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The Best Entrepreneurs Know How To Fail Fast
Last night at the TechStars Boulder Mentor dinner I got into a conversation about what makes a better CEO of a new startup – an experienced entrepreneur who’s last company was a failure or a big company executive with a stellar pedigree who has never worked in a startup.
Give me the experienced entrepreneur whose last company was a failure 100% of the time. The cliche “you learn more from failure than success holds true”, but more importantly the dude that just came off a failure and is ready to go again is super-extraordinary-amazingly hungry for a success. It doesn’t matter how much money he’s made in his past companies – once he decides to go for it again he’s going to be ready to crush it.
Spend four minutes listening to Mark PIncus’s interview on Vatornews about his lessons from Tribe – fail fast. Two great entrepreneurs that I’ve worked with before (and intend to work with again) sent it to me this morning with a note saying “wow – awesome – must watch.” (n.b. each of them had one success and one failure before I funded their third company, which was a huge success.)
Mark is the CEO of Zynga (I’m on the board). I love working with Mark – I’ve known him since the mid-1990’s and funds I’ve been affiliated with invested in his first two companies: Freeloader and SupportSoft. Both were successes. We didn’t (for a variety of reasons that I can’t remember) invest in Tribe which was a failure. When Mark started talking about Zynga, it was an easy decision to jump on board and do the first round funding with Fred Wilson at Union Square Ventures.
Mark amazes me on a regular basis – not only has he synthesized everything he learned from Tribe, he has developed unbelievable sense of self-awareness as an entrepreneur and a human that helps accentuate the things he’s great at while opening up for help when he needs it.
Note to everyone: check your pedigrees at the door – tell me about your successes and failures when we meet for the first time. And fail fast.
Great post. Thanks to Mark for sharing and Brad for posting.
When things aren't working there's always that fine line (maybe it's only fine to the founders and blatantly obvious to everyone else) between knowing your idea will work and not giving up OR realizing what you thought would work isn't working and the environment/market you were building for has changed.
We had the same thing happen with MyWingman. Other large companies tried to follow the same model but nobody made it work. When we look back on it now, we acknowledge that it was a failure but we learned a lot from it and when we look at what the other companies spent and how long it took them to acknowledge that it wasn't working, we failed for a hell of a lot less money and time then they did. (Hey, we'll take the small wins where we can get them.)
There is no doubt Mark is KILLING it with Zynga. However, as an investor I would recommend talking to both current employees and ex-employees about the state of affairs there. There are too many stories for me to pen down here. But when 10% of your company resigns in about 3 weeks, you've got a serious problem. When people I know who got offers from Zynga turn it down because of leadership, there is a problem. When you have a PM from Zynga show up at my doorstep talking about them wanting to leave Zynga & tired of working 70 hour weeks, there is a problem. When top engineers are not given stock options after being promised, there is a problem. When you're told by the CEO to "hire anyone with a heartbeat" there is a problem.
Brad, I regularly follow your blog and I have great respect for you. But I would caution to not get blinded by just numbers that a company keeps hitting. As with any venture this one has been built with lots of sweat and tears. I would encourage you to reach out to the troops at Zynga especially in a couple of groups that are purportedly making most of the money.
Anon – always happy to hear your perspective. Don’t worry – I’ve never been blinded by numbers. If you want to talk directly, rather than via “anon”, please feel free to email me anytime (brad@feld.com).
what makes a better CEO of a new startup – an experienced entrepreneur who’s last company was a failure or a big company executive with a stellar pedigree who has never worked in a startup.
This seems like an easy call as you say. The hard call is, "Who would you rather back — an experienced entrepreneur who's had one failed company or an experienced entrepreneur who's had one successful company?"
If you learn more from failure, in theory you should back the failed entrepreneur.
Yet most investors don't do this.
My answer to this one is “depends.” It depends on the nature of the success and the nature of the failure. I’ve had excellent experiences with both categories of entrepreneur as well as terrible experiences. The worst ones are the entrepreneur who has one success, no failure, and “knows it all”. That often (but not always) ends badly. So – it depends.
