How to bounce back from a startup failure
The pain of any kind of startup failure cuts deep. Whether it’s the loss of your company, your job, your money, your shareholding, your friends, your team, or your self-belief, the process of seeing your business fall apart changes you forever. The ‘fail fast, fail cheap’ mantra so beloved of the startup eco-system rings more than a little hollow when your house is on the line, or you’re several years and millions of pounds in - minus the results you expected. And when it all falls apart in public, the pressure and emotional toll can test any founder’s resilience to destruction. Yet, however improbable it may feel at the time, those people able to process, learn and also grow from their experiences typically go on to found companies again - and those companies have a much higher probability of success.
There is no magic formula to get you back on your feet and into your next startup, though there are elements of a process that can help. Over the last eighteen months, I have done a lot of my soul-searching, reflecting, processing and learning here in this blog and through the podcast. But now I’m deep into my “next big one” and very much in execution mode again. And so with that final step, I feel I have reached sufficient distance from the raw emotions that overshadowed the end of my last company, to share the aspects of the ‘bounce back’ process that worked for me.
I hope there is something here that is useful for anyone facing the possibility or living through the reality of their startup failing. Because while it may take longer to recover from and be more personally and financially bruising than any previous career experience - this really can be the making of you. Good people and good companies don't always win, that isn’t always right or fair. Random stuff (good and bad) happens and even as CEO, you're in control of way less than you realise at the time. But you are not alone and it is what you learn in the process and what you become as a result that ultimately matters.
So, here's some of what I learned on my journey from high to low and back again:
1. Break free from the poster child trap
One of the biggest pressures as you go through the slow-motion implosion of a “public” failure is that as well as feeling like you’re letting absolutely everyone down, there is also this sense of being exposed as an even bigger screw-up precisely because you’ve been held up to your peers as an example of success. Once you become someone else’s poster child, you have a lot further to fall. The lesson is, I suppose, be careful what you pin your identity to and try to exercise restraint as you seek out or accept public badges of your startup “success”. Your personal and professional identities become very hard to unpick.
Public recognition is nearly always a lagging indicator - meaning by the time the spotlights falls on you, you and your company have moved on into fresh pain and new problems. There's something strangely nauseating about winning some big award or public recognition, just as you see an unavoidable brick wall coming towards you at great speed. It can affect your decision making as you try to delay the inevitable, and you may find your waking and sleeping thoughts overwhelmed with the dread of impending humiliation and exposure to the cost of your mental and physical health.
And let's be honest, once your head is above the parapet, a lot more people will join in shooting you down when the moment comes, plus there'll be plenty of people who you've never met with an opinion on you and your mistakes. So when you're in freefall, I honestly think the best thing you can do is escape from the whirlwind if at all possible. Retreat to the people from ‘before’, or a person or place that is completely unassociated with the startup version of you. Then once you are able, step outside your own myth and see the poster child trap for what it really is.
Because at any particular moment there'll always be one or two of us who are temporarily deemed to “be successful” and because visibility breeds visibility, we are on everything, in everything and asked to speak at everything - while the rest of our peers go unrecognised. It is not passing the buck to promote another founder who might benefit from and be more appropriate for this exposure than you. Make that introduction and broaden the visibility - it helps no one when the spotlight shines only on the same few people.
Sure, these things can be fun and easy to justify - and it is a privilege to get the opportunity to be a role model. But they can also make you feel busy, in control, and give a short-term confidence boost. Or, you may feel obliged to keep repaying assistance you received in the early days or feel tied to “generous” support that comes with never-ending strings attached. But the way I look at it now, if you are being asked to put your time and face to something that doesn’t personally develop you, develop your business, expose you to potential new hires or new clients, give back as a role model in a really meaningful way, or fill your heart with joy - then say no.
2. This is a grieving process, allow yourself and others to recognise it as such.
Recovering from the loss of something you have invested significant emotion, energy and personal resources into will take time, which is not a thing you're used to having. If you try to go through grief and an intense period of personal growth at startup speed, it isn't going to deliver the healing and insights you need. Slow down and stop beating yourself up. Don't try to go at entrepreneur speed - this is a different, more nuanced and complex task. I've talked and written about this transition process a lot, so I'll link rather than repeat. But one thing I would recommend is to look closely at what - and more importantly - who - you still have once the dust settles. Because you will find new friends in surprising places if you let them in, and you'll likely discover that despite your neglect over the previous years, there are people who never left. So don't get stuck at mourning who and what you've lost. Recognise who you have gained - and who was always there despite you - and channel your energy and gratitude there.
