11 Lessons From 3 Failed Startups
This is a very honest recount of the experiences I’ve personally had over the past 5 years. I’ve had 3 businesses (startups) in the CPG and consumer space all over the last 5 years. All 3 of these ventures I had to eventually, painfully, and regretfully, shut down as we hit the end of our burn rate. It really sucks, like really sucks! It feels like you failed - you birthed this beautiful thing into existence, you gained a following, had people that loved your product, and then you had to kill it. It's a painful, unenjoyable death (I guess every death is).
Below are 11 lessons I learned from all of this, that I hope will give you a better idea or what you're getting into. Now I want to preface this with the following — these are not blanket statements. I am not Naval Ravikant or Paul Graham or Peter Thiel. These are just my experiences growing these companies from an idea, to an actual physical product, to generating sales, and eventually shutting down. You might have a completely different experience - but after having my own journey and talking to many other first-time founders, I found that many of them have gone through a very similar experience.
Your Friendship Will Suffer
Whether you start your business with a friend, a family member, or your significant other, just know this — it will put a strain on the relationship! It's a tumultuous, never-ending, potentially unrewarding task that is bound to put a strain on anyone, so be sure you are both crystal clear with the other before entering this shared journey.
I think the healthiest, most constructive way to retain a relationship (but also build a business together) is brutal honesty. Don’t be afraid to speak up, or voice your opinions, in an effort to keep things kosher. Even that, at times, won't save you — but at least it gives you both a fair chance. My business partner and I didn't think that far into the future, mostly because we were confident that our venture would succeed (it didn't), but also because there was no one to give us these tips. The demise of our business and friendship was simultaneous and while we still keep in touch, the effects that reverberate from the fallout are still felt. So, be very aware of who you choose to marry through a business partnership because that’s what this is — a marriage. It's for better or worse, it has the potential to be amazing - but also it could be a relationship killer. Lastly - just because your startup gets funding and is successful, does not shield you from these same pitfalls. Stay transparent and honest with each other, through and through.
It’s more about YOU (the Team) than the product
“Your idea is amazing!”. I’m sure many people have said that to you about ideas you have thrown at them, however, the cold hard truth is — investors will invest in you! You, the person, you. You could have the best idea in the world but if investors don't have faith that YOU and your team can deliver, it’s a lost cause. On the flip side, you could have an only “decent” idea and if you are a magnetic or brilliant marketer, or an experienced person in your field, you will most likely attract the right individuals to invest in you. See, investors are not immune to magnetic, charismatic individuals, they want to know that this bet they are taking (betting on this individual) will yield them a return. While you can have the most earth-shattering idea - if you don’t hustle, grind and figure out a way for people to get behind you — your earth-shattering idea will be just another idea. There are many examples of startups with magnetic individuals at the helm that raised hundreds of millions of dollars but inevitably sunk the company. When I shut down one of my companies and moved onto my next venture, one investor literally told me, “I invested in you, so let’s see where you go next”. He trusted me, whatever decision I make, or whatever company I build, he wants to go along for the ride. Realize you are the product, work on your product/service, but simultaneously, work on being a magnetic individual that people just can't say no to.
Raising capital takes up A LOT of time
At least half of every waking moment that you have will be spent on raising capital. From putting together a pitch deck, to finding the right people to invest in you, writing emails, trying to get intros, actually pitching your company, getting rejected, and doing it all over the next day. It's the least fun aspect of starting a business, trying to convince other people that you, your idea, and your team, are worth their money and will actually generate a return for an investor down the line. You have the option to invest your own money (if you have it) which will afford you more flexibility, more time to focus on building and improving your company, and ultimately more equity/control. Bootstrap for as long as you can, it's preferable to reach out to investors from a point of leverage after bootstrapping a business to reach positive cash flow or even gain x growth over x many months. However, take into account that a check is not magically awaiting you and your startup, and will take weeks/months to land, so plan accordingly.
You must let go of EGO
Rejections are a part of the game. You can't take it personally, even though on some level you do. It’s just what we do as humans. When faced with rejection, just reverse your way of thinking about it. Instead of sulking, thinking “I’m not good enough”, “these people are so smart”, “they know so much”, “there really are so many problems with my product”, etc, just reverse the thought process. Think — “they don't know what they're missing”, “one day they’ll regret not investing”. You cant let the fear of rejection, or the rejection itself, be a deterrent. If anything, use that shit as fuel, and you will prove these naysayers wrong, you will bring your idea to fruition. As the old saying goes “It’s business, not personal”. Keep this in mind. Now, this doesn't mean these people know nothing, but they don't know your business or your idea as well as you do, so try to take advice (when applicable) and implement, or even pivot, when need be, which leads me to…
Pivot! You are going to pivot.
