And more advice from Brian Cohen, Chairman of New York Angels
New York Angels is a member-led organization committed to finding, funding and mentoring great young companies from pitches through to successful exits. They are one of the longest running active angel groups in New York City and have invested over $150 million in entrepreneurial ventures.
1. Don't be afraid to walk away from a startup that is not working!
Almost all startups fail. Unfortunately, some companies are barely alive. We call them the "walking dead." Our society encourages people to do things. Sometimes great things. And in this context of doing things, this world of entrepreneurism has been a great resource because people can put their heart, their souls, their minds into something that expresses their interests, creativity, and desires. To some extent, you can go to school to learn how to do that. You can have your family encourage you and give you startup money to get going because we are all supported by the drive to be a founder of a company. We have all these positive forces working towards that goal.
Unfortunately, what I have learned, is that there is generally a lack of understanding of time. To a great extent, my feelings about the importance of time comes from observing thousands of companies in the last 40 years since I have been working with startups and investing in them and helping them. Time is precious. Being driven causes you to think that time is not a problem because you can see the end result of the goal. Many times the end result of the goal is very elusive. So, you keep trying. Founders told me that they wished that they had stopped what they were doing many, many months before, but they couldn't because they couldn't tell anybody that they wanted to stop. They were worried that people would think that they didn't know how to succeed. They couldn't explain that to anybody, and so they kept going. But they wished, in the end, they could have stopped earlier and started something new. Started something fresh and moved on. There is no book for that. They don't teach that in college.
2. Your time is far more important than a fail.
The issue about admitting failure has been written about a lot. People have lots of quotes about how important failure is, but we need to teach people to recognize that admitting failure is okay! Unfortunately, the word failure is a stinging word. You failed. In some European countries, failure is something that they carry on their foreheads for a very long time, and it is painful for a lot of people. Here in America, that is not the case. We all teach each other that failure is a critical step to learning to succeed. We use the line "fail early and fail fast," and I agree with that. I think that if you equate the value of time to a young person's life which they don't always recognize...that time slips by too easily. They can do more by recognizing that they should stop doing something that is not working and they should do something else and move forward with their lives. So, it is a strong word failure. I don't really use that word. I like to simply say, "what I thought about the opportunity and what I thought about the customers isn't what I expected. I learned that what I had believed wasn't actually true. But I took the opportunity to find out." And in the context of failure, that indeed is one aspect of what causes a company not to succeed. There are other factors that create uncertainty in the growth of a business, of course, but in the end, a founder should often consider time as a critical component of how they recognize in deciding on when they are going to stop doing something. And proceed the rest of their life without wasting time.
3. Get feedback from advisors on why your startup is NOT going to succeed.
When I gave a talk at Columbia University a couple of years ago, I wanted to learn a little bit more about this concept that we in the startup community tend to coddle the entrepreneur to think positively. To think good thoughts and to think that opportunity is right around the corner. We say, "you are going to be such a great entrepreneur; you should be so proud." I asked the question of these brilliant students in the graduate program at Columbia. “are we, the startup community, the accountants, lawyers, parents, the funders... Are we too nice to you? And, in being too nice too are we causing you to do things you shouldn't." And they came back to me and said, "you're right." "Don't treat us like children. Treat us as you would any hard nose consultant. Tell us what you are really thinking. If you see failure, let us know. And, explain it to us. Maybe it will make us better. Maybe it will make us pivot, or maybe it will make us move on to something else."
Unfortunately, we don't have this culture in America. I always wanted to start "The Devil's Advocate Society." A startup founder would come into a room, and they would want to be told why they are going to fail. They would want to be told why success is never going to happen to them. That is the mark of a great founder. Someone who challenges their beliefs.
4. It's not all about you.
Don't take everything personally. The founder forgets that they are the steward of a business. And a business is not them. The business is a separate entity. The best founders I have seen are the ones that are incredibly transparent about what they don't know and are willing to listen. That doesn't mean that they are going to do everything, but they are willing to listen and learn. It gives me a twinge inside when I see a founder saying "I'm going to do this because I think it is right." And they can't even defend it.
The other thing that hurts companies is not understanding that they need to create a culture in believing in everyone around them and supporting them rather than being the other way around. I have an upside down triangle in the businesses that I have built. I am on the very bottom of the triangle, and everybody else is above me. I think they need to invert their analysis of who is in charge. People on the front lines are in charge. You support them; you feed them. They are above you. I look for founders who understand that leadership is at the bottom of the rung not at the top. That is vital.