Fail Spectacularly to Win Big | Episode 7

I think that if we don't fail, it's an indicator that our dreams are not big enough.  

This is the Lunar Startups Podcast and I'm your host, Twila Dang.

No entrepreneur wants to fail. It's not an enjoyable experience. It's not the expectation you have when you take this kind of risk. When putting yourself and your ideas out into the world, the assumption is that you will succeed. At the very least, you will try your very best. No one goes into an entrepreneurial venture looking for failure, but entrepreneurs always know deep down that it is a possibility. 

This is Lunar Startups Program Director, Jeffrey Aguy, talking about cohort one and describing entrepreneurs in general. 

Aguy: They're entrepreneurs. They're like entrepreneur entrepreneurs and I don't think they would have ever started a company if they didn't know that failure was a possibility. 

Failure brings fear to the surface. All of our insecurities, our doubts, our shortcomings feel exposed for the world to see and judge. Fear of failure is a constant in the life of an entrepreneur and this isn't just about ego. It's also about family and friends or investors or customers—anyone who you could potentially let down or harm if your business doesn't succeed. 

This is Connor O’Phelan from Dojour. 

O’Phelan: It's always failure. I'm always afraid of failure as a Founder. The more you do it, the less afraid that you get so it's kind of like softening that aspect of starting a business. You take a lot of risks as a Founder as well with your family and friends and if it doesn't pay off in the traditional way, it can be taxing mentally on you. And again, I've experienced it before so I’m trying to learn from my mistakes and not have it happen again, but it's always a possibility. 

While we know that any failure can be painful for a business, we wondered, ``Is there a difference between small or big failures in the life of a startup?” The first thing we noticed is the concept of failure is as wide and varied as the concept of entrepreneurship. Lunar’s Jeffrey Aguy has an optimistic view framed around a favorite quote and the opportunity to learn.

Aguy: One of my favorite quotes is from Nelson Mandela where he says that “I never lose, either win or I learn’. I look at failure as learning opportunities—opportunities for us to grow. Opportunities for us to measure where we are and opportunities to see if our dreams are big enough. I think that if we don't fail it's an indicator that our dreams are not big enough. I think failure is a realization that we have an opportunity to learn and that the ideas that we want to bring into reality, reality may not necessarily be ready for it. At the same time, we have the power to create what reality is and so I look at failure as an opportunity to learn and as an opportunity to grow.

 Jeffrey's focus on learning from failure also helps him to place failure in its proper perspective and find ways to recover from it, regardless of the size. 

Aguy: I think that big and small are from the perspective of how long you think it will take to recover, right, or how much it slows you down. And when I think of a big failure, I also think of...if you are true to who you are or true to your values, I think a small failure is 

‘Hey, we didn't land that client’, ‘Hey our MVP didn't do what we thought it would’, ‘Hey, the customers are not really responding in the way that we think’, ‘Hey the investor we thought would for sure invest into our company didn’t. But I think the bigger failures are when you are not holding true to your values—which all of us will have moments like that—and then we have to go back to the drawing board and ask ourselves ‘Who are we and who will we be in the future?’

Muhammad Abdurrahman from ClutchSOS shared a view based on the idea of making progressive mistakes that hopefully move his company in the right direction. 

Abdurrahman: I told one of our investors that investing with me, he wasn't guaranteed anything. He certainly wasn't guaranteed a return. What he was guaranteed was that I would take the money and I would use it to make as many progressive mistakes as possible until we got to something that went well. What he was getting with me and the fact that I have experience wasn't that it would just be a sure thing, but what he was getting was somebody who would know how to fail experimentally and had a good sense for things that were worth failing on versus others.

Among the services and support Lunar Startups provides to the cohort, one of the staff’s most important roles is helping the founders keep their perspective when things get rough. Entrepreneurship can be overwhelming. Often, the daily work of building a start-up can make you lose sight of the big picture—why you wanted to start a business in the first place. 

Lunar’s Managing Director, Daniel Steer, explains.

Steer: A lot of the same concepts, personality traits, or challenges or other things that our cohort Founders are facing, I can identify with and also disconnect from to a certain extent to be able to help them see the forest through the trees. So I think that additional layer of distant my role and asset in that process is having a little bit more of that so that I can help them see through the thick of it. When they're having a really bad day, when they feel like the fires are not getting put out at the rate that they need them to, I can remind them that it's going to be okay. We've seen this before; you're going to be fine. 

