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7.21.21   12:00 PM

Tom Eisenmann has taught would-be entrepreneurs at Harvard Business School on how to build successful startups for over 20 years. But when two students experienced startup failure firsthand, Eisenmann was caught by surprise — the founders both seemed promising, and the business model seemed sound. He then decided to embark on a journey to find out exactly why startups fail.

Eisenmann’s latest book, the aptly titled “Why Startups Fail,” examines six methods of startup failure gleaned from 470 entrepreneur interviews and two decades of teaching. Nearly every startup failure, from Quibi to WeWork, can fit into one of Eisenmann’s frameworks. Sometimes a startup grows too fast and falls into the “speed trap.” Sometimes it’s a case of false positives: a startup seems to do well with early adopters, then flounders in the real world. And then there’s what Eisenmann calls the asteroid strike — the unpredictable catastrophe that eliminates even the best businesses, the most recent being the pandemic.

Eisenmann spoke about how he distilled his research into six kinds of failure, his most surprising case studies, and his advice for entrepreneurs on how to fail gracefully.

  • Defining startup failure


    What prompted you to write this book, since you've been teaching at Harvard Business School for decades?

    This goes back eight years — things move slowly in academia compared to startups. I had encouraged a pair of former students to launch a business, I thought they had a great idea. I had a lot of confidence in them as founders, I was actually an investor. And the business they launched, Quincy Apparel, in New York City, focused on designing and selling better fitting, affordable, and stylish apparel for young professional women. The key there is better fitting, you usually get two of the three, stylish and better fitting, but not affordable, because it's got to cost $1,000 and have to be tailored somewhere. Anyway, that was the goal. 

    They were both tall and had trouble finding work clothes that fit them well. And they did a textbook perfect job of testing the idea the way we teach. There's this movement that came out of Silicon Valley 12 years ago called “lean startup.” And the whole idea is basically to have an assumption about your opportunity, and test it before you invest lots and lots of money in building the product and marketing and so forth. And they did that. 

    For folks who are listening who know the fashion business, trunk shows are a thing. You bring samples, people try them on, people do pre-orders. And women who came to the shows loved them. They raised $1 million, they wanted to raise $1.5 million. That's part of the failure story. At launch, the business sales were strong, repeat purchases were strong. But they had trouble actually manufacturing this stuff so it fits. So the returns weren't crazy high, they were actually on par with other ecommerce sites. But if your promise is better fit, you’ve got a problem even if you're doing average. 

    They were burning through their cash and went to raise more. While they were making progress, they just weren't making enough progress to have investors with the confidence to put more money in, ran out of money, and shut the business down after a year, heartbreaking. I was close to the founder, so I watched those dynamics close up. And I could point to a lot of things that went wrong, but I couldn't pinpoint the cause. Here I was supposedly an expert on startup management. Failure—since something like two out of three startups fail — is one of the most important things in my field. And I was a failure at explaining failure. So it set me on a quest to learn everything I could see if there were patterns, if entrepreneurs could anticipate and avoid those patterns? And if they were going to fail? Is there a way for them to fail less painfully and actually get something from the experience? It really hurts when a founder fails.

    I’d like to hear more about that feeling of failure. I've read first person accounts, and it seems humiliating.

    Yeah, Christina Wallace, who was one of the founders of Quincy, this company I just mentioned, left in sequence. One came out of the company before the other, and the other kept going, trying to rescue the thing. And it only took another five weeks, frankly, but in that period, Christina, she's talked quite publicly about the experience — basically four weeks on your couch, eating DoorDash every night, watching all seven seasons of the West Wing. Probably not clinically depressed, but probably not far from it, and ashamed to tell people what happened. She was also fearful because her co-founder was still trying to rescue the company. 

