Chapter 16: Failure Is OK (If You’re Learning) -
Tomorrow Toolkit for Entrepreneurs
Failure Is OK (If You’re Learning) By Juliana Reyes
Founder culture doesn’t take on enough defeat. Some ideas won’t work, and that is acceptable, if we learn and share from it.

When you’re at a cocktail party or a networking event, too few founders say what’s going wrong. It’s all good news — client numbers are up, mission is in and revenue is growing. That runs counter to the experimentation that has to happen to be truly innovative.

“Sometimes you win and sometimes you don’t. You have to be realistic about those percentages of success to learn from those mistakes because if you’re not failing, you’re not learning,” said Jason Volmut of Chicago IT firm CPURX.

If you’re going to take risks, you’ll have to fail.

Bob Moul will tell you that he failed. Not on something small. Not on something long ago. It was big, and the wound is fresh. And that’s making all the difference.

In late 2015, Moul was the CEO of Artisan Mobile, a backend platform startup with 16 employees. His plan was to build “a major, permanent software company in Philadelphia,” but that plan didn’t pan out. They weren’t acquiring paying customers fast enough. Not only that, after he sold the company that summer, he wasn’t able to repay all his investors. He could have kept private about the details, calling the acquisition a win. But he didn’t. He hadn’t delivered on the goal he set for himself, his employees and his community. And he was honest in the end.

Along the way there, it wasn’t pretty. There was the rumor-mongering, the “months of agony.”

“I had heard of the death spiral,” he said. “I had never seen the death spiral personally. This is not a fun place to be.”

It was the most stressful time of his whole 30-plus year career, and he wants you to know about it because, as he puts it, the only thing worse than failing is not learning from it, or worse yet, not sharing the story with others to learn.

Moul was a local tech startup founder but the logic carries for the leader of any young organization trying to find its value. To get there, you must take risks. Sometimes those risks won’t work out in small ways. Sometimes they won’t work out in big ways. Many hide. Too few share.

Moul was no bit player either. He was CEO of Boomi when the suburban Philadelphia cloud computing company was acquired by Dell in fall 2010. He then became the de facto spokesman on a local tech community he was only just joining — becoming the volunteer Philly Startup Leaders president and often cited by local politicians as an example of someone building a new company in the city.

And then his company was acquired at a far smaller level than anyone had hoped.

Persistence also matters. Sometimes, it’s only a short-term failure.

Detroit’s Itai Ben-Gal, who founded home device control app iRule, told the story of pitching a venture capitalist on a first round who said no. But he kept in touch, and eventually the VC became an investor.

There’s an important difference in external and internal messaging, however. There can be a fine line when sharing bad news with your team. Be transparent, but consider the timing.

“While there are some things that you want to share, there are certainly some things that you want to protect the team from while trying to empower them to be able to make those same types of decisions in the future,” said Margaret Martin of Atlanta-based CN2.

It’s not easy to admit failure. Especially in entrepreneurship scenes or nonprofit settings, where failure, it seems, is a concept that’s paraded around by founders only when it’s convenient. It’s like everyone wants to point to failure as a prime tenet of founding until they actually fail. At that point, it’s easier to disappear and not answer any questions or spin it as a success and move on. But no one benefits from that.

Tech CEO Bob Moul led Artisan Mobile to an acquisition but he was open about that not being as big an exit as he had planned. He was honest about failure. You should be too.

Your Checklist:

  • Monitor and evaluate: Want to know what’s not working? You need to keep track of what metrics are most important to you — your organization’s key performance indicators or KPIs. Without measurement, you would not know how to adapt your plan and action in order to achieve the highest impact and sustainability. Continuous evaluation ensures a better chance at success. Of course, the process can be difficult and complicated. But at least you should focus on developing your evaluative logical model.
  • Share what’s not working: Be honest. You can celebrate what is working, but share with others what isn’t, so others can feel comfortable being honest with you. That means what metrics aren’t you hitting? “Take a step back, analyze it, understand where you went wrong or what you can do to enhance your future engagement, and make sure that you keep learning from your failure every step,” said Simonida Boscovic of Chicago-based VizLore.
  • Tell a failure story: At an entrepreneurship or tech event, offer to tell a story of a true collapse. When what you tried didn’t work, be honest about it. Look at the story of RJMetrics, a popular Philadelphia-based business analytics startup that laid off 20 percent of its workforce in early 2016 by betting on the wrong product.  
  • Put a hand out to others: Is another founder perhaps struggling? Find a private opportunity to share your own challenges and focus on what she has learned. Those sessions of honestly speaking about what is and isn’t working can be inspirational.
  • Right now: Send an email to someone who closed a project or business or organization and said it was because their hypothesis wasn’t correct. Thank them for their honesty. It’s hard and important.

The point here is that though lots of people like to talk about failing fast, very few act on it. You must.

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