Onlyfans started out as a platform for social media performers to allow their followers to subscribe for a monthly fee to see clips and photos. Youtube used to be a video dating site, Paypal started out as a mechanism to beam IOUs from palm pilot to palm pilot. Netflix started out as a mail-order DVD service, Slack started out as a failed game called Glitch, and back in 2004, Yelp started as an automated system to ask friends for direct recommendations. You get where I’m going with this. The examples are endless. My point being— you are most likely, at some point going to pivot or at least make some changes and adapt/grow your business. Be flexible and realize that you are not married to any one idea.
The highs are highs and the lows… low
When you see that you hit x in sales this month, or when you finally close a round of investment, or hit any other OKR’s, the highs are... HIGH. But that’s just a small percentage of the time, the vast majority of the time you're going to be faced with problems, rejections, malfunctions, and anxiety. Make sure to relish those moments of achievement, grab a beer with your team, take an hour off, and just realize for a minute that, wow, you achieved this amazing goal. Because the odds are stacked against you (75 percent of venture-backed startups fail), whenever a recognizable target gets conquered, smile, take a deep breath, hug it out, and then get back to it because tomorrow is another gusty day in an ocean of problems, on the boat that is your business. Embrace the journey, every action, and inaction, every experience, and interaction are part of the ride so buckle up and thoroughly enjoy the highs, because it's about to get bumpy.
Everything takes longer than anticipated
If you think you’ll be out the gate in 4 weeks, most likely it will take 8 weeks. We had an investor wanting to cut us a check for 6 figures, the only catch was we had to find another investor to put up the same amount within 2 weeks of that call. We thought we could do it, it was a test to see if we could raise. We came very close, but ultimately, weren't able to close the round. I chose this specific example because this was really a make or break moment in our journey (which ultimately broke us). It could have gone either way, we could have raised a lot of money or ended up with nothing. Unfortunately for us and our startup, it concluded with the latter. Perhaps if we had a few more weeks we could have done it — but that’s the point, things take time. Many things are out of our immediate control, plan accordingly.
Capitalize on opportunity
Opportunities are like the weather, fleeting. One day it's sunny and beautiful; the next day rainy and damp. While you shouldn't jump on every and any offer that you receive, just keep in mind that because you received one or two offers this week doesn't mean this will repeat the next week. Those could have been your only two offers for the next 3 months.
Be calculated and smart in your refusal to accept them.
You're going to make mistakes… many mistakes!
Mistakes are part of the learning curve, any new endeavor you dip your feet into, you will make mistakes. It's fine. It's frustrating, but it’s fine. People will have tolerance for these mistakes because you are new to the game. The question is how fast you learn, and how quickly you fix those mistakes. If you keep repeating the same mistake over and over again, suffice to say, any patience the people around you had will evaporate and you will quickly sink your business. However, if you make a mistake, quickly learn from it, acknowledge you fucked up, and course-correct, not only will you be forgiven, but you will be admired. You set the example of, here is someone that made an error, learned from it, and improved. That is something everyone can respect. Do not have a big enough ego that you can't admit you're wrong because you're the captain of the boat. The opposite is true, if you show humility and ingenuity in the face of problems, your team and your investors will respect your decision making so much more.
Never give up
You failed? No, you just didn't keep going long enough. JK Rowlings was rejected by all 12 major publishers for the Harry Potter manuscript. I recently saw a Tweet by Harry Stebbings. The tweet essentially sums up the story of a founder of a $7Bn+, exited company. Harry had 71 pitch meetings, with 70 no’s. That 1 yes he stuck it out for, made his business. The moral of the story is — never give up! All it takes is 1 person to believe in you. If you give up, you’ve already lost.
If you have a dream, just keep chasing it. Eventually, you will succeed, it really is a matter of time. As long as you believe in your dream, you should keep going. Don’t let outside interferences distract you from your goal. Forget all the cliches, all the inspirational quotes, all the examples of rich people that made their fortune at the age of 60. Just ponder the feeling of going back to an office, think about how you would feel knowing you gave up, knowing you didn't commit. You wouldn't be able to live with yourself, most likely, in the regret of what could have been. In the famous words of Joe Rogan — “Conquer Your Inner Bitch”
Life goes on (it really does)
Although it seems like everything around you is about to implode, life does go on - it's not the end of the world, you are not a failure, and this too shall pass. While I have not launched the company of my dreams (yet!), I’m pretty young, full of energy, ideas, and a passion to succeed. Just because it did not succeed this time, doesn't mean it’s not going to succeed the next time. You take the lessons you’ve learned, the relationships you’ve built, and the experience you've gathered and you keep moving forward. You still have a family that adores you, friends that love you, and a dog that is with you and needs to go for a walk. Life is all about forward momentum, we have to be aware when it's happening and capitalize on it when it does, I sincerely believe that if you want it, you must keep chasing it.
