10 Reasons You Need to Fail Before Funding Your Startup

10 Reasons You Need to Fail Before Funding Your Startup

 

You’ve been in this scenario before: someone – be it a stranger, friend, or family member – approaches you and tells you about this amazing idea they have for a new product or service. You may nod your head and agree that it sounds like a fantastic idea. You might even push them to do something more with it, but overwhelmingly the chances are they never pursued the idea past an initial conversation or two. If that was the case, chances are that person didn’t possess the drive needed to truly initiate and maintain the momentum needed to found and lead a startup.

 

This is the first failure of startups: not being started to begin with. While it’s true that somewhere between 70-90% of startup ventures and small businesses end up failing, the most common reasons widely vary depending on who you talk to, and when. One of the most widely talked-about top reasons for this is a very simple but fatal mistake fledgling entrepreneurs frequently make: seeking and accepting outside funding too early on. Thinking logically, it makes more sense to have the plane fully built before we attempt takeoff, but the road to startup success is not a logical one – it is a messy, chaotic graveyard littered with the dreams of those who did not learn from their mistakes or failures.

 

If you truly want to traverse this landscape, you are going to need to be able to not only build but make critical modifications to your plane while you are flying it.

 

That’s why I’m here with you today to talk with you about failure, and why it is absolutely necessary for you to grit your teeth through more than one failure before you can think of scaling your startup through outside funding.

 

1 ) Fear Fearlessness, not Failure

 

Can you tell the difference between fearlessness and bravery? If you can’t, you aren’t alone. For thousands of years, the archetype of “The Warrior” in our subconscious has been classified by societies as both fearless and brave. While many may have certainly possessed both traits eventually, the two are not a package deal.

 

Fearlessness is the absence of fear, often viewed as an innate inability to possess fear.

Bravery is the ability to acknowledge one’s fear and push onwards in spite of that fear.

 

In 2011, Japanese video game developer FromSoftware released a dark action role-playing game “Dark Souls.” The title rapidly grew in popularity with gamers around the world due to its innate difficulty and relentless punishment of the player for making even the slightest mistake or miscalculation throughout the protagonist’s adventure, and to this day leaves even seasoned video gamers red-faced and raging at the game’s unapologetic frequency of unseen traps, overpowered enemies, and random “invasions” from other online players. Dark Souls is so infamously difficult that the bundled version of the game with all available downloadable content is even called the “Prepare To Die” edition.

 

Despite this, the game is also critically and publicly revered for its breath-taking atmosphere, unique settings and characters, and rich lore deeply rooted in themes of eastern philosophy. The best part? Upon beating the game, the player is given a choice: start back from your most recent save, or continuing playing in “New Game+” mode, which allows one to keep their customized character’s weapons, armor, and most items, but greatly increases the health and damage dealt by enemies.

 

The game and its subsequent sequels are titles now synonymous with the overcoming of fear and failure. In fact, the series has even been acclaimed to help those suffering from depression or anxiety to cope with or – in some cases – even overcome their ailments.

Failing is scary. It leaves us feeling alone and hopeless. Everyone fails at some point in their life, some more often than others. The sooner you fail, the sooner you will be able to pick yourself up and try again. Each time you do this, you learn a little bit more and get a little bit better.

 

2) Become Familiar with the Unknown

 

“The oldest and strongest emotion of mankind is fear, and the oldest and strongest kind of fear is fear of the unknown.” – Howard Phillips Lovecraft

 

As a child, I had a horrible fear of the dark. I could not make it to bathroom three feet from my own bedroom door in the middle of the night if there wasn’t some vibrant source of light to illuminate the path. My mind would conjure images of some monstrous beast with gangly limbs, beady eyes, and a dripping maw filled with serrated teeth lingering just beyond the void of the pitch in front of me, waiting for me to take a single step outside the familiar comfortable bubble of my room.

 

As an adult, I realize now it wasn’t simply the dark I was scared of, but the unknown. Some anthropologists have concluded that what many chock up to as a child-like “fear of the dark” is actually an evolutionary trait that remains in our genes from the early days of our species as hunter-gatherers, ever on the look-out for nocturnal predators.

