[PAUL] I define failure as not meeting my own expectations of how I believe I should be as a person others depend on. My disappointment with my own personal failure peaked on the day I reported to prison and realized my life as I knew it, as well as the lives of my wife and children, was irrefutably and forever altered. At that moment, faced with 7 years of incarceration, I did something I did not think I would ever do: I cried.
[FC] A lot of our readers are startup founders or business consultants, like you are. They’ve probably never envisioned a failure resulting in prison, nor I’m sure did you. Often we get into these cycles of failures that we don’t even notice we’re in. What happened with this failure for you, and why did it look like a good idea at the start?
[PAUL] I made 2 mistakes that inevitably sent me to prison: 1) I was a bad guy wanna-be, who associated with bad people and 2) I suffered from hubris – I thought I was the smartest guy in any room and would never be caught. Being the “bad guy” caused such an incredible adrenaline rush, I just couldn’t quit it. That, coupled with my growing sense of entitlement, just made everything seem like a great idea.
[PAUL] That came from the people I chose to associate with. Because I represented bad people who did bad – and exciting - things and profited from those bad things, I eventually came to the conclusion their lifestyle and the adrenaline rush that went with it was a good thing. And something I chose to emulate.
And my hubris grew as I developed into a successful trial lawyer and business man. After experiencing success, I began to believe I could not fail and I was entitled to even more success, even if it came at the expense of others.
[FC] Looking back, were there any red flags you feel you should have noticed, that you’d warn others to watch out for now?
[FC] It sounds like you’ve recovered from some pretty impressive lows in your time. What would be your #1 piece of advice to help others recover from failure?
We took some time this week to sit with FailCon Speaker and founder of RideJoy, Jason Shen. Below, he gives you a taste of some of what he’ll cover on stage on October 21st and the challenges he faced shutting down RideJoy.
1. What have you been up to since Ridejoy? How has that failure informed your present?
Since leaving Ridejoy this summer, I’ve moved from San Francisco to Washington, D.C., to serve a tour of duty as a Presidential Innovation Fellow. I went from working out of my apartment with two guys to working for the US Federal Government in the nation’s capital – it is quite a change.
We took some time out of FailCon prep to interview speaker and reporter Jess Bruder on her personal experiences with failure. Learn more at FailCon SF on October 21st, 2013.
1. What inspired you to write the “The Psychological Price of Entrepreneurship”? How did you go about researching the article?
We’re all familiar with “entrepreporn”: the kind of media coverage that makes startups look hot, shiny and meticulously airbrushed. But the scene is different backstage, where founders often struggle with depression, fear and plain old exhaustion. If they bottom out later, you probably won’t hear about it.
Below is a guest post by Bernino Lind, COO of CloudSigma, one of our partners for FailCon SF 2013. He’ll be discussing letting go of fear to empower continued improvement. He also shares how CloudSigma pulled off 300% revenue growth year over year.
“NO! We cannot go back to the shareholders and tell them that online music needs to be given for free and therefore the cost of licensing is killing the business. Besides – I DON’T BELIEVE IT! And, we promised them bigger than Spotify!” That was two hours before the board meeting, and I was the CTO of this music company. We were out of cash, after having burned more than five million US dollar and spent four years trying to sell an online music product no one really wanted to pay for. The business-plan had obviously failed, the financial forecasts were off by infinite factors (from negative to positive) and very little worked on the commercial side of things. Except – sticking to the plan. Because the founder’s plan and idea was obviously brilliant and the market just not ready for it yet. Besides the co-founders had promised the investors the consequence of the financial plan – millions and millions and so that was what was going to happen. Six months later, the company joined the deadpool. Millions of dollar were wasted resulting in lot’s of upset shareholders and depressed team members.
It’s a Bullshit Business Plan
Only 10% of startups and projects are successful says the rumor - this number is hard to evidence but looking at venture funded startups, the number is 25%  and these are the companies that have been fighting with others to get funded by VCs increasing their chances of survival, so it’s safe to assume that the un-funded startups fail at a higher rate. So what are these winning companies doing differently?
