Are you a failure if your startup fails?

Circuit City going out of business
Image by F33 via Flickr

“Son, businesses can succeed or fail. Because your business fails doesn’t mean you have failed!”

My father said this to me, one evening as the two of us sat down to discuss how the startup I headed was doing.

For a little over four years I had been running my startup. Months after we got started, the dot-com bubble peaked and burst. We had also chosen a technology, that everyone felt would not take off despite the initial hype. Our two nearest competitors where both American companies – one, also a startup, that had raised about 100 times more money than we had and the other a listed company with well over a 1000 customers. We’d over committed to the first three customers we’d acquired – miraculously in three different continents – and ultimately failed to deliver outright or were so late as to be not useful for the customers.

We had borrowed money from the bank (another of my father’s favorite piece of advice – debt is a good thing) and from family including my father. Just the previous year, we had to cut back on a rather ambitious – and poorly thought out – plan to design chips and keep our focus on software. We also had to let go nearly fifteen people, whom we’d hired in a burst, without much attention to culture fit, while persuading the people who remained to take 10-20% pay cuts with no commitments on when these cuts would be reversed.

This was also a time when I was commuting – spending two weeks every other six weeks in Bangalore, whilst my family lived in California. So between hotel rooms and my sister’s house, I spent many a night tossing and turning, worrying how we were going to make payroll that month and not sure if we’d ever turn the corner.

To add to the pressure, the senior staff, who’d been putting in 10-12 hours a day were buying first cars or homes incurring debt, getting married and now had spouses who now wondered what they really did. Once when we had to send a key engineer to a customer site overseas, we packed his new bride with him – so that they are not separated within weeks of their wedding! We’d had actually celebrated with a cake, when the company made its first million in revenue but ten minutes later had to dash off to dampen new fires.

This story did have a good ending. Despite ourselves we turned a small profit in year five and a real one in year six. We sharpened our business focus and were gaining traction.Β  Newer challenges emerged as pricing pressures drove deal sizes down, competitors were gobbled up by customers in some instances and the market adoption was slower than we anticipated, and the payroll bill continued to grow each year. Whilst my partners and our immensely committed employees along with some luck, brought us to a successful and profitable M&A conclusion, it was my father’s words that kept me going.

“Son, the failure of your company doesn’t mean you have failed.”

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10 thoughts on “Are you a failure if your startup fails?

  1. Pingback: Tweets that mention Startup Failure Lessons - Lessons from Dad | Design of Business -- Topsy.com

    • Vinod, good to see you here. In startups, especially in bootstrapped ones, unlike with GPS devices – the challenge is that it's never clear how far ahead the right bend is (where you turn the corner!) despite numerous false positives. So its good to have some perspective – that only folks not involved in the business can bring. Sometimes despite “darkest before dawn” the dawn seems too far, so it helps to try and maintain perspective – easier said than done!

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      • This is pretty good advice, but as you say, it's quite hard to remind yourself to maintain perspective when things are just looking really down. Which is why your comment on outsiders helping out with a different point of view is pretty important.Nice post!

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  2. Hi-really inspiring Krishna!!It aint what happens to you..but more to do with how one reacts to the situation.As we can see all around, itsnt startups that fail! Even big names flounder! An entrepreneur doesnt fail -wrt his abilities, it cd be a larger systemic fault. As a recruiter, I have often helped clients find 'failed' entrepreneurs greater assets than 'safe managers who have proven track records with large cos'!!AchyutPS”Sometimes by losing a battle you find a new way to win the war. “Donald Trump

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    • Thanks for your kind words. I never ceased to be amazed how perseverance always seems to overcome setbacks. But it always is easier if there are people how can help you keep it straight, ie., separate our businesses from ourselves. Still a struggle for many.

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    • Ramesh, good to hear from you. thanks for the support. would love to hear perspectives on some of this as well, given the number of startups you have done and are now participating with!

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