    So you can't go out and tell people that you left and why you left and that you think it's on the verge of failure. It stirs up super strong emotions such as shame, regret, fury. A lot of founders will blame a very human tendency to ego — a defensive tendency to blame other people for what went wrong. “My co-founder dropped the ball. The investors pushed us in the wrong direction. The regulators did something crazy.” Most founders I find have this period of intense emotion, sometimes depression, and it can take weeks or months to snap out of that. 

    In the ones who managed to do it, you can't avoid rumination. So there is always some rumination, but the best way to do it is to alternate the rumination with some distractions, a side project. Go take a course somewhere, exercise, enough of that, and eventually you'll wrap your head around what happened, and then only when you’ve settled the strong emotions down can you actually start to make sense of what happened. Even then a lot of founders never learned much from the experience because the ego defense kicks in. They never really make sense of their role in the failure.

  • Horses, jockeys, and the fundamental attribution error


    You wrote about the fundamental attribution error, and the horse and the jockey dynamic. People on the outside might blame the jockey, the founder, and on the inside, they might blame the horse, the startup. What's wrong with that picture?

    Yeah, so anybody listening who took psych 101, if you were paying attention, you might not have been freshman year in college. Psychologists have this thing that they call the fundamental attribution error. And it's fundamental because it's ingrained in all of us so strongly that everyone will feel it when I describe it. It was like, “I did something wrong. Something in this situation was just off, and there's no way it could have been me because I'm me. And I'm talented and brilliant. I'm trying really hard. So it was somebody else's fault, or the universe just conspired to send an asteroid down and strike things.” 

    “I was a failure at explaining failure. So it set me on a quest to learn everything I could see if there were patterns, if entrepreneurs could anticipate and avoid those patterns.”

    If you did something wrong, you were probably lazy or distracted, or you weren't motivated, or your head wasn't in the game. We do this all the time. You get cut off by a BMW, and you blame the self-centered jerk. If you're driving a car and you cut somebody off, it's the blind spot in your mirror. And you're like, “The manufacturer just never got that dynamic,” right? So same thing with founders. Ask investors why startups fail, and they will point to the founder over and over again, the jockey in your formulation. And this metaphor gets overused a lot in the world of venture capital. If you ask founders why their startup failed, they will point to co-founders and investors and competitors that came out of the woodwork by surprise, all sorts of things. And the reality is way more complicated.

    It's always some combination, that the horse is the idea, the opportunity, and the jockey is the founder. And it's always a lot of both. But there are some recurring patterns. All of those patterns involve some combination of horse and jockey. The reality is a lot more complicated. There could be a million outside factors that contribute to this, not just an ego maniac.

    There is an asteroid strike — COVID hits, and COVID wipes out hundreds of thousands of small businesses, new businesses, through no fault of the entrepreneur. And there's just not much to say about that. It happened and it’s tragic. We wish it hadn't happened. But you don't have to spend a lot of time dissecting that one. The ones that are interesting are the ventures like Quincy Apparel that showed promise initially, enough promise to assemble a team, to attract investors. When one of those goes off the rails, it can be tricky to figure out what really happened.

    You surveyed and interviewed quite a few founders and people in startups that have failed. I'd love it if you could walk me through the research process.

    The working title for the book for a long time was “False Start,” just like in track and field or swimming, where the athlete jumps the gun in an effort to get an edge. My wife thinks it's ironic that I was working on a book called “False Start” and had an outline in 2014, and revised the outline in 2016, and revised the final in 2018. I  revved it up in earnest and it took the pandemic, frankly. And the ability to put my head down and just crank it out for months on end to actually get the book done. So there is a silver lining out there for some people anyway.

    The original concept for the book was “50 ways that startups fail” and it was going to be short chapters, two or three page chapters — pattern 17, 18, 19. And then in this is what designers do, they basically take a complicated space and they simplify it so gradually thinking this through saw enough commonality between the 50 to compress them down to six patterns. The research around that — there was a survey of 470 early stage founders. These were both successful and less successful founders. And they raised at least a half a million starting in 2015. I asked them 50 questions about every aspect of the business and their team and their investors, trying to sort out where there were statistical patterns between who did better and who did worse. And there were quite a lot.

