Failure sucks. Nobody wants to fail. But in the start-up world, most people are doing just that. I’m not sure I’ve read much about “how” to fail, since failure is so depressing and negative. But I’m here to tell you that there is a good way to fail and that there are steps for positively managing the aftermath. I’ve seen it done well, I’ve seen it done poorly and I’ve done it myself, so I certainly have some well-formed views on the topic.
- Thank your investors for their faith and confidence in both you and the mission, and express how truly sorry you are that it didn’t work out.
- Work hard to leave on good terms with all other key constituencies - co-founders, employees, service providers, etc. You don’t need to be best friends, but you should be civil and able to move forward with a clean slate.
- Think deeply about how it went wrong, and write it down. As much as you can in a sitting. Almost a Kerouac-like jag of stream of consciousness related to your multi-year, all-consuming experience.
- Read what you’ve written, clean it up, and share it with others however you like. The process of sharing is both cathartic and can generate some valuable feedback for your future endeavors.
- Look for those in your market space who are successful and whom you respect for how they became successful. Study their attributes and do the differential analysis between your failed firm and them. This is important data for you to think about and ponder for your future experiences.
- Talk to lots of people. Don’t hide. Have breakfast and lunch with friends, trusted advisers and other interesting people. Stay in the flow of energy and ideas. It will renew you during this difficult time of loss.
- Don’t let failure color your perceptions of yourself. Take failure as a valuable learning experience that is merely a step on the road to future success. Whether you do another start-up or not isn’t the point; it’s to use the invaluable data you’ve collected about how businesses work - or don’t work - that you can take with you for the rest of your working life.
While it’s poetic to say “do it again,” maybe that’s not necessarily the right thing for everybody to do. But absolutely, positively, DO NOT LET FAILURE DICTATE YOUR FUTURE CHOICES. If you’ve got the fire in your belly to do another start-up, then freaking DO IT. Few VCs or angels I know view failure as a negative if you’ve failed “correctly.” In fact many, myself included, view it as an important experience as part of one’s personal and professional development. Really.