Many of these blogposts are geared towards how to fail well. Well, I’d prefer to never get there. Here’s a few insights into how to mitigate the risk of failure.

Based on the cases in the Success/Failure module, here are my own personal takeaways on how not to fail. Or at least, give yourself the best chance to succeed.

  1. Prepare well and prepare often

One of the biggest learnings thus far has been the lack of preparation by founders right from the initial founding of the company. Many of these founders took for granted the amount of preparation need to validate product market fit, to identify the right customers, etc. They also don’t realize where their own blind spots lie. Maybe they were experts in technology but can’t always grasp or communicate unit economics. Maybe they take for granted the infrastructure required to communicate their vision.

 

Specifically, I believe that preparing for entrepreneurial success often starts before founding a company. Are you learning from successful founders? Are you thinking through your own leadership principles? Are you gaining the skills to shore up your weaknesses?

  1. Sweat the small decisions

As a founder, especially early on, every decision matters. From hiring down to key product decisions, each small decision can have a dramatic impact on the trajectory of the company. Its worth putting down guidelines (i.e., as GH Smart recommends for hiring), and quickly acting on those decisions that don’t work out. I think one of the most valuable skills a founder can have is the ability to toggle between the big picture and the minute details quickly and efficiently. Doing so allows them to have a pulse on the company while also understanding when to delegate accordingly. But having a mindset that “I’m going to get every decision right” doesn’t mean an irrationality of control, but could also mean “I need to cede this decision to those who know best”. We’ve seen many founders who have gone astray by not sweating the small decisions, choosing instead to gloss over them using their money, or lack of insight.

  1. Diversify with governance

Many founders view governance has a bad, constraining thing. But if done well, the proper governance can be instrumental in minimizing bad risks in a company’s future. Finding the right investors, aligning incentives among the employee base, and having a broad base of opinions are critical towards making the right decisions. Silicon Valley to some extent has recognized this. Many, often exclusive, communities of founders exist to diversify brainpower and to share best practices. Incubators differentiate their value by bringing in people who have been there, done that. And investors try their best to use their network to facilitate connections. Doesn’t always work, but people have realized that both informal and formal governance has a lot of value.

  1. Don’t be afraid of risk

At the same time, risk isn’t always bad. In fact, its required to turn an idea from a a small dent into a grand slam. In my view, the key is to understand the risk, experiment accordingly, and double down when needed. Many founders go big on one idea (i.e., Curt Schilling), without the proper understanding of the risks involved. Their risk perception can be skewed by personal wealth, hubris, or market forces. Yet, entrepreneurs have to be risk takers in order to succeed.

 

 

2 thoughts on “How NOT to fail.

  1. Thanks Karthik for your post
    While I believe that not all failures are predictable and can be anticipated, I tend to agree with you that there are steps entrepreneurs can take to mitigate challenges and failures.
    One more insight I would add is “learn from other entrepreneurs’ mistakes”. Entrepreneurs tend to get advice and best practices from others who successful founded and run their businesses. However one should not only learn from successful founders but also from unsuccessful ones. When looking at their competitive landscape, entrepreneurs should identify other startups with similar business model that failed and try to understand the reasons for their failures and the lessons that can be applicable to their own startup.

  2. Hi Karthik, thank you for your post. I generally agree with you and I believe that entrepreneurs should be as prepared and possible and try to plan ahead in order to avoid failure. However, I was struck by our guest’s (David) comment on how it is difficult to plan ahead for everything since companies go through different stages. He mentioned how you might need a certain type of employees in the first stage (ie: generalists) but then you might need to turn to a more specialized team in the second stage, and so on.
    I wonder if we should “plan ahead” for each of these stages (which sounds a bit too complex), or if we should approach this as a “these are the few rules I must follow at all times” and then try to adapt as things change.
    Having some ground rules to guide us is helpful and necessary, but is it enough to get us through the different stages of our business?

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