Humans today have evolved to where we very rarely now have to worry about the predator lingering just beyond the threshold of the darkness, but there are still remains within us a primordial fear of the unknown. The more familiar we become with the situation of failure itself, the easier it becomes to pick ourselves up and carry on after we fail. We teach ourselves that failure is not indeed the worst-case scenario. By creating your own mental cushion to persevere in spite of your fear, the unknown becomes more familiar and less frightening to venture into.

 

3) Use Failure as a Guide

 

Think of a time when you truly wanted to obtain something, no matter what it was. Did you get it? If you didn’t get it, were you bothered by it? If you weren’t bothered, the chances are you didn’t actually want it as bad as you thought you did, and you likely changed course to focus on obtaining something else you wanted.

 

Pandora Radio, one of the earliest success stories in contemporary music streaming software, did not get there overnight. Founder Tim Westergren went through a grueling near-decade of revising and changing his entire business model, during which time he had maxed out eleven credit cards, generated $500,000 in personal debt and $2MM in back payroll, and faced 5 employee lawsuits. Despite being founded in 2000, it wasn’t until the smartphone boom of the mid-2000s that Westergren’s target market finally accepted his product.

 

 

Failure is not a destination – it is a fork in the road. It allows us a stopping point to decide if this path is truly the one we wish to take, or if it’s time to change course and try down a divergent path.

Some may see you changing paths and call it a waste of time. You may even tell yourself this, too. So long as you retain the knowledge and experience you had from the prior failure that brought you to that initial crossroads, to begin with, you have to remind yourself: it was never a waste a time. You will continue down that other path a little bit stronger and a little bit wiser than before.

 

4) Failure Builds Strength, not Weakness

 

Not everyone is born innately resilient. It is more common than not a trait taught to us by our environment and surroundings as we grow into adulthood rather than basic human nature. Studies on school-age children have shown that presenting them with creative and constructive ways to overcome challenges is essential for allowing children to grow into adults who are able to set and achieve personal goals.

The important takeaway, psychologists agreed, on these studies was that encouraging decision-making skills for children to acknowledge, reflect, and build upon their short-comings built traits of perseverance in the face of failure. This, in turn, leads to presenting children with the beginnings of a growth mindset: a way of assuring oneself that developing abilities over time through hard work leads to the greatest reward.

Just as those who are fearless are merely fearless and not necessarily brave, those who are strong are merely strong and not necessarily resilient. Although strength and fearlessness are often viewed as valuable traits to possess and ones many people seek to obtain for themselves, there is no magic pill to take in order to immediately become stronger, just as there isn’t one to immediately become successful.

Ask yourself: would you rather be born strong and never work out a day in your life, or would you rather push yourself day-in, day-out at the gym to see and feel how you are becoming stronger? If you say “born strong,” you can stop reading here because you missed the point harder than the Atlanta Falcons missed it in Superbowl LI.

The next time you feel you have failed at something, do not be insincere with yourself or devalue your attempt. Instead, reassure your effort and tell yourself that the next try will make even more progress. Resigning in the face of adversity is a weakness. Resilience in the face of adversity is a strength.

 

5) Use Your Failures as Stepping Stones

 

“I didn’t fail 1,000 times. The light bulb was an invention of 1,000 steps.” – Thomas Edison

In my junior year of high school, I decided to join the Jazz Band. I did this with zero understanding of music theory or knowledge of how to read sheet music – I had simply taken a few drum lessons in the past and had a basic kit I practiced on at home, much to my baby sister’s dismay. When the first day of class came around the instructor asked us which instruments we played and told us to go to the respective spots in the room where our instruments were found. Then he told us which piece we were going to play and in which key.

I looked at the sheet music for the song’s drum track and, functionally illiterate, and told myself, “whatever, I’ll just wing it.” After all, I did know how to play drums, just not the finer details of music theory. What ensued was to-date the most disastrous and embarrassing dumpster fire I have ever found myself in the middle of.

Not three seconds into the piece the entire class stopped and stared at me. “I thought you said you played drums,” the instructor asked me, “but you can’t read music? Why did you join a band class then?”