And sometimes just a little bit of that assurance and validation and coaching, is exactly what they need to go, “Oh, okay. This isn't the most important thing”. 

The language of failure or the language we use to describe failure is just as important as our understanding of failure. Sometimes to entrepreneurs, criticism is the language of failure. But criticism can be a powerful tool to grow. 

This is Jasmine for Monicat Data. 

Russel: My name is Jasmine Russel. I'm the CEO and Co-founder of Monicat Data. Your brand is always the biggest thing. How do you actually talk about it? But that's where you need the criticism of people. So that's something that I wouldn't trade. 

I've loved the criticisms that we've gotten so that we could change that. So I had to really take some time and think about that. But with Monicat, I think there's of course like wanting to have more cash flow—that's always a thing, especially within the first two years. For us, the first year the cash flow wasn't an issue because we were getting hit with so many projects right in the beginning. But then the second year—last year—that's where we really started to see the need for strategy. 

So I don't think I would call that like a failing, rather just like, we need to actually have a sales process. We need to actually talk to people; we need to reach out. I don't think we've experienced a true failing yet. But also I think it's because we have a few things going on at the same time, where if one thing isn’t exactly going the way we want it then we can kind of transform something else. I try to always look at it as improvements with my team so that they don't get discouraged. 

We'll be right back after the break. 

Welcome back to the Lunar Startups Podcast.

Failure can come at you from anywhere. It can be from an external source that is out of your control.

Caroline Karanja from 26 Letters works to help businesses in the tech sector become more inclusive. But what happens when the training is done and it's time to implement her changes?

Karanja: I always get a little bit concerned about making sure that the recommendations and initiatives that we have in our platform and our education is actually 

being followed through. I would really want people to actually take the things that we're doing to heart and see how they can use them within their organizations or personally to grow. I guess one fear is people not actually, you know, following through on those things because it has a very real effect on the fellow employees. It has a huge effect on other people. And so when we talk about system change—actually making those changes to the system, not just acknowledging that like, ‘Oh, these are some things we need to do’.

Failure can also come from an inability to see mistakes you're making within your business. With so many moving parts in a start-up, it can be all too easy to create conditions for failure. Jasmine from Monicat learned a lesson about pricing.

Russel: Its so many things. I mean, it could be how to make a proposal correctly [or] how to price yourself correctly. I think being in a service business, just having a set price is great. It's like we tried to have a set cost for a certain project or certain tasks and...now it's like we have flat fees for what we do per hour versus kind of these sketchy fees per project. So, pricing is a big thing.

Muhammad an Aaron from ClutchSOS discussed what they see as the double-sided nature of failure in the startup ecosystem. A world where a lot of attention is focused on dynamic success without honest discussion of the reality of failure that plays out every day.

Free: You know, there's kind of this cult of loving failure right now in startup and it's kind of true and a lie. Because when you talk to entrepreneurs—no matter where they're at—they're talking about how hard they're crushing it and how just everything is going awesome as if they don't get hit and dinged on the way. 

Abdurrahman: Yeah, there's definitely a lot of failure in the background. 

Free: There's so much failure in the background. I've been at parties where entrepreneurs like, ‘I mean, we had some trouble but you know, we work through it now. Our sales projection is looking this, that, and the other’ and then afterwards we're at a bar and he's like ‘I don't know what I'm going to do’. It's like wow. There's a double-sided element there. On the one side, nobody wants to work with a company, buy from a company, or invest in a company that's going to be gone tomorrow. 

One of the things we were most curious about was the cohort’s understanding of failure. Is all failure the same? Is there a connection between big and small failures? The guys from ClutchSOS focus on small failures and how they can compound into real problems if you don't know how to measure and evaluate your progress along the way.

Abdurrahman: And so there's a difference in failure. The kind of failure we're talking about here is ‘Okay, we're going to try going after this market, we're going to put…$200 towards going after this market, we're going to see how that $200 does and if the $200 doesn't do at least as well as we expect or close to it, then we’re not going to put $400 to it’. 

Free: Yea and I think that’s small failure.

