Reboot Podcast Episode #10 – Fail With Honor – with Derek Bereit & Beth McKeon

Key Takeaways

Derek’s Conversation:

Company Scenario:

• 60 days out from running out of money
• Haven’t found product market fit
• In the middle of a fundraising, however, the product market fit issues are influencing investor decisions
• If the investors don’t double down then the business fails

Questions:

• How do you personally recover and get over the strong sense of personal failure if the business fails?
• How do you focus on the upside while simultaneously being prepared for failure?

Key Takeaways:

• Being 60 days out from a complete failure is one of the most difficult situations facing an entrepreneur.
• One of the things on the table is not just the company failing, but in your mind,  if the mission fails.
• One of the hardest parts about being in a startup is that failure is actually the norm.
• The struggle is how to shift the mindset from this being a failure into something more like “okay well that didn’t work.”
• There is a near term issue, which is how can I stay positive as I continue this process of fundraising while I know that the likelihood is that we are going to fail.
• One of the hardest questions entrepreneurs have to deal with is when do you know it’s over?
• You don’t need a coach; you need to listen to yourself.
• Shutting the company down in the right way and giving up is not the same thing.
  • It is fruitless to continue a fight that you have already given up and lost.
  • Preserve those resources and preserve those relationships.  As an investor, Jerry has had countless companies fail.  Most of the folks that he backed who failed well, he backed again.  Fail well.

• Fail with honor.  Hold your head up with pride.  Treat people well.  Be honest.  No delusion.  No lying.  No spinning.  Get the houses in order – the financial house in order.  Pay your taxes, pay your bills, and quietly live to fight another day.

Beth’s Conversation:

Company Scenario:

• This is a solo-founder company that has been building a team over the last year.
• Finding and hiring the right team is one of the bigger challenges, especially being a startup in the Midwest.

Questions:

• How does one go about building a team?
• How does one attract a team of people who are culturally accepting of life in a startup?

Key Takeaways:

• You as CEO have three jobs, even though right now the work of the company is still about building a product or service.
  • The first is to hold the vision of the company – that means the mission, the purpose, and the values.  What it is we are doing, and why we are doing it.
  • The second is to build and maintain the team.
  • The third is to give that team what they need to succeed.

• Those are the steps necessary not to build a product or service, but to build a company.
• You are in the company building business, and it gets confusing because you are still in the process of building the product or service.
  • Building this team is your job.  Here’s the really bad news – when you are finished building the team you are going to have to do it all over again, and again, and again.

• If you are in the business building process then what you want to do is have the functions that create the most leverage as quickly as possible.
  • Often times that means the technical co-founder because they are the ones that actually build the product or service.

• Implicit in the first job of CEO of holding the vision is developing the skill to constantly and with energy, explain the why and wherefores of your company in such a way that you inspire people to work without salary, give up a stable job, and come take a risk on this belief.
  • The reason this is a really important skill set is that you will never ever stop being required to do that.
  • You never ever stop getting people to believe in the company.

• If you are going to convince people to take a risk on your business and leave a safe and comfortable job you are going to have to sell them from your heart because that’s where the vision lies.
  • Employees are not necessarily motivated by good business ideas.

• Daniel Pink talks about three things that people look for and are motivated by autonomy, mastery, and purpose.
• You have got to sell the AMP because this is what the startup offers employees:
  • Autonomy – the freedom to really create a magnificent job on your own.
  • Mastery – the ability to learn and grow in a job in ways they would never have been challenged before.
  • Purpose – without purpose, it is all stress.  With purpose, it just becomes hard work.

• If you are hiring people who are coming just because it’s another part-time job you might as well light your money on fire.
• If I join your company will I have more fun, will I have more meaning, will I grow, and will I impact the world in ways that are important to me.
• If I don’t have those things then I am not going to take the risk because it is just too hard.
  • Be leery of recruiting people who want to join because it will make them rich.  Those are people who are driven by money, and they tend to bail at the first sign of trouble.

Shutting the company down in the right way and giving up is not the same thing. Fail with honor. Hold your head up with pride.