There comes a time to stop the introspection - but you'll probably be one of the last to see it. This is why having someone who can give you an external perspective and the occasional firm kick up the backside when required is so valuable. As the extremes of emotion start to fade a little, allow yourself some pride in what you got right - it is perfectly OK to have major ambiguity in how you feel about your startup and for it to have been both the best and worst of times, as well as everything in between. Starting to be present is a necessary step to move on from looking back and re-analysing every decision - but that can introduce new pressures when the new idea or opportunity that would provide welcome distraction doesn’t appear on cue.
3. Don't despair when the next big idea doesn't come immediately
This was a really big deal for me. Initially, I thought that if I didn't get straight back on the startup horse, I'd never find the courage to do it again. So I did what many founders do in their desperation to be busy and back in startup mode again, I rushed straight into a series of rebound projects. After all, what is an entrepreneur without an idea? I worked very hard on finding my next great idea. I had a process, got lots of quality input, had very big notepads, I hung out in the right places, read the right books, announced to pretty much anyone who'd listen that I was looking for an idea - and still it didn't come.
I began to think I was done - that I'd been as good as I could be and my last one, along with my demise from it, was the most I was ever going to achieve and I was a great big useless disappointing waste of potential. (Yup, very, very self-indulgent, but painful all the same!) I ignored or simply forgot that last time it had taken me over a year of work, two contradicting business models and three differently named/trademarked iterations of my idea before I settled on what became Clear Returns.
Just as the cliché goes, once I relaxed to the point that I had stopped actively trying to force it, the next idea found me. (In bed on a Sunday morning, courtesy of Twitter, as it happens). But because for the best part of a year I'd been slowly building a team, working on a process, actively staying useful, and gathering knowledge and resources - once the idea came, then Bam! we were ready to go and go fast.
So, recognise that a rebound startup is a thing and don't force yourself to over-commit to an idea that doesn't deserve it, just because you fear something is probably better than nothing. Instead find a process that lets you filter out the things that are not right for you at this time - for example, in the space of a few months I abandoned drone insurance, a startup idea validation network (the irony), a rape recovery app, employee analytics and a smart fabric clothing brand, to name just a few. All good ideas, just not for me at that time.
Instead of pushing against your own closed door, open yourself up to the external commercial value of your experience - you may find there are opportunities to sell what you know for a while, for example as an advisor or consultant. That can give you a little financial relief as well as headspace while you figure out what next. I was deeply touched and relieved by how many of my old clients and contacts reached out to me and gave me project work, once I was legally able to do so. I’ll admit a certain sense of shame in that it reinforced my sense of failure as an entrepreneur and founder, but actually it was a good way keep functioning, reduce my financial exposure and put what I’d learned to good use. If the calls don’t come on their own, don’t be afraid or embarrassed about telling a few people well-connected people that you are open to paid project work - this is a good way for the people who want to help you to be able to do something of practical assistance.
You can also stay engaged and startup ready (if not completely at peak performance) by being useful to others - I personally found meeting and mentoring other founders and entrepreneurs re-energising. But it is not just about what you can give, or you’ll deplete your own reserves - think about what you need too, and find a place or state where can you just ‘be present’. Then you will find you start to accept that despite the failure weighing down on you, there was also a lot you got right and more you didn't control, which brings me to the next point.
4. Reframe the idea that “the buck always stops with me”
Accepting accountability for every failing of your product and team, and truly believing that “the buck stops with me” is often seen as the mark of a good leader. As a leader, you must learn that while you can delegate shared responsibility to numerous individuals, only one person can be held accountable. As founders we take pride in the fact that we do not throw anyone under the bus, we own our mistakes and those of others in our team, and work incredibly hard to learn and do better next time.
But it is also important to have the self-awareness to recognise that there are aspects to this supposedly “good” behaviour that is problematic, self-defeating and can leave you open to exploitation.
Firstly, there is something perversely comforting in the idea of accepting all-encompassing accountability. It gives you a sense of control over the uncertainty and chaos that accompanies so much of startup life, especially when you are the inexperienced leader of an inexperienced team. We all create illusions of control to manage the scary unpredictability of existence - but as leaders, it can be all too easy to believe our own fiction. For example, it can become a habit to accept accountability for everything yourself, rather than to put the work into the processes and staff development necessary to enable others to do the same. And it can also sometimes feel easier or “right” to mop up the really gnarly people problems by simply accepting accountability for them, rather than embedding change, or directly challenging those who are incapable or unwilling to accept responsibility or accountability themselves.