Red-faced and sweaty-palmed with embarrassment, I took a seat on the far side of the room and sulked for the next half hour. After class, the instructor came up to me and told me that he would let me drop his course and sign me up instead for a basic one in Music Theory. I listened to his advice and followed his instructions, and at the end of the semester, I had passed Basic Music Theory with an “A” grade and readily registered for the following semester’s Advanced Music Theory class.

 

Although I rarely used the knowledge I gained from those classes outside of high school, taking the path of an undergraduate Philosophy Major who eventually went out to become an MBA graduate student, I never forgot the lessons learned from the first day in Jazz Band: being really bad at something is the first stepping stone towards eventually being better at something.

 

 

 

 

6) Failure Breaks Entitlement but Builds Accountability

 

There is no – I repeat – no place in entrepreneurship for entitlement. Entitlement is a slippery slope that often leads to an inflated ego and a subjective feeling of inherent self-worth over others.

 

If you’re a fan of Gary Vaynerchuk’s content, you are likely more familiar than most with his beliefs on entitlement and success. One of his favorite phrases to use when it comes to entitled entrepreneurs who haven’t experienced the downfalls of failure is, “you haven’t been punched in the mouth yet.”

 

When you suffer failure – whether single or multiple failures – you build resilience. Part of this is due to the proverbial gut-check suffered to your ego, breaking down feelings of entitlement to success and in turn building feelings of personable accountability.

 

Being accountable to yourself will not only force you to take ownership for the good and bad within yourself and your venture, but it will also demand you set expectations for and build trust in yourself. It will force you to define the reality of your situation and list your options before choosing the one best for you moving forward. Accountability is where self-empowerment is born.

 

Whether you are building your startup by yourself or with a team, the number and degree of failures you suffer along the way will foster accountability to yourself, your team, your company, and your clients. Cultivating accountability within yourself will also aid in the development of empathy and honesty: two of the most respected traits customers wish to see from companies they purchase products and services from.

 

7) Failing Forces Founders to Evolve

 

The reported 70-90% failure rate of most startups is a daunting factor that stops many wannabee entrepreneurs from beginning their venture in the first place, but when a startup does fail, the founders and stakeholders too often blame the wrong thing.

 

“Did we fail because the idea wasn’t innovative enough? Was it because we entered the market at the wrong time, or maybe we didn’t understand our target market as deeply as we should have?” Often times, wherever the blame falls it falls on the wrong aspect of the startup instead of the one where founders do not want to place the blame: themselves.

 

Founders who believe they have their business model and market all figured out will refuse to budge, refusing even constructive criticism of their venture and instead only seeking validation. Change does not happen easily, but especially not when you surround yourself with “yes-men” or employees or partners who refuse to challenge their company’s purpose when it runs into a wall.

 

When that wall is hit, it should force startup founders to take a retrospective look at their original idea and model for their venture in order to spot any holes or gaps they didn’t originally see. This will force them to change and evolve the plan for their venture, be it short-term or long-term, in order to grow and scale at a healthier rate rather than pump funds into a bucket of half-truths.

 

Is your product/service not selling? Check your branding and messaging to consumers. Is the problem on your end or the market? If it’s the latter, you may need to pivot to fit a more urgent market need.

 

Running out of capital too quickly? Check your COGS and monthly burn rate. See where cuts can be made and allocate your remaining funds accordingly.

 

Are you having challenges with legal or burnout issues? Take a step back on market expansion and spend a day or two mapping out your time management.

 

8) Your First Idea is Probably a Donkey, Not a Unicorn

 

Of the some-90% of startups that fail, more than 50% will fail in their first five years, and further statistics show that only 20% of startups – or 1 out of 5 – will make it past their first decade of operations. These reports show us that, if your venture is going to fail, there’s a much higher chance it will do so within its first few fledgling years as an infant company.

 

If you come up with what you (and maybe even some others) believe to be a fantastic idea and run with it, building your venture around that initial idea with little to no constructive criticism, feedback, or in-depth market research, the chances are extremely likely you’re building a venture around an idea that is doomed to fail. How do you know your idea will still be as relevant next year? In three years? Five? How about even ten years from now?

 

Even in the instance when you do listen to feedback and conduct in-depth market research on your target customer base, industry reports on projected market growth can only get you so far. You need to test your product or service with your beachhead market and make sure they accept your idea to begin with.