I find Anon's comments to be quite true in many companies. From the outside, it appears everything is swell when the numbers (rev growth, etc) are good. However, it is usually quite a different story when you talk with people in the trenches. Very interesting comment by Anon. Truly effective leaders are very, very rare.
One good implicit point in what Brad wrote and his examples is that many criteria commonly claimed to be 'musts' for a CEO are not mentioned at all! In effect Brad is saying that entrepreneurial desire is "one ring to rule them all" or overcomes all the rest.
While it is unfortunate to have a CEO who is lacking in some respects, who among the really successful entrepreneurs would you, say, want to date your daughter (uh, please excuse my sexism here!)? Or would you really want them on YOUR Board? To be clear, I'm suggesting that such entrepreneurs can be a bit 'uncomfortable' to work with!
The common criteria are something like saying that the CEO has to have his nose to the grindstone, ear to the ground, and shoulder to the wheel and then do good work in that position! That is, too darned many specific criteria only distantly related to the real, pressing issue at hand while ignoring the really big issues we might expect for a highly motivated information technology entrepreneur: (1) He REALLY understands the 'business vision' because he invented it and has lived it 24 x 7 at least for many months. (2) REALLY understands the technology 'secret sauce' if only because he invented it and programmed it. (3) Is betting much of his life on the company and is as highly motivated, focused, and determined for success as possible.
In business, I've seen, sometimes up close, successes and failures, both from world-class to meager. For success, here are some CEO criteria I extract from that experience: (1) He's perceptive enough about people to see some of the major aspects of their personality. (2) He really cares about the real success of the business, e.g., is not just playing a role or putting on an act before bailing out just before it all collapses. (3) On the serious issues, he's ready carefully to consider reality, deeply, and not just cover things over or make excuses. (4) He has stable judgment and doesn't go wacko. (5) He REALLY understands the crucial aspects of the business and is not trying to get by just shoveling BS.
[...] More importantly, we should draw energy and inspiration from anyone willing to talk openly about how to learn from failure. I’m finding this thread compelling in reading Founders at Work, and in the Mark PIncus interview below, which came by way of Feld. [...]
Fail fast, lead. Hiring a CEO (any leader) who just failed might be a good strategy as long as you believe they learned and are not stupid enough to try try again. Be diligent my friends.
Her name is Bambi? Really?
Good post but it's whose not who's.
Damn – I always mess tho’s up. Fixing it now.
Brad, you should check out this research by Prof. Gompers et al from HBS on serial entrepreneurs. The data say that an entrepreneur who has failed before is not more likely to succeed in a subsequent venture as compared to a first time entrepreneur. However, an entrepreneur who has succeeded before is significantly more likely to have a repeat success. The paper is really fascinating as there are a bunch of other things in the same vein that he identifies.
Yup. Read it. The biggest problem for me is the definition of “success”. From the paper: “We define “success” as going public or filing to go public by December 2007.” (p.8). They go on to say “Our results are qualitatively similar if we redefine success to include an acquisition in which the purchase price exceeds $50 million as a successful outcome.” (p.10). As anyone who lived through the Internet bubble knows, defining “success” as going public or filing to go public is a sketchy metric.
I’m glad this research is being done, but as a repressed social scientist I recognize the difference between quantitative data, qualitative data, and the predictive power (or lack thereof) of each. Oh, and I love Taleb (hint).
Great interview on Zator.tv. When you say fail fast, I take it that you mean find out that your business model does not work (fast) and then find a new one. If Mark has figured out that the key to creating lasting viral growth with social networks was real life connections and he had figured this out early enough, do you think he could have reinvented tribe to become successful e.g. more of a Yelp or a Facebook/Yelp?
Maybe, but I don’t know as I wasn’t involved with Tribe.
I hear ya. The data are definitely not clean and pretty, but it's nice to see *some* numbers at all, as you said.
I've heard that point about the definition of "success" many times when I mention it. You could be right. The argument would be that "market timing" skill is not important for $10MM-$50MM exits because it doesn't really matter how big the market is….it's an execution play and therefore repeat entrepreneurs (even those with failures) are better operators than first timers.