Abdurrahman: That’s small failure. And that's great failure. The other kind of failure is, you know, we have office space here at our crazy discount, right? The other failure would be to say ‘You know what, we're going to blow $2,500 a month on some office space, right?’ Which I mean maybe that's cheap in some other parts of the area but in the Twin Cities that’s a house—that's crazy. But, I’ve seen people do it. Like, I've heard about stories of folks in the community who took investment checks and then use part of it to buy a car and it's like ‘Is your business driving?’ What are you doing bro?

Free: Is this Lyft? 

Abdurrahman: Yeah, I could totally get it if you're trying to start up, you know...right but that's the kind of that's the kind of failure that, I mean, I promise that we'll do the the kind of like ‘We're going to test this’.

For Jasmine of Monicat Data, big failures are rooted in core business practices. Recognizing an area where your company is not performing well and making adjustments to improve it—but patience is important too.

Russel: But with big failures, I think that's where you really have to readjust. I guess if I had to put a name to failure based off of what we're doing, it would be how we communicated our brand in the past versus what we're doing now. But that takes a lot of time to get to. It's harder just to say we're not speaking our brand properly to people and we need to completely change it. It's going to take a few months for you to get there.

Aaron Free from ClutchSOS believes that big failures can be hard to recover from over time, especially when you lose sight of what you were trying to accomplish. 

Free: I think big failures are harder to bounce back from. I think you need to have that little bounce on the small failures so you don't have to do the big bounce on the large failures. So sometimes it can be hard to, you know—identifying. There is that trick of identifying that this is a little failure I’m having here and I shouldn't let this compound—I shouldn't spend three years on this. And then if you’re, you know, fifty thousand dollars in debt and then realize like, ‘Oh the this isn't a good idea’. So, you know, sometimes it 

can be tricky to rebound—to know that you need to move on.

What if failure is caused quite simply by something you fail to see? Sometimes we’re too close or too enamored by our ideas to see that there's trouble ahead. Aaron from ClutchSOS has some salient advice about not falling in love with your ideas.

Free: I think you don't want to fall in love with your idea. I've learned and I've been taught that you don't want to fall in love with your ideas. I think a lot of times as an entrepreneur, you can test something out or you can find a new market or you can figure out a new way to think about your product and you can just be totally in love with it. And then you can think about the ten years your directory and then like ‘Oh my gosh...this is like the rest of my life’, right? But sometimes, you know, sometimes you have to learn to say ‘No, that's not actually how this is going to go and, you know, we should be focusing on something else’. 

Abdurrahman: Being in love with your idea is fine, but if you can objectively say ‘What do I need this business to do?’ ‘What are the objectives?’ ‘What am I trying to achieve?’ 

And if you go ahead and you look that up and you evaluate it and you evaluate it against your other ideas, you're going to see if one's a winner or not. Now you might have some bias that weights those things. When I when I started my first reasonably well-known company in the Twin Cities, Remo Health, when I started that I had a tableau of all the different ideas I was working through—including some that were kind of ridiculous. I waited and I weighed the issues and I decided this is the best opportunity. If you're able to do that, then you can junk the ideas that are really seductive but probably not worth your time.

Free: Yeah, a lot of times they're great ideas. But you know, maybe you might not be the right person to do it. 

Ultimately failure is a fact of life for entrepreneurs and as much as the idea of failure looms large over any potential startup, it will never be as large as a spirit of individuals choosing to pursue the dream of entrepreneurship. They may fail but they can always get back up.

Lunar’s Program Manager, Jeffrey Aguy.

Aguy: And I know for a fact that none of them would quit their company because they've had a failure. We don't do as much teaching as much as we do learning together about failure. How do we teach the cohort companies to bounce back about failure? 

One of the great things that I would say is that we haven't had failures that are so big that they're may necessarily need to be a “bounce-back”. We teach the cohort companies to get up again. 

Thank you for listening to this podcast. 

If you'd like to learn more about Lunar Startups or apply for an upcoming cohort, check out the website at lunarstartups.org. 

We'd like to extend a special thank you to the Glen Nelson Center at American Public Media, Knight Foundation, and Osborn370 for their continued support of Lunar Startups.

This podcast is a Matriarch Digital Media production. Executive Producers: Twila Dang, Brittany Arneson, and Josette Elieff.