How to deal with failure as a startup founder
Steve Blank basically started the Lean Startup movement with his book ’4 Steps to the Epiphany’, his take on customer development (aka the importance of validation). He founded or cofounded 8 companies in 21 years, and he sums it up like this: “two large craters (Rocket Science and Ardent), one dot.com bubble home run (E.piphany) and several base hits”.
That’s a great score for an entrepreneur, considering the majority of startups fail (or die, as Paul Graham calls it). But his blog post of today is about one of the craters – Rocket Science.
Rocket Science was a gaming company Blank started with $ 35 million to burn. And burn it he did: a few months after making it to the cover of Wired magazine – “the first digital supergroup”, the company failed. Miserably, if Blank is to be believed – he admits that to this day, he can’t play a video game (!).
“The press called Rocket Science one of the hottest companies in Silicon Valley and predicted that our games would be great because the storyboards and trailers were spectacular. 90 days later, I found out our games are terrible, no one is buying them, our best engineers started leaving, and with 120 people and a huge burn rate, we’re running out of money and about to crash. This can’t be happening to me.”
His first reaction, he says, was to plain deny that he had made any mistakes: “In my mind, I had done everything the investors asked me to do. I raised a ton of money and got a ton of press. We hired everyone according to our plan. It was everyone else who screwed up. I did everything right.”
As Blank tells it, he really went on a blaming spree – from his cofounder to the engineers to the sales and marketing department and even Sega (“for making a bad gaming platform”). ”A few weeks after leaving, I began to think about what I should have done, could have done and pondered why I didn’t do it. (I didn’t listen, I didn’t act, I didn’t own my role as CEO, I wasn’t prepared to do what was right or leave.)”
“Understanding what I could change in my behavior took long months. It would have been much easier to just move on, but I was looking for the lessons that would make my next startup successful. I looked at the patterns of behavior, not just at my last company but also across my entire career. I learned how to dial back the hubris, get other smart people to work with me – rather than just for me, listen better, and act and do what was right – regardless of what others thought I should do.”
“For my next startup I parked the behaviors that drove Rocket Science off the cliff. We established a team of founders who worked collaboratively. When my co-founders and I got the company scalable and repeatable, we hired an operating executive as the CEO and returned a billion dollars to each of our two lead investors.[Read more at Steve Blank][Photo: Flickr, chipdatajeffb]
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