The only caveat that most VCs are looking for exits north of $50MM so the research's definition of "success" is in line with the typical requirement.
A balanced diet of hungry and naïve first timers (high risk but naivety tends to create game changes such as Facebook, Google, YouTube etc), hungrier but less naïve second/third timers (less risk, high determination) and seasoned entrepreneurs who you can bank on (lower risk tends to produce lower results) would sound like a good combination for an investor to me. It’s a lifecycle after all and you can’t produce seasoned pros without backing the occasional spotty faced geek.
Yeah, but a $50m sale of a company that has raised a $100m isn’t a success!
[...] big lesson was that we didn’t fail fast.” Thanks to Mr. Clark for bringing this blog and video to my attention today. The 4 minute interview is definitely worth watching and it happens [...]
The post got me thinking about changing business models. Here are some thoughts on how Twitter has already changed its model and how the micro blogging market might pan out: http://estatecreate.com/blog/?p=75
Interesting interview. Totally agree that metrics should drive decisions. I just got involved with a new startup and this is where I started – with our measurement capabilities so we could establish a baseline.
I assume fail fast does not mean bail completely at the1st sign of trouble but instead, test and iterate constantly. But don't give up unless your thesis for getting in changes and/ or you determine you cannot be successful to the level needed given the investment.
[...] next day, Brad wrote a post called The Best Entrepenuers Know How to Fail Fast, where he answers the question about whether he would rather back a startup CEO who’s last [...]
It feels a little strange to comment on an anonymous post (see above), but it’s important to me to address a couple of the points that have been made. There are few things I value more than my team. At Zynga we’ve worked hard to hire the best and brightest talent in the industry and create a culture to support them. We continue to strive to make our environment fun, rewarding and most importantly, sustainable.
Zynga is a start-up on a mission. As such, we work hard and we play hard. It's been challenging as CEO to manage product development and the existing business, while growing our team and maintaining our start-up culture. The pace isn’t for everyone and as we’ve scaled from 25 to 250 people in the past year, there have been growing pains. We’ve lost some people and each loss has been heart-breaking. I believe in good people and I’m proud that there are about 25 former employees working from my past companies, at Zynga, including the entire founding team from SupportSoft.
I’m in awe of what’s going on in social gaming and encouraged to see so many entrepreneurs flourishing. I’m proud of the games we have created and the amazing innovation at our company. Zynga will continue to scale to meet the opportunity and build our company in way that reflects our people and our values.
And I should also thank Brad for letting me comment here—it’s been really great working with you.
Exactly.
From a presentation I give on succeeding through failure:
Fail fast. <image of racing cars speeding around track>
The sooner you realize that you've failed, the sooner you can adapt, revise your plans, alter course, or abandon your plans and start again. Delaying failure can simply reduce the time you have to formulate a response to the situation.
Fail hard. <image of car after hitting telephone pole head one>
The worst outcome is a vague uncertainty which is never quite recognized as a failure until eventually and inevitably the truth becomes unavoidable. Often by this time it is too late. Seasoned entrepreneurs define measurable criteria for success and therefore also for failure. Failing hard means failing definitively and with precision.
Fail often. <amazing chain reaction accident>
If you aren't failing often, you aren't trying hard enough. Breaking new ground, inventing something that's never been done before, or charting a new course often building on previous failed alternatives. If you fail often, you are continually moving towards an optimal solution. Biological evolution fails often for example and you can too.
Mastering failure means success.
You too can become a ninja of <FAIL>
[...] post was inspired by a post on Feld.com. Brad Feld is a very successful entreprneur and investor. He [...]
[...] The best advice I’ve heard all week? Learn to fail fast. [...]
Sigmawaite,
I'm not sure exactly what you're getting at with the comment about not wanting a successful entrepreneur to date your daughter. Successful entrepreneurs are totally hot. I find they usually have a great sense of humor, too. I'd absolutely let my daughters date one (assuming they were all the same age, of course!) However, I'd much rather my daughters BE a successful entrepreneur.