    “The identity of an entrepreneur is somebody who persists, so if I quit, am I a good entrepreneur?”

    They map pretty neatly onto the six failure patterns in the book. The biggest part of the research was actually case study. At Harvard Business School, where I teach, it's all teaching by the case method. You typically bring in one case study that usually takes the manager, the CEO, the entrepreneur up to some decision point, and the students debate, “Should we go left? Should we go right?” I had a bunch of these case studies and did more of them on failed startups, and then eventually launched a course on that, entirely focused on entrepreneurial failure, with some trepidation. I was actually worried that sitting there class after class, which has bummed the students out, and it had just the opposite. It actually galvanized them, because it was a puzzle. 

    I brought the entrepreneur to class, and when they meet this person, it's like, “Wow, that person's really impressive.” They just raised $4 million from really smart people. And they attracted this team, they had this idea, but a thing went wrong, or many things went wrong. The students were galvanized by the puzzle of figuring out why these seemingly sharp individuals ran into trouble. 

    I survey the students at the end of the course, like, “Has the course changed the way you think about becoming an entrepreneur in the next five years after graduation?” And 20% say, “Yep, this scares the crap out of me. It hurts so much, this person ran up their credit card debt, they didn't have a spouse they could lean on in order to have family money. Like the financial situation is dire. They've spent the last six months working 80 hour weeks trying to save their company. So they've trashed their relationships with all their friends. And if they're married, their spouses run out of patience, and since that seems to happen two out of three times, I don't think I want that.” 

    40% said, “Yep, thank you for showing me that. I think I understand it better. I think I've got the temperament. I actually relish the challenge, and most importantly, I see that these people you brought in, all of them are doing something really cool right now. It's gonna hurt like crazy for six months. But I'll learn a lot. And these people seem to have learned a lot.” That 40% is even more inclined to do it. The remaining 40% said, “I was always gonna do it, I'm still gonna do it.”

  • Case study: Jibo


    Many founders who have bootstrapped have talked about how they didn't want control from the outside and wanted their vision unadulterated.

    That's a big thing for a lot of founders, too. Once you bring in the outside money, you're responsible for that. The definition of failure in the book is — I think most people think like, “Isn't it obvious what you're talking about?” Actually, not really. Defining failure turns out to be trickier than it sounds. The dictionary definition doesn't help, which is “a shortfall relative to expectations,” like, which expectations and whose expectations? Is it the entrepreneur? 

    Only 40% of startups are actually run by the founder after five years. As a company gets bigger and more complicated, it simply outgrows their skills. Many founders just love the early stage. Building the thing and running a more complicated thing with hundreds of employees isn't for them, and it’s quite natural for them to replace themselves or for the board to come to the conclusion the person is just not up to it anymore. You can't necessarily gauge failure by those goals and objectives of the founder, although that's important. 

    There are financially successful startups out there that we all wish would just disappear. They've got addictive products, they exacerbate income inequality, they pollute. But they're financially successful. There are financially failed companies out there that actually show the way for other entrepreneurs to not do that. The book starts with a case on a social robot Jibo, it was on the cover of Time Magazine, invention of the year 2017, and this was a robot that didn't walk, but it swiveled. It had three separate speeds, so it could actually torque and do little dances. The robot would start up a conversation with you as opposed to Alexa or Siri where they’ll respond to your prompts. This robot would come in and say, “Hey, Ivan, I told you your commute might be heavier than usual this morning. How did it go?” 

    “That combination of a graceful shutdown and being able to show you've learned something, it positions a lot of entrepreneurs to do it again.”

    Jibo came out of the MIT Media Lab. Cynthia Breazeal, who is the scientist there, has been working for decades on social robots. In research she uses them to engage the elderly in intellectual and emotional stimulation. Autistic children who would have trouble relating to humans will relate to this weird little robot. Jimbo raised $75 million. They tried to position for the elder market, nobody would invest in that, like investors who put money into ventures for elder care. They're looking for things like cell phones with big giant keys, something a lot simpler than a robot who can talk to you. They were scared off. 

