From Steve Blank: A story of "Failure and Redemption"

From Steve's great blog. Original post here. Reposted by permission.

 

Failure and Redemption

 



“What’s gone and what’s past help
Should be past grief.”

William Shakespeare - The Winter’s Tale

We give abundant advice to founders about how to make startups succeed yet we offer few models about dealing with failure.
So here’s mine.
——–
In my experience, living through failure has 6 stages:

• Stage 1: Shock and Surprise
• Stage 2: Denial
• Stage 3: Anger and Blame
• Stage 4: Depression
• Stage 5: Acceptance
• Stage 6: Insight and Change

While I had been part of a few failed startups, none of them had fallen squarely on my shoulders until Rocket Science Games where my business card said CEO. It was there that I lived through all 6 stages and came out the other side a changed man.

Failure
Stage 1: Shock and Surprise   We raised $35 million and after 18 months made the cover of Wired magazine. The press called Rocket Science one of the hottest companies in Silicon Valley and predicted that our games would be great because the storyboards and trailers were spectacular. 90 days later, I found out our games are terrible, no one is buying them, our best engineers started leaving, and with 120 people and a huge burn rate, we’re running out of money and about to crash. This can’t be happening to me.

Stage 2: Deny any of it was your fault   In my mind, I had done everything the investors asked me to do. I raised a ton of money and got a ton of press. We hired everyone according to our plan. It was everyone else who screwed up. I did everything right.

Stage 3: Get angry and blame everyone else   This was the fault of my cofounder since he was in charge of game development, it was the engineers who bailed on me, it was the sales and marketing people who didn’t tell me how bad the games were, it was the VC’s who refused to put any more money in the company, it was Sega’s fault for making a bad gaming platform…
State 4: Get depressed   When the inevitability and magnitude of the failure sunk in, I slept in a lot. There were days I’d get up late and go to bed again at 5 pm. I lost interest in anything associated with my past industry. (To this day I still can’t play a video game.)

Redemption

Step 5: Gradually accept your role in the failure   A few weeks after leaving, I began to think about what I should have done, could have done and pondered why I didn’t do it. (I didn’t listen, I didn’t act, I didn’t own my role as CEO, I wasn’t prepared to do what was right or leave.) This was hard and didn’t happen overnight. My wife was a great partner here. I often reverted to Stages 2 and 3, but over time I took ownership of my primary role in the debacle.

Stage 6: Gain insight and change your behavior   This was the hardest part. While I stopped blaming others, understanding what I could change in my behavior took long months. It would have been much easier to just move on, but I was looking for the lessons that would make my next startup successful. I looked at the patterns of behavior, not just at my last company but also across my entire career. I learned how to dial back the hubris, get other smart people to work with me – rather than just for me, listen better, and act and do what was right – regardless of what others thought I should do.

Epilogue   For my next startup I parked the behaviors that drove Rocket Science off the cliff. We established a team of founders who worked collaboratively. When my co-founders and I got the company scalable and repeatable, we hired an operating executive as the CEO and returned a billion dollars to each of our two lead investors.
Now when I listen to entrepreneurs who’ve cratered a company, I listen for their stories of failure and redemption.

Lessons Learned

• Six stages of failure and redemption
• Don’t get stuck in Stages 2, 3 or 4 - move forward
• Don’t skip acceptance of your role
• Get to insight so you can change your behavior—then commit to the challenge of doing it differently the next time

Jim Marshall's wrong way fumble recovery

I had forgotten about old-time Minnesota Viking Jim Marshall's story until reminded of it in Carol Dweck's book "Mindset: The New Psychology of Success." Here's how Dweck captures the story:

Jim Marshall, former defensive player for the Minnesota Vikings, relates what could easily have made him into a failure. In a game against the San Francisco 49ers, Marshall spotted the football on the ground. He scooped it up and ran for a touchdown as the crowd cheered. But he ran the wrong way. He scored for the wrong team and on national television. It was the most devastating moment of his life. The shame was overpowering. But during halftime, he thought, “If you make a mistake, you got to make it right. I realized I had a choice. I could sit in my misery or I could do something about it."

Marshall played 15 more years, appeared in 4 Super Bowls, and set the record for most fumbles recovered in a career (only one went the wrong way).

Here's the play itself, from 1964:

Comparing Edison and Jobs in how they dealt with failure

Speaking of grit, let's consider Thomas Edison and Steve Jobs. In his blog, Bob Sutton posted about the terrific comparison of the two geniuses by Andrew Hargadon. And the most fascinating part of Hargadon's analysis is in highlighting how each dealt with crushing failure:

How both men dealt with their very public failures is a morality tale far richer in their differences than in the simplistic connections between them.

Once ousted, both men jumped immediately back into the arena, intent on proving their detractors wrong. And both failed again. Edison returned to an earlier project, the phonograph, but would soon become embroiled in, and ultimately lose, another standards war. In 1985, Jobs founded NeXT computer, describing in a name his desire for redemption. Interestingly, both invested in new movie technologies (Edison pioneering moving pictures with a system of film, camera, and projector; Jobs investing in Pixar and the development of computer animation).

At the end of their second acts, our two heroes faced their greatest challenges and, here, their paths diverged.

Edison kept roaming. Whether by temperament or temptation, he kept pursuing the next great invention, investing his and investors money in ultimately fruitless ventures such as magnetic iron-ore mining and concrete cast-in-place houses (both doomed by a toxic combination of huge capital costs and his well-known predilection for experimenting).

Jobs returned to Apple. Clearly the wiser for these experiences, he discussed publicly the lessons he learned from his original ouster from Apple and from the failure of NEXT despite its brilliant technology. Even brief conversations with former colleagues told me he had brought a new humility to the company’s innovation efforts. Gone was the effort to prove Apple’s technical genius, or inventive power.