Lessons in Failure

Sometimes in startups the biggest failures can look a lot like successes

I've come to a funny realization about failure. Sometimes in startups the biggest failures can look a lot like successes. 

The last company I built, Joymode, was a failure. We sold the company for less than we raised. The deal closed while quarantining so I had nothing but time to think about everything that went wrong. In auditing all the little decisions we made over the five years of Joymode, I mostly feel pretty good. There was plenty we got wrong but we iterated fast and executed at a very high level. 

With the benefit of hindsight, I believe that if we had picked the right choice at every fork in the road and then executed that choice perfectly, the business could have grown to 2-4x the size we were. The problem is that the business we were building needed to be many times bigger than that. Even if we did everything right, I do not think there was enough demand to support the level of growth we actually needed. 

Leaning into my obsessive founder mindset, I couldn't help but run a similar process for Klout. Fuck me. There is so much I would do differently. I don't regret selling the company. It was a life-changing outcome. I regret all the little decisions that put us in a place where selling was the best option. With where the internet and society are today, it's not hard to imagine scenarios where a service like Klout is a foundational internet technology, 10-100x the size of the business we ended up building. The Joymode failure is actually tiny compared to this in terms of missed opportunity. I get reminded of this literally everyday as people continuously reach out to tell me they wish Klout still existed. 

So I get the recognition of being a "successful" entrepreneur because I built Klout. I mean, I'll take it, but I've come to realize that I failed much harder in building that company than in the one I had to sell for less than we raised. It also goes to show how critical it is to pick the right idea. Right idea but not reaching full potential -> "success." Wrong idea but great execution -> "failure."

A venture-backed startup is a bet that the future will look a certain way. In the case of Joymode, we were betting that the very concept of ownership would change and that people would prefer to access common everyday items rather than own them. That ended up being wrong at the scale we needed. Klout was a bet that social media would turn individuals into broadcasters and that the internet would shift from page centric to people focused. Got that one right. I guess that's the thing with bets, you win some and lose some. 

"I can't believe you want to do another startup," friends who have been through these battles say to me. I feel like eventually everything will align. Right idea, right timing, right execution, etc. and I want to be there when it does. So, I keep making bets and embrace all the types of failure I've experienced. I am sure I'll also find new ways to fail and that’s scary. But, the idea of not trying sounds so much worse.