    So they repositioned it as a companion for a family. You’ve got a surly teenager who isn't talking to Mom and Dad. You put the robot in the middle of the kitchen, and somehow the robot will be in between the harried parents and the surly teenager. And that worked beautifully for some people, but just not enough people. Speaking of asteroids coming out of the blue while they were in the middle of all this, Amazon launched Alexa, the Echo is the device, Alexa is the agent inside the device, for $200 when Jibo was selling for $900. So that pretty much ended it, even though Alexa was never meant to really engage you emotionally. For the people in Jibo, the failure was heartbreaking. People held wakes for the robot,  they were trying to figure out what to do with this thing. It was a family companion, like a pet. 

    Jibo now is the inspiration for the next generation of social robots that are going to come back to the eldercare market, so it’s good for society. But bad for Jibo's investors. The definition [of failure] I use in the book is: Investors didn't make money and never will make money. But it's got a lot of asterisks on it, that we need to think about this in more complicated ways. Just because Jibo failed doesn't mean that it was a failure. It sounds like it influenced a whole nother generation.

    I have a concept in the course and in the book: Have a good failure. There's some failures that are blame lifts, like a business that shut down just because of COVID. They're actually some failures that we ought to celebrate. Entrepreneurs do something new with limited resources. Somebody's got an idea. It's plausible, checks out. Sometimes the only way to figure out if it's a good idea is to do it. Entrepreneurs who follow this Lean Startup approach, figuring out a way to test the idea without committing massive amounts of months and resources, money and people. Sometimes it doesn't work. It's good to learn that it was worth trying, no one should be ashamed of that. Those founders can hold their heads high. Jibo had many aspects of that kind. I mean, you couldn't do it fast. Because it turns out to be really hard to build this thing. And you really don't know if it's going to work until people live with it for a while.

    Right, as opposed to Amazon. That's a huge company that has subdivisions that can put that time and money into R&D.

    Yeah, I think that is the difference between innovation. Alexa is innovation. Jibo is entrepreneurship. The definition of entrepreneurship is doing something new while you're lacking resources, at least initially. Your job as an entrepreneur is go get the people, go get the money. You may need partners, go get the partners.

  • The six types of startup failure


    When you were putting together this book, you mentioned it was hard to break it down to just six types of failure. What were your greatest challenges in defining them?

    The challenge was simplifying it. Hope some people have heard of the hedgehog and the fox. It's one of Aesop’s fables, but Isaiah Berlin is a philosopher who has written a famous essay about the hedgehog and the fox. In Aesop's fable, the parable is the fox knows many things. But the hedgehog knows one big thing. But the fox is a scavenger, it'll hunt and eat almost anything. The Hedgehog just knows how to roll up in a ball and protect itself. Everybody has a different intellectual style. I'm very much a fox, and I've never met an idea I didn't like. 

    My problem in writing the book is a temptation to connect every concept I've ever run into in teaching and studying entrepreneurship into this stuff. Finding the tension between making it as complicated as I could see, it was, and as simple as it needed to be to get a message across to the reader. Really, actually a lot of fun and challenge as a writer, so I had a blast writing and I had a developmental editor who was a fantastic intellectual sparring partner, you're too simple here. And you're too complicated there.

    You did manage to narrow it down to six types of startup failure, which is digestible. What were some of your favorites of those six? What did you find most surprising?

    I've seen a lot of MBA graduates launch new food products or new beverages. And there's a million things you need to know if you're going to do that, like, how do you get the packaging so it stands out on the shelf and grabs the consumer’s attention? How do you think about slotting allowances? The retailers will just eat you alive, taking promotion money from you in order to put your thing at the end of the aisle. How much is too much? When do you move from local distribution to try to get into the national chains? 

