Category Archives: Entrepreneurship

Fail Early, Fail Often

I’m tired of people saying don’t be afraid of failure. Fear is an emotional response – you may as well tell someone not to be sad if his pet dies or not to be angry if someone bumps his car. Fear is part of being human. Sure, some people experience these things more acutely than others, but everyone – even a tough, serial entrepreneur – feels something.

Of course entrepreneurs fear failure. There’s just no way to avoid that – the challenge rather is to manage that fear so that it doesn’t have the perverse effect of making the big failures more likely.

When I started GreenLine, I had an acute fear of failure. I left a secure, well-paying job that most of my peers were steadily advancing in. So my reaction was to shrink from this fear by postponing the day of reconing far off into the future – either I’d run out of discretionary savings and would have to go back to working for someone else, or I’d be generating good cash flows. Success or failure would happen at that point rather than at numerous small points along the way. It was the exact opposite attitude that I should have been taking.

In hindsight, I should have embraced the doctrine of Fail Early, Fail Often. This is not the Silicone Valley saying “Fail Fast”, meaning your entire venture should either crash or be airborne in a short period of time (which Mark Suster persuasively dismisses), but rather the idea that I’d set a series of concrete goals that were testable within a reasonable period of time.

This may sound obvious to more seasoned entrepreneurs and executives, but for me it was a real revelation. As Eric Ries argues, if you just build something and put it out there to see what happens, you’ll always succeed – in seeing what happens! But entrepreneurs, who deal with staggering numbers of unknowns, must embrace the scientific method in their strategy – set a clear, disprovable hypothesis and test it in a way that ensures success or failure. Without this, there can be no real learning and without learning there can be no real progress. Sure, you might get lucky or might internalize this process in an informal way, but neither of those things are viable recipes for actually running a business.

For the product-focused tech geek (like myself), this is easy in terms of metrics (cohort analyses, revenue targets, etc.), but is much harder when you get to the human side of things – to actually talking to customers. The reason is two-fold:

First, there’s confirmation bias – you’re likely to attach more weight to data that confirms what you already believe. If you’ve built a product, you think it creates value, so every scrap of data from customer conversations that confirms this will stick out in your mind. I think a lot of entrepreneurs crash and burn on this point – you conclude way too early that you know which product to build and which customer to sell to. Fight this bias! Savor criticism. Love it – embrace it. Put it up on your wall and ruminate over it, not to the point of beating yourself up or getting discouraged, but just enough to counteract the tendency to hear only what you want to believe. Your customers just told you something very valuable.

Second, most people don’t press hard enough to get past the polite BS that you usually receive. Good entrepreneurs, like good journalists, will press much farther than you’d go in a friendly dinner conversation. It’s easy to hear “This is really cool – everyone will be using it in a few years” and stop at that point. Great for team morale, but it doesn’t mean squat. Early on, we got a lot of these messages, but drilling down, it always turned out we had the perfect product for somebody else – never for the person we were actually trying to sell to. You need to (politely) press much, much further. Would you buy it now? Do you have the budget for the sticker price? How much would you pay? How often would you use it? How much value does it provide? Would you recommend it to a colleague or friend? How much time/money does it save? I have a hell of a time actually doing this – both because hearing criticism is unpleasant (let’s be candid here) and because I don’t want to make a potential customer uncomfortable. People also tend to be polite rather than honest (this tendency is in direct proportion with your geographical distance from New York City). If you don’t press, you’re avoiding your fears of failure instead of confronting them.

So the moral of the story is to manage your fears through pure habituation. Fail early, fail often. Set long term big goals and then work backwards to the present until you have a set of small, easy-to-test hypotheses. Each hypothesis should have a binary outcome – success or failure – in a reasonable amount of time. If you’re not failing pretty frequently, you’re either an entrepreneurial demigod or (more likely) you’re not being ambitious or honest enough with yourself. Savor the failures. Share them with your friends and family to help desensitize you. But most importantly, learn from each one. Learn why your experiment failed and take corrective action. Adjust future hypotheses if necessary. But don’t just run from these little failures – doing so makes the big failures an order of magnitude more likely.

Photo credit: Hirz/Getty Images

* Interesting story about St. Sebastian (the woeful looking fellow depicted in Andrea Mantegna’s painting above) – once a Praetorian Guard of Diocletian, he encouraged two imprisoned brothers in their faith and, despite being shot many times by archers as punishment, he pulled through (“‘Tis only a flesh wound!”) and was nursed back to health. Ever persistent, he then harangued Diocletian, was clubbed to death and thrown down a toilet. I visited Diocletian’s palace in 1999, located in present-day Split, Croatia.

    The Technologist’s Curse

    As a technology-focused founder, what could be better than building a cool new machine?  Innovating for its own sake is fun, challenging and it lets you learn powerful new tools.  A clever new technology is seductive – you want to tinker with it, improve it, add features, tweak the design.  But great technology most certainly does not imply a great business model.  That’s the Technologist’s Curse – a technical founder falling in love with his or her new machine and losing sight of the underlying business case for the product.

