It was a chilly December morning when I met an old friend for breakfast. We shook hands outside the diner and shuffled in as our gloves bristled against the frost.
John (not his real name) spent the past 2.5 years as a technical cofounder on a small but funded startup. He’d been successful in his previous startup endeavors and from the outside his current startup appeared to be doing well too. They had recently received positive press and seemed poised to raise a fresh round of funding.
And yet John looked tired in a way that sleep couldn’t fix. “Everyone has heard of the Silicon Valley mantra, ‘fail fast’, but have you ever tried the opposite? You know, failing slow?”, he asked.
“It’s the absolute biggest mistake I’ve made in my career. Our startup has been dead the past 5 months and no one will admit it. It finally hit me last night. We need to fold.”
John wasn’t just tired, he was defeated.
John agreed to a behind the scenes interview and we worked together to turn our conversation into this article.
How do you define “Failing Slow”?
Failing slow is letting yourself be handcuffed to bad decisions. It can also force you to make the same mistakes over and over.
It's insanity. We're doing the same things and expecting different results.
In what ways did your company fail slow? Can you give us specific examples?
1. Business Model -- The absolute biggest way we failed slow was with our business model. With hindsight I can see that we tried to be "too cute" with it. This was extremely helpful for us when we were raising money but it didn’t translate well to paying customers post launch. Because of our initial fundraising success with the model, we waited way too long to switch to something standard. The team loved the model so we tried everything to make it work. We let our business model fail slow and it ate away months of our runway. We should have killed it months earlier.
2. Rewriting Code -- We inherited a legacy codebase. We needed to decide if we were going to rewrite from scratch (you should be hearing alarm bells in your head), extend it, or build around it. We decided to rewrite it and it delayed us learning about our flawed business model for an additional 3 months. I wish we stuck with the legacy code. We would have added some technical debt but it would have exposed flaws in our business much sooner. We ended up having to rewrite a massive amount of that code again anyway when we switched models.
3. Sales Strategy -- Our sales team became complacent trying to hit home runs with large partners instead of doing smaller sales. We should have run large and small sales in parallel. Instead we placed all our eggs in the "large client basket". Large clients typically have long sales cycles and are pretty unstable. We thought we had closed large clients three separate times and each time they backed out at the last minute. These opportunities were worth chasing but this absolutely killed morale when we had nothing to fall back on. If we would have focused on "smaller" wins, we would have bought ourselves more time and our cash crunch wouldn't have hurt so bad.
How would “failing fast” have changed your startup?
I believe if we would have let our business model fail faster we would have had enough capital to reload and take another shot. We had a fundamental issue with our startup that we didn't discover until it was too late to course correct.
I'd like to think if we moved on a few months earlier we'd be profitable and thriving.
What else did you learn from your failed startup?
- Failing publicly hurts like hell. Admitting I failed to my friends was surprisingly difficult.
- Decisions were made quickly (good!) but we were slow to correct them when it was obvious they were wrong (very bad!). Founders have to be able to leave ego at the door and own mistakes.
- We were way too passive on sales. Sales fix all woes. If you have a sales person they should not be waiting for the product to be finished before selling. They should have a list of 10 people that are ready to sign up on launch day.
- We were adding “features” to our product to make a product matrix look good, not because it added value. We should have resisted our investors and trusted our domain experience. Not a deal breaker but it did slow down development.
- What you read in the press represents PR, not reality.
- One of my cofounders was vehemently opposed to a vesting schedule. I won’t work on any project without one. He became less involved at a critical point and we would have been stuck carrying dead weight (equity) if we didn't get him to agree to the schedule when we started the project.
- We did a lot of things that felt like work, but actually weren't.
- Don't be reactionary. At our startup we started treating "symptoms" instead of the cause. Be as proactive as possible.
- If you're currently running a "Zombie Startup", be honest with yourself.
- Don't let startup failure creep into your personal life. When you spend so much time and effort on your company it's pretty natural to tie self worth to it. Don't fall into this trap.
Any closing thoughts?
Failing in general sucks. Failing fast also sucks, but it hurts a hell of a lot less than failing slow.