    “You're probably going to fail. But it could be a good failure, and you should be proud of that. And then you should go for it.”

    One of the other failures in the book is a dating website. It turns out there's a million dating sites out there. 999,000 of them are failures. But the successful ones, if you look at the backgrounds of the people who launched the successful ones, it's not like they've worked in another dating company where they had any profound insight about human relationships. They basically had an idea and they tested it, and it turned out to be a good idea, OKCupid, Coffee Meets Bagel, every now and then one of these works, but most of them fail. You don't need industry experience here. So that was one big surprise. 

    The other big surprise was what I call a false positive, just like COVID testing. We have all learned about false negatives and false positives — entrepreneurs turned out to be subject to false negatives and false positives. In terms of the early response to whatever they're doing was negative can be tragic, because you get a signal that your thing isn't working, and you throw in the towel. Then two years later, you read that somebody has done a SPAC and they're now a billionaire with your idea. It's like, “I should have kept going.” It can't get worse than that, but that's pretty bad. 

    And a false positive is the opposite. You get an early signal that this thing is working really well and you rush in the direction of success despite a lack of resources. Jibo is a great example of this. There's often some foaming at the mouth enthusiastic early adopters out there that have just been waiting or they're banging on your door, like “When's the product ready?” If they're not representative of the mainstream customers, you need to build a successful business. You over commit in the direction of the early adopters, maybe with a feature set that's relevant to them, but the mainstream would say, “What do you need?” So it's really pretty surprising how vulnerable entrepreneurs are to the false positive. 

    When you're doing this autopsy, so to speak, you're saying this is more of a false positive. How is this different from a speed trap?

    The speed trap can start with a false positive. Thank you for that insight. That's an example of where the patterns start to tangle up with each other. For the false positive to me as an early stage pattern, baru really never made it past the first couple years. Sometimes a company can fall victim to a false positive but gets so much momentum that it can keep going so it doesn't fail. 

    A lot of listeners will remember as an online retailer of home furnishings. They had a really distinctive design. At the beginning that curator of products, it was a flash sale in the beginning, and they put one thing up for sale a day. A rhinestone encrusted motorcycle helmet, a chandelier made out of martini glasses, quirky and cheeky design stuff. People loved it and they referred it to friends, it's off like a rocket, and venture capitalists put a whole lot of money in at a very high share price, expecting continued growth. Jason Goldberg, the entrepreneur behind it, was a dazzling, charismatic salesperson. So he could sell the vision with passion and conviction.

    They raised a ton of money, like no one's arm was twisted, everybody wanted the thing to grow, and they pumped money in. And the first wave of customers, the early adopters were indeed a false positive. But they didn't realize it until they went after the mainstream customers. Whereas the early adopters, everything spread through word of mouth and social media. The next wave, you had to do naturally, were running TV ads, radio ads, and so forth. They were spending on marketing. So the customers are more expensive to acquire, and they're buying less and repeat purchasing less and not doing word of mouth referrals to friends. So they're worth less than they're costing more, you get a squeeze. But the investors and the entrepreneurs think, “Well, we can fix this, there's always confidence that's temporary, we'll sort out how to market more efficiently, and we'll go find better customers,” but they didn't.

    So the speed trap, just like the police on the side of the road with a radar gun, this entrepreneur is going fast. Jason doubled down on the problem. He was cloned instantly in Europe, there's an outfit called Rocket Internet in Berlin that will take a successful US startup concept and, almost pixel by pixel, copy it and launch it in Europe. Their gig is basically, “We're going to conquer Europe.” That's like half of the world market. “If you want to ever sell anything in Europe, you should buy our company out. It's going to be tragic if you end up trying to compete with us here after we've gotten established.” Goldberg and his investors said “No, we're not playing.” 

    “Defining failure turns out to be trickier than it sounds.”