It appears that we are taking some fairly well understood but very different attitudes toward dating! I am well acquainted with both attitudes but assumed just one of the attitudes in my post, for a fast, rough example, the Elizabeth Taylor character in 'The Father of the Bride' with Spencer Tracy and the concerns we would expect for the Tracy character! Yes, these attitudes are now highly politically INcorrect!
But if I am successful as an entrepreneur, then I will want to take a Gulfstream and a pretty woman to dinner and an opera (Italian, French, or German — Puccini, Verdi, Saint Saens, Massenet, Mozart, R. Strauss) in Europe, and in that case for me the woman will be sweet, pretty, meek, darling, adorable, precious, sugar and spice and everything nice, good at cooking, sewing, and cleaning, with fantastic social graces, with a really high SAT Verbal score, and just excellent at music! And if her family is really strict and wants the mother to come along, too, that's okay. Yup, this attitude is wildly politically INcorrect but still held strongly in some parts of the US.
But I'm sure that Brad is not expecting his blog to be a romance site! Sorry, Brad! For me, there's no problem: My wife (sugar, spice, everything nice, piano, voice, clarinet, cooking, sewing, raising chickens, world-class brilliant, Valedictorian, Phi Beta Kappa, 'Summa Cum Laude', Woodrow Wilson, Ph.D.) died, and I will NOT get married again. So the woman (and her mother) get a nice trip, dinner, opera, and conversation and that's ALL!
[...] The Best Entrepreneurs Know How to Fail Fast: by Brad Feld. “Give me the experienced entrepreneur whose last company was a failure 100% of the time. The cliche ‘you learn more from failure than success holds true’, but more importantly the dude that just came off a failure and is ready to go again is super-extraordinary-amazingly hungry for a success.” [...]
[...] The Best Entrepreneurs Fail Fast (Estimated tim to watch 4.5 min) http://www.feld.com/wp/archives/2009/04/the-best-entrepreneurs-know-how-to-fail-fast.html [...]
[...] The Best Entrepreneurs Know How To Fail Fast [...]
[...] work experiences at a startup versus a more corporate environment. He starts by referencing how Brad Feld would “rather back a startup CEO who’s last company was a failure” over “a [...]
Not failing fast enough / often enough is often due to one of two reasons: a culture that doesn't accept failure ("if it's not working, try harder") or an inability to recognize when the current strategy isn't on the path to success.
In the former case, the company is doomed. In the latter, it can be tricky to recognize a "failure" and turn it around on time. I just wrote a post on warning signs – How to Fail Fast: 5 Signs It's Time To Move On – http://www.cindyalvarez.com/execution/fail-fast-s...
[...] any better. Our angels actually had varying advice on this question. Ultimately, I think it was a better outcome for our shareholders to have failed fast with half of the capital we raised, vs. what the next 12 months would have looked like even with a full tank of gas, but again, I am [...]
[...] Why VCs are especially interested in proven entrepreneurs that have just failed is covered here by Brad Feld. Hunger [...]
[...] The first one, Sportner, did not work as expected and, thanks to some discipline, I managed to fail fast. Learning from this great experience, I am co-starting a new one, http://www.intellijuris.com. I will [...]
Brad, awesome post and many thanks. Fail Fast! Today I read this and was at first perplexed. Failing fast doesn’t seem linked to good entrepreneurship. I thought, "if you fail fast, that means your idea was a bad one from the start and should have never been attempted. You’re not a good entrepreneur if you fail fast." However, I thought about it more.
We entrepreneurs are predisposed to attempt things that others call crazy, stupid, and 'can't be done.' It is natural that such personalities would sometimes attempt things that ARE crazy and succeed while also venture into projects that ARE stupid and fail. It is our nature. Sometimes we win, sometimes we lose. Given time it will happen to us all.
Therefore, Fail Fast is saying; "what separates good entrepreneurs from bad entrepreneurs is the ability to recognize a stupid idea even after months of work, sunk costs and tested relationships and say “this isn’t going to work,” “this is stupid” and at that point stop or adapt, rather then stubbornly and stupidly continuing on. Good entrepreneurs are not stubborn and they don’t let their egos and identities get involved in their ideas, projects or businesses. They pursue the impossible, but when too many cards stack against them they have the experience or instinctive logic to stop or adapt what they’re doing and move on to something else, take what they’ve learned and succeed.
