Some of the world’s most significant problems, such as the projected need to generate 4 Quadrillion BTUs of new energy by 2020, will require breakthrough innovation to address. Should we expect to tackle these problems and get it right the first time? If not, how can we encourage learning from failure as opposed to burying it?
Last week marked the conclusion of the Fall 2013 Startup Secrets series – a series that was born out of trying to help entrepreneurs learn from the mistakes I made as an entrepreneur. As I reflect on the series, the theme of converting failures into learning experiences is one entrepreneurs really need to take seriously.
Being able to talk about failure – and learn from each other’s experiences – is a good first step. I’ll start the ball rolling by sharing three of my biggest mistakes and learnings as an entrepreneur and CEO for the first twenty-one years of my career.
1. Too Much Emphasis on Fundraising
As an entrepreneur, I was tempted by the availability of capital and found I was good at raising money and so sometimes it came easily.
Easy money isn’t always good money. It can be a mirage.
I used to be proud of the fact I’d raised over $100m. I now think at least some part of that was a mistake. Because at times, fundraising both consumed my time and the money sidetracked our business. It was a mirage.
In the end, the only money that really matters is the money that comes to you from repeatable customers.
VCs have no job if they can’t invest and their motivation may take you off track by convincing you to take more money than you may need. Instead, as an entrepreneur, think carefully before you embark on fundraising. Do you really need the money and for what and when? Or are you just being tempted by the Money Mirage (see related article published here)?
And even if funding can be easily attained, do you have the discipline to prevent spending ahead of the understanding of what problem you are solving for whom? Or the actual market need? Or hiring too far ahead of the opportunity? Of course, funding can be a critical resource to build your business and in that vein, see our Harvard iLab workshop on “Funding Strategies to Go the Distance” below. Also, an interesting case example tied to fundraising at Endeca can be found with the founder Steve Papa on video at Harvard here.
2. Misguided Hiring Focus
With a lot of cash in the bank and a big opportunity to go after, it was exciting to think of hiring the best and the brightest. But one of the greatest mistakes I made was to think about only hiring people who were incredibly talented. I was certainly lucky enough to do that and have gone on to see many of my early hires become great entrepreneurs, CEOs and huge contributors in the industry. But I’m sure they had that in them anyway, and the question is: how many people does one actually add any value to, versus sidetrack, or worse still, burn out along the way?
While many people do this, hiring based specifically on skills doesn’t translate into happy or productive employees. Instead, I’ve learned to ask prospective employees questions like, “What are you passionate about?” It’s important to hire people who will not only be able to do the job but love and be passionate about their jobs for their reasons. This is critical to enduring motivation and organizational success.
Furthermore, if you can create a clear and consistent culture that not only attracts but retains and binds the type of individuals to a common purpose, everyone can work in a harmonious environment to turn your venture into a successful company. Some hiring techniques and considerations that have helped me can be found in the following presentation:
3. Fear of Focus: Lacking a Clear Market Segment Focus
I love painting a big vision. But in the end, it’s meaningless without strong execution. And one of my first mistakes in that regard was jumping into building a product without first thinking about the very specific group of users the product was going to address. Even with the new lean startup methodology of MVP, if you address the entire marketplace, you will likely find that customers have a spectrum of very different needs.
The key is to find an initial segment where there are an identical set of needs that you can address in a repeatable way. This is what I like to refer to as the Minimum Viable Segment (MVS) [related article linked here]. Additional details on MVS are shared in the below video:
Like me, many entrepreneurs fear losing their bigger vision if they focus. However, it often plays a critical role in any venture’s success as you translate ideas into execution.
I’ve made and continue to make so many mistakes, there are hundreds more I could share with you. However, I don’t fear them and see them all as learning opportunities upon which to share and build. So my greatest Startup Secret is that fear of failure, while natural, simply needs inverting.
In my world there’s room for this, as we want to make a difference in meaningful ways to solve big problems. If there’s room for this learning in your world, tweet about Startup Secrets, encourage others, and share your mistakes and learning in the comments section. Together we can make an even bigger difference.