    Airbnb had gone through this, Birchbox had gone through this, and Groupon had gone through this. He said, “Somebody's got to stand up to these guys.” And so Jason went pounding into Europe, put like $150 million into building a big Berlin headquarters and watching all over the place. And it just never worked. He did drive the competition out of business. But it was a Pyrrhic victory, it was so expensive and painful that it crippled the company. Meanwhile, the US was not working very well. Eventually the investors will, particularly the dazzling salesperson, put another round in. But at some point, they look at the economics of the profitability of the customers and say, “It wasn't there, it isn't there, we don't see how it's going to get there. So we're not going to put any more money in, and if you're burning through capital, because you're investing in inventory and marketing, boom.” 

    So it failed really fast. It's the end. This is one of the late stage failures when these things fail. There's a giant steaming grater in the landscape.

    How can startups avoid this? It seems like the easy answer would be just don't grow too fast. But how?

    I'm a professor, so I get to have clever frameworks. The test in the book is something we call part of the rawi test. I love it. There's some poetic license here. A rawi in Arabic is a reciter of ancient poetry, epic poems. So these failures are epic. So you want to use the rawi test to see if you can avoid them. 

    Ready, able, willing, and impelled is what it stands for. Ready is basically: Do you have what we call product market fit? You've found a profitable way, maybe not make profit yet, but we can see how in the not too distant future you're going to make profit from these customers and you can continue to do that. The market’s big enough for you to grow at the pace you think you're gonna grow. That's all ready. 

    Able is: Do you have the team and access to the people and the money you need to grow? Sometimes there's a pace of growth where a lot of the companies in the book went through this. You just can't hire people fast enough and train them fast enough to keep up with the pace of customers you're bringing in. 

    Willing is usually pretty straightforward. This is for the founders in particular, do you want to go through the personal sacrifices? You are going to be working 80 hour weeks for as long as you're growing at that speed and there is going to be tremendous pressure. Things are going to go wrong and are going to go wrong faster because you're growing faster. Do you want to put up with that pressure, number one, and number two, when you bring in outside money, what you need to do to grow, because you're not making enough money yet to fund the growth in cash flow from the business. Every round of venture capital, you bring in another venture capitalist to join your board of directors. The job of the board of directors, of course, is to hire and fire the CEO. Eventually the investors outnumber the founders on the board. At that stage, if the founder’s not doing the job as the CEO, you can replace them. And it happens a lot. So willing is: Are you willing to give up control of the company in exchange for the capital it's going to take to grow at the pace you want to grow?

    Impelled is tricky. Are you in a sector where the nature of the business is going to force you to grow fast? There's this concept called network effects where basically one fax machine — I'll date myself — is useless, two are useful, 200 million start to make each fax machine a little bit more valuable. 

    We could pick some social networking sites to update the reference, I should probably do that. If you're in a business with network effects, there's gonna be a lot of pressure to grow. Same thing with switching costs, I use the example of the dog walking service, the switching costs are high. If switching costs for customers to move from one service to another are high, if you can grab them before they've signed up for anything first time customers who don't have an affiliation with any, you will invest heavily in marketing and go get those customers because once you've got them, they aren't going to switch, the other service will have to bribe them like crazy and it won't be affordable for the other service. 

    Are you impelled, if you have these structural attributes like network effects and switching costs that lead to a land grab and a real race? So you run the route, we test ready, able, willing and build. If the answer is no, then you tap on the brakes a little bit and try to slow the growth down.

  • Advice for founders: When to quit and how to fail gracefully


    Let's say it might be too early for that test, maybe we didn't even get to a speed trap, or it's too late and we're hemorrhaging money. When should a founder throw in the towel? What is the test for that?

    The real test for that is are you out of moves? That’s question number one. Question number two, are you miserable? And if you're out of moves, and you're miserable, it's probably time to throw in the towel. What surprised me in doing this research was how many of the failed founders I spoke to said they had waited too long to shut the business down. 

