In the entrepreneurial world, failure is a word that is often used and heard. In Silicon Valley, the “Fail Fast” mentality has been adopted. It’s an idea that encourages people to take risks to learn from their mistakes quickly and efficiently. But what happens when your startup fails? What are some of the thoughts that go through your mind? This blog post will give you nine confessions from a failed CEO who wants to share his story with the hope of helping others avoid some common pitfalls he encountered as he was building his company.
Let’s take a look at these confessions.
1. I miscalculated equity distribution (assumed that paying someone $70,000+ would make them care)
You can slice equity however you want, and the only thing necessary is this: Equity is a weapon, an opportunity, and a bonus, and it must be distributed to those who you would like to care about and make a contribution the most. To put it another way, your most valued teammates should most likely have some ownership. You don’t want them to be all-in and committed for the long haul, do you?
I did equity in the worst possible way. My developers were outsourced, and they were the company’s backbone, implementing my and my co-vision founder’s and turning it into valuable proprietary technology. I was too novice to notice, but a few hundred hours spent QA-ing the numerous bugs, sloppy development work, and a few coding severe errors alerted me.
2. When my burn rate should have alarmed me, it didn’t
I anticipated that starting a bootstrapped tech firm as a non-technical owner would be complex and costly— at least at first. Nonetheless, I assumed that those costs would instantly stop once the development was complete and the business was launched. I also entirely omitted or ignored any significant marketing expenses in my financial model. Perhaps I was unconsciously planning our pre-revenue downfall from the start.
3. At the price of our most valuable asset, I compromised for a developer’s shortcuts
Being in investment banking, I expected robust analytics to come included with any website or software product — certainly one I’d pay six figures to create. I got into my admin panel to examine the test user data and export the file after the developers provided me with the first working iteration of the platform for evaluation. It took less than two minutes to realize that this information was woefully inadequate.
The worst thing was learning that enabling enhanced exportable reports would set me back another few thousand dollars — and they wouldn’t be nearly as user-friendly or powerful as I’d hoped.
4. While I paid others to address my problems, I stayed in the dark
In my instance, five fundamental aspects were critical to the company’s success:
- Platforms for user-generated content technology (devs)
- Payment methods based on revenue sharing (devs)
- Legalities of sweepstakes (lawyers)
- Recruiting early adopters (influencers) for new content platforms
- Creating opportunities for social networking (influencers)
I delegated the first two to my outsourced tech team, the third to my pricey lawyers, and the fourth and fifth to later when the platform was launched, and influencer collaborations would propel it to success. I honestly believed that paying my problems away was a better option than putting in the effort to study, grow as an expert, and master those critical core talents – whether through research, online courses, or trial and error. I squandered a once-in-a-lifetime learning opportunity.
5. I should have snuck into the industry or snatched up know-it-alls
When I initially started my company, I made the error of thinking that a few months of round-the-clock Google searches and extensive conversations with industry experts and pioneers would get me up to speed. At least for the developing industries, that was sheer fantasy.
6. I was too frightened of failing to enlist the help of outside beta testers
Building a startup may appear to be a lonely, solitary task best suited to introverts who prefer the back office. Its launch, on the other hand, is not. I had been waiting for that wonderful moment when a voice from above would break through my doubts and anxieties. That notification never arrived, and it appears that it never will.
7. I yanked the cord as I felt we weren’t the right team for the job
Our failure was the result of an intentional, calculated decision. I decided to leave because I had too much time to address and wrestle with our flaws after 18 months of an uphill struggle that wasn’t going any smoother (or cheaper).
8. I hid behind the goods to avoid having to advertise myself
The PopSocket was simply another way to avoid pounding the pavement to promote the product. We didn’t have to fail. We didn’t have to give up before putting our ideas to the test in public. I made a strategic decision to do so, and I have no regrets given the limits of our under-equipped crew and low budget.
9. I should have given up earlier
I saw the mounting, fairly close issues we faced many months ago, as much as I hate to say it. I felt we’d taken off more than we could handle, somewhere between $40k and $60k. The more I researched our affiliated businesses, the more confident I grew that my 6-figure savings and our piecemealed staff of part-time, substandard talent would be insufficient to succeed in our company.
The best thing about losing six figures
My initial startup failure hurt didn’t go away overnight – or even years later. Even after developing, co-founding, consulting for, and currently leading numerous thriving businesses, I still get a knot in my gut when I think about that first company failure. Having lost six figures in my first venture was a rude awakening, but I believe it was exactly what I needed. An essential lesson I learned early on was that you couldn’t just pay your way out of your difficulties.