 

If you believe your idea is one-in-a-million, but the odds of making your next sale are a million-to-one, you’re going to need to rethink your original idea. Likewise, if your initial idea showed initial success but sales are starting to stagnate, then your original idea is no longer worthy of “unicorn” status. It’s time to put your nose to the grindstone and think of ways to either pivot your original idea or come up with a new unicorn. But if you do neither, you’re setting yourself up for failure.

 

9) Failure Tests Your Passion and Focus

 

When you begin building out the model for your startup, ask yourself: “is this idea, my product or service something I truly care about? Is my target market a group of people I deeply wish to solve a problem for? Why?”

 

If your answers are anywhere along the lines of, “no,” “probably not,” and “who cares?” Then save yourself the trouble and find a better use of your time.

 

Regardless of how great or innovative of an idea you have to build your start-up around, it is impossible to fake true passion. Investors know this, and they will be able to tell if you’re faking it. Your passion is what will continue to fuel your drive as you grind your way through the early-stage hustle of startups – a place frequently referred to as (and aptly named) the “graveyard” of start-up ventures. Even with a genuine driven passion for your start-up, losing focus of your late-stage goals or the necessary steps to evolve these goals over time is just as finitely one more nail in the coffin of your business.

 

 

Every successful entrepreneur will tell you two things about the grind, but especially as it relates to the early stages of your startup: it requires a LOT of genuine, hard work, and; there are no shortcuts.

 

If you find yourself slowly losing your passion or focus over time as you keep grinding out your business model and seek revenue, you need to be able to identify if you are experiencing a genuine lack of passion, or if you are suffering the side-effects of burnout. The good news is that the latter can be easily rectified – step away for a few days for some R&R and come up with a plan on how to tackle your roadblocks when you return.

 

10) Fail with the Wrong People; Win with the Right People

 

Regardless of what kind of startup you are founding, no matter what your target market or customer segment is, or how fantastic of a product or service you may be offering, there are two major factors that will leave you dead in the water before you can get off the ground: bad timing, and the wrong team.

 

Timing is often a question of whether or not your target market is ready for your product or service, or if you’re attempting to enter a highly-competitive, over-saturated, or unbreachable market.

 

Team makeup is trickier. Too many startups that fail in the first year often do due to some team-related factor. Perhaps you and your partner disagreed over a sales or marketing strategy? Was someone who initially seemed promising hired, only for them to not give back the value expected of them? Maybe you tracked KPIs off the completely wrong metric which led to a lack of focus and dedication from your team, or perhaps there was a blockage of communication between your team members?

 

Whatever the case, the team you hire and the behavior you require them to exhibit will make or break your startup faster than almost any other factor.

 

Founders have the biggest role to play in a fledgling startup, and the first key responsibility they have is hiring the right team to help the vision of their business succeed and while initial hires may be made off of experience, the experience is not synonymous with adaptability, passion, or communication. More than likely, your startup is going to have to spend a good bit of resources on hiring and firing some of the early talents you acquire before re-hiring others that are a better fit for your path into the future. In a company’s infancy, this is less a question of raw performance and more one of matching to your company’s culture.

 

Every company has good days and bad days, but the volatility of startups can make the bad days feel exponentially worse. If your team is not emotionally sound or stable enough to cope with and band together to pull each other out of the bad days’ proverbial foxhole, dedication and focus on the vision will begin to visibly deteriorate leading to your company’s early demise.

 

There you have it, readers! Do you agree with this list? If not, leave your reasons why in the comments below and maybe you’ll get a shout-out in a future blog post. As always: stay hungry, and keep grinding.

 

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If you want more tips on how to build self-resilience and overcome fear, our team recommends looking into the following reads:

 

Unfu*k Yourself and Stop Doing That Sh*t by Gary John Bishop
The Confidence Gap: A Guide to Overcoming Fear and Self-Doubt by Russ Harris
Crushing It and Jab Till It Hurts by Gary Vaynerchuk
If You Really Want To Change The World by Henry Kressel and Norman Winarsky
On Combat: The Psychology and Physiology of Deadly Conflict in War and in Peace by Dave Grossman

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