You and your teams will be prevented from learning and moving forward if you hold yourself solely, permanently and paralysingly responsible and accountable for every detail of what went wrong with your company. As you begin to move on from a startup failure, you have to let go of the idea that you controlled, and therefore were personally at fault for every aspect of what happened. That is not to say you should blame everyone but yourself - it’s not true, you learn nothing that way and will never grow or progress. But to blame only yourself and to do so indefinitely is also limiting and debilitating. There will always be choices that weren’t yours, problems you saw too late and factors you couldn’t influence - replaying those indefinitely will get you nowhere. As you move forward, it is important that you learn to reframe how you look at and why you accept accountability. This is not only for the development of your future teams and your own personal recovery, but to close a blind spot in your tactics. Because when it is entirely predictable to those who are jostling with you for power and control that you will default to accepting accountability, rather than calling out power-play or incompetence out for what it is, you become very open to exploitation. For example, when a powerful individual close to you experiences something that makes them feel insecure or exposed, or simply sees an opportunity to score a point, they may react by deflecting that straight back at you at a moment of maximum potential hurt - safe in the knowledge that you will accept blame rather than make a scene by calling them out. The problem is, other people take your acceptance of accountability at face value. If the exploiter gets away with it the behaviour will escalate and will damage your credibility. And the unpinning people issues of trust, values, responsibility and accountability go unfixed.
I took this on the chin for years - I saw the buck always stopping with me as an essential part of the job and a truthful, important part of my communications with the board, senior stakeholders, and investors. But my predictability was played against me, and ultimately those values were not perceived as strengths, but as weakness. And I am certain there were times when “heroically” accepting accountability felt easier and more effective than the pain of tackling unacceptable or unpalatable behaviours. I am absolutely not advocating changing your values or abdicating your responsibility and accountability. But I am suggesting that you shake up your tactics from time to time, be aware of the possibility of exploitation, and remember to ask yourself whether underneath it all you're just doing this to feel in control or to avoid tackling a bigger problem.
5. Don't wait for the next one to be perfect and risk-free, that will never happen
At some point, it will be the right time to start again. It may be your idea, it may be someone else’s - I think it matters less as your confidence builds over the process of founding multiple businesses. But as you start, I strongly recommend you cut out second-guessing yourself and try to at least shorten the list of things you say you’ll do differently next time. (Yes, it is mostly myself I’m lecturing here). You can't eliminate all risk, but this time you can aim to work in an environment of more informed optimism (or opti-skepticism?) rather than blind hope fuelled by adrenaline. Don’t let go of your personal superpowers and neglect all the things you’re really good at in a bid to be less bad at your weaknesses - this is what the magic combination of self-awareness and co-founders is for.
I can’t overstress the importance of not doing your next big one alone. If like me, you found your experience of startup failure a deeply isolating one, you are going to need people who’ve been there too. You are also a lot more likely to be thinking about your leadership/co-founding team as your number one priority (with my new one, I had my founding team in place many weeks before the idea) - and maybe that is why the chances of success increase.
Pick your co-founders wisely. Think long term and go for balance and difference rather than clones of yourself. I think a co-founding team of three is the ideal number to cover a broad set of skills and a diverse range of personality traits. Spend some time working together to see if you’re an effective team and equally committed. But once that is established. ensure for everyone’s sake that you make the relationship formal - as in written, signed agreements that make explicit your shared expectations - a business pre-nup, if you like. You need to be able to talk frankly about how you’ll share, co-operate, and if necessary separate without breaking the company, in order to have the best chances of working successfully together. But once it's formal, trust them. By all means over-communicate, but allow them to lead execution and have accountability in their areas and understand that the strength of your entire company comes down to the health and strength of your co-founder relationships.
In my experience, you’ll know when you’re ready to go again, because you’ll be excited for the journey and the process of starting up, rather than dispassionately focused only on the end destination. So, have a ball, enjoy your new adventure, make different mistakes because you still dared to take a risk - and next time you fail, as you inevitably will when you try anything new, just make sure you fail more fabulously than last time. Oh, and it’d be really helpful if you could tell the rest of us what you learn - because chances are, it might just be a spectacular success this time!