I Worked For a Start Up. And It Failed.

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When I first left the agency world, I wanted to do something different, something better, more fulfilling, and more meaningful. After a brief stint as a substitute teacher (don’t ask), I joined a promising young startup company with a vision of making the internet a safer place for kids. Sounded like an adventure, and maybe, just maybe, it would take off .. who knew what could happen?*

This was my second job after graduating from college three-ish years earlier. I would like to say that I didn’t know any better, but I did. Thanks to years of business school studying venture funding, forecasting strategies, business plans, and entrepreneurial venture creation, plus three years working an agency that launched many funded startups, I had some experience with this world. I was well aware of the failure rates of startup companies. But what the hell? Why not?

Here are some hard-earned lessons learned (bruises) from spending a year working at a startup:

Passion Alone, Is Not Enough

Our team had a worthy and amazing goal; to make the internet safer for children. Our founder had the best intentions, starting the company with a purely altruistic vision. He was an incredibly inspirational person. And the company relied heavily on expecting others to be equally inspired by our vision. We wrongly assumed nonprofits would be a natural alignment, but they were very cautious of who they align themselves with.

We were out to change the internet for the better, if it would have us. And it turns out it would have us, but it would cost us. We thought there was no way bloggers would not want to write about us. We thought non-profits would love to have a great new partner. And while bloggers and other non profits were happy to hear our pitch, they also had jobs and couldn’t just give us free press, everyone has bills to pay and many people don’t accept “passion” as payment. We thought we had an inspiring story that people couldn’t help but support. But we were wrong. Relying heavily on the blogosphere for support was my idea. And my failure. Not because because a blogger-outreach strategy is a bad idea, it’s not, it can work well, but if you can’t inspire others with your ideas, you have a bigger problem.

There’s No “I” in Team

Our crew was largely made up of freelancers, consultants, and vendors. Most operating on a full time schedule, but a bunch of paid-by-the-hour people none the less. There were some truly amazing people on the team who I have tremendous respect for. However, we also worked with lots of consultants, “partners,” and vendors. What was retrospectively apparent was that not everyone fully committed to the company’s mission. And how could they be? They had other gigs, or worked for larger companies, they weren’t on salary at our company. While in theory it was a beautifully bootstrapped together team, the type always praised on the pages of Inc. and Mashable, in practice it was fractured, self-interested and uncommitted. When times got hard and the payment terms needed to be adjusted many “partners” disappeared.

Investors…

Over three years we were lucky enough to sit down with some of the most respectable investors in the Northeast. This was a great learning experience for everyone on the team. Although we had an infectious mission, with great potential partnerships in the works, once we were sitting around the table it was all about the numbers. We routinely found ourselves at an impasse where the goals we wanted to reach required more funding, however the investors would not buy in until we hit those goals. It became a chicken or egg situation and a frustrating pattern where the future of our company became soberingly dependent on getting outside funding. In his book Rework, Jason Fried says “Outside money is plan Z,” a tough lesson to be learned. We didn’t have control of our future because the plan always relied on getting more rounds of funding to prove out our model.

Prove It.

Whether it was potential partnerships, organization membership, investors, or sponsorships, everyone wants to invest in a sure thing. There’s simply too much competition to put your chips on a long shot regardless of their worthy intentions and unlimited amount of passion. Over and over again we heard the same feedback:

“Call us when you make it, then we’d love to get involved with you.”

But here’s the thing, once we make it, we won’t need you anymore, we need you now. It seemed like there was always a potential deal on the table, we scored meetings and “potential partnerships” with some of the biggest companies in the world, all eager to hear about how we were making the internet a safer place for kids. Everyone wanted to be “kept in the loop” and requested “progress updates” every three months while they were making up their minds. It was encouraging to get such positive feedback and hear so many larger companies were interested, but this was also dangerous because it gave us false hope to continue further, thinking “we are so close to getting this deal done, let’s push for another three months.”

Am I Missing Something?

When you first begin your career, you make concessions about:

  1. What you might not know and
  2. What you should not rightly be expected to know at such a young age.

You assume the other people on your team sitting around the conference table know exactly what is going on and have full control of the situation. You rationalize the things you don’t understand based on your inexperience. When you’re confused you chalk it up to being new on the project.

But eventually that small voice in the back of your head starts to pipe up and says “Wait. Am I missing something here? I know I’m new/young but this doesn’t make sense…” You look at the numbers, you start seeing through the rationalizations and you realize, “I’m not missing anything here, this company is in trouble.” This was a turning point for me, from a confidence perspective. I learned how to correctly interpret the well-intentioned (yet-flailing) motions of a company striving for survival. And even more important, I learned to trust that instinct, even though the more-seasoned, much older professionals around the table seemed to believe things were on the right track.

So What?

At first glance these “lessons learned” here may seem like rationalizations. If I were reading this post, my initial reaction would be that:

  • It sounds like the company couldn’t hack it, so of course no one invested.
  • It sounds like it relied too heavily on others to buy in.
  • It sounds like it was a ball of misplaced passion and you can’t blame anyone else for its failure but yourself.
  • It sounds like there were lots of big, obvious warning signs and you must be an idiot for thinking this was a “learning experience.”

All valid points. Some people may get absolutely nothing from this post. But to walk away from over a year’s worth of time and effort and chalk it up to “that was a bad idea” is an oversimplification.

This was a lesson in passion, teamwork, intentions, and ultimately failure. This was also a lesson in storytelling. The story that was inspirational to some was not inspirational to others. What turned out to be an incredibly expensive user experience to build (which we rationalized was good because it was so expensive) did not provide an incredible experience to users. What looked like a dream team of startup all stars, was just that, but sometimes even a stacked bench can’t move an idea one else buys into. And this is why ideas are powerful, not only because great ones can change the world, but because if the idea doesn’t resonate with and inspire the masses, it doesn’t matter how much talent and money you throw at it.

Anyone else out there have a good story about failure?

*As it turns out, 44% of startups fail in their third year.

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