With a failure, the dream of success does not die, just the path you take along the journey.
Brock Predovich
http://brockpredovich.com
[...] I’ve never once come across this attitude, but I suppose it could exist. In clear contrast, Brad Feld has said that his favorite entrepreneur to invest in is a successful one coming off a recent failure. This [...]
[...] startup try again after failing? Startup failures can be small or catastrophic. The thing is to overcome failures quickly. Lessons must be learnt. Otherwise the same failures will be repeated again and again. Failure will [...]
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[...] vs. efficiency The two don’t go together. Period. For every guru talking about failing fast, you have five middle managers second guessing your progress, your methodology, and demanding to be [...]
I guess it makes sense – if your idea doesn't pan out – just give up!
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vs. efficiency The two don’t go together. Period. For every guru talking about failing fast, you
I’m definitely not a guru – just a practitioner. I fail fast – a lot!
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Brad / Others – can you give me some quick advice about whether I should pull the plug on my business?
Website is SmarterLeap.com. Concept is to provide aspiring entrepreneurs with innovative, original business ideas (that are pre-screened for things like profitability, scalability, etc.). The ideas come from other people.
Website has been up for about 7 weeks. Business model is membership (people have to pay a monthly fee to get access to the proprietary ideas). Currently get about 1 customer per day. So far I have been unable to develop a community within the site.
Lastly, I have a relatively strong pedigree (Wharton Grad & former VP at HSBC). This is my first try at a web-based business. I have had a great success starting an optical store in Chicago.
Would love to get the groups feedback whether I should start over, or continue on. Thanks in advance for any feedback.
All the best,
Jeff
Well – seven weeks isn’t very long to go after things if you are passionate about it. I don’t know enough about your specific business – but I encourage you to use the notion of “fail fast” to challenge your assumptions. You aren’t going to be successful at 1 customer per day. So – why do you think you are only getting 1 per day? Try some different things and see if they work. If they don’t, “fail fast” on the specific ideas and keep trying.
Jeff – the largest failure now would be to quit after only seven weeks? My advice to you is related to your point about community. Consider working hard to create a community on the non-paid subscription part of your site – open community. Create the culture of give and take while adding needed traffic. Your next problem should be conversion of your users to the paid offering. Good luck!
[...] If you want to hear more about why it’s better to ‘fail fast’ than to cling on to a ride going nowhere, Mark Pincus who founded Tribe which was a bit of a slow fail, and who learned what needed to be learned and has gone on to found and lead Zynga – has some good lessons to teach. You can see him interviewed here. [...]
I love this article , Very good collection of information,thanks.
So, some tip about this issue are welcome and really sorry if my question is very simple.
My answer to this one is “depends.” It depends on the nature of the success and the nature of the failure. I’ve had excellent experiences with both categories of entrepreneur as well as terrible experiences. The worst ones are the entrepreneur who has one success, no failure, and “knows it all”. That often (but not always) ends badly. So – it depends.
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[...] And here are couple other good links: The Best Entrepreneurs Know How To Fail Fast [...]
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There comes a time for every entrepreneur when they need to recognize that it's time to call it quits. The faster they can reach this point, the sooner they can start on their next (potentially successful) venture. The opportunity cost of continuing on a failed venture is the entrepreneur's time; this is the entrepreneur's most valuable asset.
There comes a time for every entrepreneur when they need to recognize that it's time to call it quits. The faster they can reach this point, the sooner they can start on their next (potentially successful) venture. The opportunity cost of continuing on a failed venture is the entrepreneur's time; this is the entrepreneur's most valuable asset.
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[...] more feedback, and keep it up! Yes, it’s true you might fail furiously, but hopefully you’ll fail fast and move [...]
[...] feedback, and keep it up! Yes, it’s true you might fail furiously, but hopefully you’ll fail fast and move [...]
[...] The reasons these failed are instructive and manifold, but thankfully we failed fast. [...]
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each of them had one success and one failure before I funded their third company, which was a huge success.