    The most important reason is there are a bunch of moves you want to try before you throw in the towel. There's this concept of pivoting, changing some important aspect of the business, new types of customers, new features, whatever it's going to be, a way of making money. You want to try the pivots. Each of them takes time, you have to train workers, you have to educate customers, and then you have to see if it's working. 

    “Most founders [who fail] have this period of intense emotion, sometimes depression, and it can take weeks or months to snap out of that.”

    You want to try to raise money from new investors. When that doesn't work, you want to go back to your existing investors and say, “Will you give me a bridge loan, something that will take me over the chasm. It’s this very emotional thing for the investors because they have to figure out whether they're throwing good money after bad. You work through all these, you try to sell the company, this is a tricky one, because everybody in your space wants to have a look. So you have all these conversations with your competitors, you think, of course, they want to have a look, they want to see who your employees are and how much you're paying them and learn more about your strategy. So you get all these expressions of interest that eventually go sideways. 

    The ones who are interested are torn between just buying you now and wearing you out so they can buy you at a lower price and get whatever is valuable in your company cheaper. And they've seen your cash flow so they know exactly how long you have to survive. So you have all these moves you have to try but then there's other stuff. The identity of an entrepreneur is somebody who persists, so if I quit, am I a good entrepreneur? Isn't it the job of an entrepreneur to keep trying? 

    Some people would rather defer the ego blow and this enormous pain, and you just push it out in the future and deal with it later. So people wait too long. In the process, they actually do a disservice to themselves. And a good thing for a failing entrepreneur is to fail in a way that there's enough money left in the bank, that anybody who's owed money, employees, customers who placed a deposit, vendors who shipped you something, the investors won't get money back. But they may get 20 cents on the original dollar. And that's better than nothing. So I call that a graceful shutdown, when everybody who's owed money gets paid back. And entrepreneurs who have a graceful shutdown preserve their reputation, their relationships, especially if they go back then the healing process and learning process if they can show they've actually understood what went wrong, their role in it and what they would do differently next time. Now that combination of a graceful shutdown and being able to show you've learned something, it positions a lot of entrepreneurs to do it again and attract money and attract teammates. So that's a good failure.

    What do you wish you could tell founders to avoid failure?

    The book closes with this advice: a letter to a first time founder, a website called startup nation actually republished the letter. The message in that letter is basically to slow down. That there's a lot of advice, probably conventional wisdom on what makes for a great entrepreneur. And most of it is good advice. Most of the time. You hear these things, grow, be persistent, stay focused, be frugal. Each of those is important for an entrepreneur but taken to the extreme they actually can increase the odds of failure. 

    I think the biggest piece of advice entrepreneurs often get is just to trust their gut and trust their instincts. And that's good advice, too, because being nimble is a big advantage, especially if you're competing with big slow companies. But there are some decisions where your gut is so important. Your gut is wracked by emotions, and you're not going to be clear headed when you make decisions about it. This is like, it's time to pivot. Should you invest your scarce capital in hiring that expert? You need to not think fast and go with a gut instinct, you need to think slow. Daniel Kahneman, Nobel Prize winning economist, psychologist who studies the psychology of decision making has a fantastic book called “Thinking, Fast and Slow” about system one thinking, which is the instinct, and system two, which is more deliberation, thinking through the trade offs, and pros and cons, and so forth. And we need both. An entrepreneur needs to know when to go with a system to go with slow thinking, and leap on it. Chart out the pros and cons, show it to somebody who knows your business, sleep well on it another night. Slow down, and think fast. But also think slow.

    Was there anything else that you wanted to add?

    No, just thanks for this conversation. And anybody who's listening, there's an aspiring entrepreneur, I think the message should be, you're probably gonna fail. But it could be a good failure, and you should be proud of that. And then you should go for it. Go for that. And there are things you can do to anticipate and avoid these patterns. If you do fail, there are ways to fail well, gracefully in ways that preserve your reputation, and there are ways that you can learn from other founders who've been through it. How to heal, how to learn from the process, and how to bounce back stronger.

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