Fail for a reason worth failing for
Most startups don't die from the wrong bet. They die from spending before they checked.
A few weeks ago I was at a summer get-together. The usual mix of founders, investors and people from around the startup world, with everyone a little more relaxed than they are the rest of the year.
I got talking to a founder. He was building something he clearly cared about, and at one point he said the thing I hear surprisingly often now.
I know I would make mistakes. I know my startup might fail. I have made my peace with that.
I admired it. If the fear of failing stops you before you start, you never build anything worth building.
Later that evening I ended up next to an investor. He asked what I do. I had barely said I work on reducing startup failure before he started shaking his head. No, he said, you cannot remove failure from startups, that is not how this works.
He was not being dismissive. He was defending something that matters to him.
Walking home, I realised they had reacted to the same misunderstanding from opposite ends. The founder thought I wanted to take away the risk. The investor thought I wanted to take away the failure. I want neither.
Some companies should fail. Many will.
When a company starts, nobody knows whether the opportunity is real. Not the founder, not the investor. Sometimes the market is not there. Sometimes customers do not care enough. Sometimes the economics just don’t work. Finding that out early is a good outcome. It means people, capital, and time can move on to something with a better chance of succeeding.
What interests me now about startups is everything that happens before a company commits serious money, time and people to an assumption it has never actually tested.
You hire because you believe the demand is there, or will be once the product is ready. You build a feature because you believe customers need it. You spend on paid marketing because you believe you have found something repeatable. Every one of those is a decision resting on an assumption.
And when the assumption turns out to be wrong, you rarely lose only that one decision. You find out that months of hiring and building and spending were all sitting on top of it.
Here is how I have come to think about it.
Every stage of a startup asks you for another commitment of money, time and people. You have to earn the right to make it.
Earning the right to commit more time, money and people is not complicated, but it is rarely impressive-looking work. At any given stage a company is sitting on dozens of assumptions. Most of them are not yet the assumptions that determine the next decision. One or two do. They are the ones that decide whether the next bet makes any sense at all, and everything else can wait. The skill is knowing which one or two you are actually standing on right now, and going straight at those instead of spreading yourself thin across all of them.
So you go at them. The companies that do this well spend surprisingly little time debating. They go to customers. They run a series of experiments, small and cheap. They look for evidence that would prove them wrong rather than confirm what they already hope is true.
Most of the time the experiment does not give you the answer you wanted.
That is exactly the point.
A failed experiment costs almost nothing next to building the wrong product, hiring the wrong people, or scaling something that was never ready. And what you are left with afterwards is not a guess. It is a conviction you have tested, so you know where the money should go next.
None of this is a promise that the company works.
You can test the right things, challenge your own thinking, make every decision well, and still find the market was not there. The bet at the centre of it can simply be wrong. That risk never goes away, and it should not.
So the founder was right, and the investor was right. Failure is part of building something new. The only question that interests me is what you fail because of.
If you tested the assumptions that mattered, went looking for the holes in your own thinking, and still found the opportunity was not there, that is a failure worth having, and one you can be proud of. You learned what the market had to teach, and you learned it without spending years pretending you were certain when you were not.
Failing because you spent the money before you checked is a different thing altogether.
The Avoidable Startup Failure publishes in August. If you want to read it first, you can sign up at anjali.no/book