Brett Martin wrote this honest, cool-headed, illuminating postmortem of Sonar, a mobile app that “buzzed in your pocket when friends were near and ushered in a new wave of ‘Ambient Social Networking’ companies.” It’s not easy for a founder to publicly write about his failed product following years of hard work. Brett goes further and walks us through a series of difficult and unfortunate decisions that we all can learn from. Next time you see him, buy him a drink.
This is a preview of a talk to be given by Psychiatrist Michael A. Freeman, M.D. at FailCon, on October 21st. Dr. Freeman works predominantly with entrepreneurs, and thus is especially aware of the emotional and mental trauma they can be faced with. He is also an executive coach and formerly an entrepreneur and CEO himself.
Last week I spoke with an entrepreneur who was in despair because the family members who invested in her company’s “friends and family round” were now suing her due to the company’s poor performance. A lifetime of love, good will and family connection was now on ice as a legal intermediary interceded between the founder and her family - none of whom will speak to her at this time.
Try to imagine the stress that is caused by sinking into intense family drama, amplified by resentment, guilt, shame and humiliation at the very moment that you need to be fully focused on getting your new venture off the ground. Strong emotions intrude into your day, derailing your focus on the business. Time is wasted through cumbersome “investor relations” processes. Even more impactful is the fact that as an entrepreneur, you need to count on friends and family for friendship and moral support when the chips are down. It’s like sailing a ship that has a hole in the hull and water is rushing in.
Could this nightmare have been prevented? Probably.
You meet someone through a mutual friend. Form a startup. Begin working on the product. Raise some money. Hire a couple of team members. Sign-up for a startup conference to showcase the product before it’s totally done. Manage to get the prototype to work just hours before you go on stage. Demo your product in front of 800+ venture capitalists, journalists and some large companies. Find your first customer at this very event, and close your first sale, to the tune of $300,000.
All in 9 months.
Sounds like a recipe for success, doesn’t it?
Well, in my case, it was the opposite. I will call this “false positive #1.”
I’ve heard time and time again from hardened entrepreneurs, especially those who experienced failure that getting the right team together with the right collaboration is critical to success AND that there’s a myth that you can sort out teaming later (i.e., after hitting that first milestone). If the environment is poisonous and/or people just aren’t getting along, your start-up may implode before you get there. I recently met with an entrepreneur who shared a story about how he and several co-founders launched a start-up in the health care technology space, but that they literally couldn’t get out of their own way. They spent so much time disagreeing about stuff, that they never really got around to much execution. Ultimately, they had to shut down the business—and to this day, the entrepreneur said it was a great idea, but it was the team dynamics that killed the start-up.
Orrick, a sponsor of this year’s FailCon, put together this incredible post on the most common startup mistakes they deal with each year. It’s worth a read before you find yourself tripping on the same issues.
Early last year, we hosted an event on “10 Startup Mistakes to Avoid” and brought in some high-profiled founders and investors to share their experiences (you can read the entry here). Fast forward to present day, while the startup world has changed a bit, the general “rules” and advice for entrepreneurs remain the same. Earlier this month, we decided to do another panel on startup mistakes to avoid, call this Part 2 if you will. Our stellar lineup of panelists this time around included Rahim Fazal, CEO & Co-Founder of Involver (which was acquired by Oracle in 2012), Ben Jacobs, CEO & Co-Founder of Whistle, Gentry Underwood, CEO & Co-Founder of Mailbox (acquired by Mailbox earlier this year), Aileen Lee, Founder of Cowboy VC, and Kent Goldman, Partner at First Round Capital. So what common startup mistakes should entrepreneurs be wary of? Here are a few golden tips to keep in mind.
Nathan Gold, founder of democoach, is the official speaking coach for FailCon. He is also a conference mentor and will be giving a workshop for any attendees interested learning how to give a better pitch. Below, he outlines the 5 most common presentation mistakes he’s seen and 4 tips to avoid them!