Seven Lessons From Startup Failure To Help Your Next Startup S | 🦄 Unicorn Mafia Startup

Seven Lessons From Startup Failure To Help Your Next Startup Succeed. Part 1

1. Set expectations with co-founders.

I’ve had a few companies go through hard times due to a co-founder losing interest, secretly taking other gigs or, in one case, ghosting completely and leaving the country. These were painful. A co-founder relationship is like a marriage. You’ll be partners in one of the most stressful, rewarding, terrifying, confusing journeys you’ve ever been on. Choose your partners wisely.

If you’re friends, have a discussion about how this will likely change the fabric of your friendship. If you just met, take time to get to know one another. Talk about your motivations, working styles, expectations and decision-making processes. Define success metrics and areas of focus.

Work together on a trial period. Don’t rush to issue stock from day one because that makes it messy if you opt to part ways. Set yourselves up with a standard four-year vesting schedule and a one-year cliff. Investors will love this.

2. Research before taking risks.

Founders embrace risk more than most. However, there’s a difference between personal risks and imposing risk on your company. To reduce risk, many founders raise venture capital. If you’re planning on doing this, invest in research.

When raising money for a prior company, a sticking point we ran into was the size of our total addressable market. After digging in, it was a real issue, and we had to pivot as a result. The churn risk of target customers also altered our ability to scale, which we hadn’t factored into our financial models. Had we done all this sooner, the fundraising process would have been faster.

3. Have honest retrospectives.

Founders are usually perpetually optimistic. This can sometimes prevent them from recognizing problems. In one of my prior roles, the founders had a policy to never distribute bad news to the team or investors in order to “not scare anybody unnecessarily.” This prevented dozens of smart people from being able to help solve problems.

As problems occur, be transparent about them with your team. Discuss what they could lead to and what the stakes are, and prioritize accordingly. Celebrate what worked, but don’t gloss over failures to salvage your self-esteem.

Revisit the scientific method. What’s the objective? What are the variables? What’s your hypothesis? What happens if it’s validated or invalidated? These answers help you build a process for improvement and reduce fears around sharing problems.