product. Or, they may be cocksure that the path that led to success in their last venture will prove true again. In still other instances, founders who Steve Duplessie describes as zealots may be loath to pivot away from a vision to which they are fervently committed—even if sticking with the startup’s original plan puts the venture in peril. This risk is compounded when an entrepreneur relies on a Steve Jobs-style “reality distortion field”—using personal charisma and riveting rhetoric to inspire people to go to extremes to achieve a startup’s vision. When a vision is sold this way, it is especially difficult to subsequently admit that it might have been flawed.
- They scale prematurely due to overconfidence or an impatient drive to see their vision become a reality. Kets de Vries says such founders often defend against anxiety by “turning to action as an antidote.”
- They stay in stealth mode too long. In some cases their founder, with a vision burning so brightly, feels no need to secure early market feedback. In other instances a founder’s perfectionism prevents a team from “launching early and often.”
- They provoke cofounder disputes by battling ceaselessly for dominance and control of their venture’s direction.