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Hi, I’m Brad Feld, a managing director at the Foundry Group who lives in Boulder, Colorado. I invest in software and Internet companies around the US, run marathons and read a lot.

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Have A Wake For Failed Startups

Comments (20)

In my upcoming book, Startup Communities: Building an Entrepreneurial Ecosystem in Your City, Mark Solon (Highway 12 Ventures) tells the story of a “startup wake” in a section where he gives an outsiders view of the Boulder startup community.

“I’ll never forget one of my early visits to Boulder. After a full day of meeting with startups, I was asked by the entrepreneurs I was with if I’d like to join them and some peers for a “special dinner.” “Sure,” I replied. “What’s special about it?” “It’s a wake” they deadpanned. That dinner showed me that the fabric of this small mountain town was different than anywhere else I’d been. Turns out that earlier that week, a local startup had decided to shut down and the “wake” was the startup community’s way of showing these young, fragile entrepreneurs that it was okay to fail – that the honor was in trying.  They made those founders feel good about themselves in a moment that was critical in their development as entrepreneurs. As an aside, in this case the founders didn’t run out of money. After giving it their best effort, they realized their business wasn’t going to be the great success they had envisioned and they decided to return their remaining cash to their investors. The epilogue of that dinner is that the founders had roles at other local startups within a few weeks.” 

I was thinking about this last night as I was emailing with an entrepreneur who’s company is struggling. Failure is a normal part of the entrepreneurial cycle and it’s talked about regularly. There are endless stories about the entrepreneur who failed and then created a monster success for his next company. But there’s not enough discussion about how startup communities should embrace failure.

I think this is especially important for first time entrepreneurs in a community. It’s easy to prognosticate about failure when you’ve been successful; it’s much harder to go through it. It’s even more painful when it’s your first time and everyone around you seems like they are doing great, even if they aren’t really but are just putting on a good act. So a natural instinct for an entrepreneur on a failing path is to turn inward, shut down, and withdraw.

If your peers in the startup community (the other entrepreneurs) don’t notice, it’s even worse. Failure sucks – it’s often emotional, physically, and financially painful. When your friends suddenly ignore you, avoid you, or don’t have time for you it just reinforces the pain.

Having a wake for a failed company can turn this around. If you are an entrepreneur and observe an entrepreneur in your community failing, do something about it. Organize a group of entrepreneurs to have a wake. Surprise the entrepreneur who is shutting down his company and take him out. It doesn’t have to be a debaucherous, alcohol laden evening (although it can be) – rather do something that you know the entrepreneur in question will enjoy and appreciate. A nice meal. A quiet conversation. A show of support from his peers. Encouragement. Acceptance that failure is part of the entrepreneurial process.

If you are an entrepreneur in a company that is failing, don’t be ashamed. Most startups fail. What matters is how you handle it and what happens next. Let your fellow entrepreneurs throw a wake for you, let the moment happen, and then get on with the next thing. Life is hopefully long. And, for all the entrepreneurs who are leaders of their startup community, make sure you do everything you can to make sure everyone knows failure is ok.

  • Jason Hull

    Isn’t it interesting how we try to encourage failure in businesses as a learning point, but are afraid of failure as a startup? I suspect this has to do with a couple of reasons:

    1) Usually, the financial implications of failing in a startup are bigger. You’re, in a sense, putting all of your eggs in one basket, so failing to financially prepare before you get going in a startup can mean near or actual catastrophic consequences.
    2) The Zeigarnik Effect leads us to want to finish what we start. Without proper closure, such as the wake you describe, that failed business continues to rattle around in our heads telling us “I coulda been a contender.”

    Oftentimes, we learn more when we don’t succeed than when we do succeed, so embracing risk should mean being able to embrace failure equally.

  • http://www.onlineaspect.com/ Josh Fraser

    Andrew Hyde did this for us when we shut down EventVue and it meant the world to us.
    http://andrewhy.de/eventvue-joins-the-deadpool-with-class/

    • http://www.feld.com bfeld

      Yup – it’s the example in the book!

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  • pg

    Great way of nurturing talent and keeping spirits up — this is the sign of a truly mature startup ecosystem.

  • http://www.facebook.com/people/Nari-Kannan/632089281 Nari Kannan

    Great blog post, Brad! Sometimes this is the difference between communities that have successful entrepreneurial eco-systems and those that don’t! It’s not in buildings that are fibre-enabled or thousands of students doing computer science but it’s the ignominy of failure that holds many ecosystems back from success!

  • http://www.recruitloop.com.au Michael Overell

    Thanks Brad – really enjoyed this post. We held a ‘wake’ recently for a friend’s startup in Sydney. Tough after the 2 years (time and money) he put in; but inspiring to watch his reaction.

    I think there’s an attitude preventing more widespread celebration of failure: Startup Bravado. You just prompted me to share some thoughts -

    Avoiding Startup Bravado: http://www.moverell.com/post/27981562578/avoiding-startup-bravado

  • http://byJess.net/ Jess Bachman

    Great idea and very inspiring. Also a good recruiting strategy… though that might be sleazy.. or not.

  • James Mitchell

    A ton of VC firms will be going out of business in the next five years, as LPs concentrate their funding into the brand name VC firms. I wonder if there will be wakes for failed VC firms?

    • http://www.feld.com bfeld

      They usually just slowly fade away.

      • http://www.danjberger.com Dan Berger

        so do startups though… the death of a startup is very personal and often happens over the course of a period of time instead of instantly

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