    I’ve certainly been guilty of that myself.  Take the legal services profession – it’s an area that by any measure is crying out for technological innovation.  Law firms frequently still use Windows XP and Office 2003.  Often it’s easier to find things on Google than your own expensive knowledge management system.  And as a lawyer, you spend so much of your day fighting with the technology you already have.  Getting the formatting right on a big agreement is one task that every corporate lawyer has struggled with.  It’s so deeply frustrating to attorneys – all you want is to get something out to your client and it usually feels like the tech is the thing that’s slowing you down.

    For me, once of the biggest frustrations was looking at the same type of agreement again and again, yet not having any easy-to-use procedure for ensuring it had all the language I wanted.  There just must be some way to avoid reinventing the wheel again and again (not to mention relying solely on my own experience and judgment rather than using a sort of checklist to back these up).  My solution was simple – I’ll just build a machine to check over the contract to ensure it contained everything it should contain!  Easy!

    Legal language is rarely drafted from scratch – you almost always work from a model.  An attorney’s nightmare is having a judge say, “You drafted this term differently from what every other lawyer from time immemorial has drafted.  Therefore, you must have intended a different result.”  Legal text is deeply conservative and thus it lends itself to lexical analysis more than free text language.  That’s when the seduction began…

    Text analytics is tantalizing since you can get pretty good results without that much effort.  But that’s when things start getting much, much harder.  There are a plethora of algorithms, techniques and black magic in text analytics, from natural language processing to grammatical parsing to the Porter stemming algorithm to all sorts of machine learning tools.  Fidgeting with the various levers typically improves one type of result while degrading another.

    Thus it’s easy to fall into the “just one more adjustment” mindset that eats valuable time without necessarily providing any business-level benefits.  I spent months trying to get this right – I’d tweak one setting, get a small improvement, but it would break something else.  Being a prudent, Steve Blank-reading entrepreneur, I tried during this time to get customer validation that the vision was actually something valuable.  As it turned out, the technology that got more enthusiasm was actually simpler – instead of actually getting into the interpretation of specific provisions, it was enough for now just to classify them for user analysis.  That alone saved lawyers tons of time and helped prevent mistakes.  But learning this was a painful lesson that only sank in after making these mistakes myself.  That’s like so much of entrepreneurship – you’re aware of this advice on an intellectual level, but unless you’ve done it before, you just don’t know what it feels like to get it right.

    A corollary to the Technologist’s Curse, and one I’m really focused on now, is just-one-more-feature-ism: if I build just one more feature, people will start buying in droves.  This is rarely the case, but to people who regularly use, build and even enjoy technology, the power that comes with additional features is seductive…and the coding behind them is just so clever!

    There’s something to be said for at least one founder without a deep, behind-the-scenes understanding of the underlying technology – it’s easier to have some distance from your product and see it more objectively.  If sales aren’t going as quickly as you want (isn’t that always?), a technologist naturally focuses on what he knows best – the underlying technology – despite evidence to suggest that this might not be the problem at all.  That’s where an objective set of eyes is really critical.

    Photo Credit: Tantalus – Giulio Samuto, 1565, illustrations to Ovid’s Metamorphoses, in Modern Languages / Anthropology 3043: Folklore & Mythology. Laura Gibbs, Ph.D.

      11 Things To Expect When You Become An Entrepreneur

      Being an entrepreneur isn’t for everybody.  I tend to think it’s something you’ve either got in your blood or not.  Regardless of the hardships, the excitement, the ups and downs, I think those who have the bug will become entrepreneurs no matter what.  So for those who take the plunge, here are some things I experienced when I started GreenLine Legal.

      1. You’ll have trouble getting people to pay attention.  If you came from a well-recognized company or firm, that name has real power.  Especially if you were a junior person at your previous employer, people would listen to you because of the brand name (and all that time you thought it was because of the valuable things you say…).  As an entrepreneur, you need to prove yourself, over and over again.

      2. It can be very lonely.  Starting a company requires you reach far down into your reserve of self-confidence. Remember the scene in “There Will Be Blood” when Daniel Plainview is chipping away by himself in his oil prospecting mine (and then breaks his leg and almost blows himself up)?  You must be comfortable going it alone, though of course having a co-founder or two significantly eases the psychological (and literal) burden.

      3. Nothing happens unless you make it happen.  If you don’t build your product, nobody else will.  If you don’t sell, market, negotiate, plan, hire, manage or raise capital yourself, it won’t get done.  You lose the comfort of having others to cover for you in a pinch.

      4. Nobody tells you what to do.  This is perhaps the biggest mental change when you start off on your own.  You can (and should) get advice from those who have been through it before, but nobody will tell you where you need to focus each day.  This is actually one of the best parts of being an entrepreneur once you get used to it.

      5. You are responsible for what happens.  Responsibility, for those who take it seriously, is hard.  Sure, there are benefits of being in charge, but if things go wrong, you take the blame.

      6. People won’t understand what you’re doing.  This is particularly true for people who aren’t your target customers.  The usual response that I’ve heard again and again is, “Well, that’s very exciting!”, similar to when you told your parents you wanted to become a rock star.  I think this is really just a cover-up when people think you’re off your rocker and are building some bizarre contraption that nobody will want (though of course this isn’t the case with you…).

      7. You’ll be afraid.  At least in my book, fear is the inevitable companion to entrepreneurship – fear of screwing up your career, burning through all your money, watching your classmates and former colleagues rise in their professions, rejection by customers and on and on.  Fear is an emotional reaction to risk (risk = uncertainty x severity of consequences), and as such, some people feel more, others less.  But however much anxiety you experience, you need to find a way to live with it.  Reduce risk by (i) decreasing uncertainty and (ii) decreasing the severity of consequences.  Decrease uncertainty by doing things that make it more likely you’ll succeed – listen and understand your customers, carefully budget your resources, get advice from those more experienced than yourself.  Decrease the severity of consequences by taking small steps and scaling – make incremental changes where failure won’t make or break you and don’t incur big expenses before you actually need to.

      8. You’ll make many mistakes.  You’ll be making decisions in the face of massive uncertainty.  Some of those decisions will be wrong – it’s best to accept this and try to learn from them.  Avoid getting into a decision that is make-or-break by taking incremental steps.

      9. You’ll hear “no” more than you ever have before.  If you’ve done well in school/work/sports or whatever, you won’t be used to hearing no.  You might have gotten a couple no’s from potential employers or the schools you applied to, but the ratio of no’s to yes’s wasn’t anywhere near where it is when you actually try to sell something new.  It’s hard when people say no.  You want to blame them or think they don’t understand the value of what you’re offering.  But you’ve got to learn from them – they will tell you critically important information if you dig a bit deeper.

      10. Am I employed?  Starting a company is nothing like “having a job”.  It doesn’t feel like work.  On one hand, it’s lots of fun, but on the other, it’s seven days a week, think-about-while-you-can’t-sleep-at-night, live, breathe, eat, drink work.  It’s gritty.  You’re in the trenches.  If you gave up a decent salary or a well-known employer to start your company, you’ll need to get used to doing without this buttress to your self-esteem.

      11. High Highs, Low Lows.  It’s a bipolar existence – one day you think your company is going public, the next you’re about ready to start looking for a “real” job.  I wish there was a better way to dampen the swings, but I think until you’re either profitable or at least scaling a verified business model, it’s up and down, over and over again.

      Again, certainly not for everyone, but if it’s in your blood then nothing else can really compare.  Each day you create something new – it’s the ultimate blank sheet.  The rewards are consummate with the risk, though I believe many entrepreneurs’ minds are wired differently for computing risk.  But whatever you do, successes and failures, ups and downs, just make sure you enjoy the ride.

        Optimize For Time Or Optimize For Money

        Is entrepreneurship risky?  To go out on your own, build something new, not see a deterministic path from point A to point B – these things do imply a high likelihood of failure.  But when people speak of risk, they’re usually referring to financial risk.  I’d suspect that entrepreneurs are more focused on time risk – the risk that they spend time doing something in preparation for a future objective, only to realize later that the objective wasn’t as great as they first thought and that the time spent getting there wasn’t that much fun.

        Humans are notoriously bad at predicting future happiness.  Although I must always accept some present sacrifices to obtain a big future benefit, I need to discount the value of the future happiness based on (i) its uncertainty and (ii) the time it takes to get there.  So not only do I need to think deeply about the goal that I’m working towards, I also need to be realistic about how great it’s really going to be when I get there.  Therefore, I should be more careful about the present sacrifices I’m willing to endure to make it happen.

        Added to this, money is replaceable but time is not.  When I was in college and then law school, most of what I did was preparation.  You prepare for college by keeping a strong GPA, building your resume, doing well on the SATs, and preparation for law school is much the same. Then the preparation you do in law school is for private practice – you prepare to find a law firm job, prepare to take the bar, prepare to be a good associate.  At each step, you tell yourself, “This makes sense because I’m keeping my options open – I can always change down the road.”  But this is a paradox – by not choosing an option, you in effect choose the default option.  And by seeking to earn as much as you can today (“I need to have a net worth of $X at Y years in the future, so I’ll have my options open”), you begin the process of optimizing for wealth (retooling your life to maximize present earning potential) instead of optimizing for time.

        But when does the preparation stop?  When have I reached the goal for which I’ve been preparing all this time?  When can I start doing rather than getting ready to do?

        For me, these were the questions that caused me to leave my job and found GreenLine.  I wanted to create something new, craft my ideal working environment (always casual, can regularly work from home, quality and efficiency are the metrics that really matter) and more than anything, control my own destiny.  Succeed or fail, you do it on your own terms and can take much of the credit and much of the blame for whatever happens.