A startup is a series of near-death experiences (often followed by death itself).
People love to talk about their success stories, but the reality is that most startups don’t become billion-dollar companies. Some of them fail, and often quite spectacularly.
A trio of tech industry veterans who have lived through their share of failures offered Code Conference attendees their takes on how to recognize when things are headed south and what to do next.
Here are some key insights from Thursday’s “Mistakes Were Made” panel at Code:
Chet Kanojia (former CEO of Aereo and current Starry CEO)
Some ventures, like Aereo, are all-or-nothing propositions. Aereo, which aimed to deliver broadcast television over the internet by recording shows onto its own servers, was one of those.
Its CEO, Chet Kanojia, said he knew from the beginning that the Supreme Court would either validate or kill what the company was doing. (It ruled against Aereo.)
“I used to tell every employee [I hired], ‘Don’t count on a job in 18 months,'” he said.
Kanojia said he wants his tombstone to read “badass,” and noted that he was someone who took a lot of risks: Less than 24 hours after Aereo shut down, he was already hiring many of his former employees for his next bet, Starry.
Joanna Hoffman (General Magic, NeXt, Apple)
Failures are often a combination of the many decisions a company makes plus circumstances.
At the famously-ahead-of-its-time General Magic, the computing power wasn’t there to build the kind of smartphone precursor that the founders had in mind, said Joanna Hoffman, who was vice president of marketing, and went on to the founding team of the Apple Macintosh. But the company also decided to blow its marketing budget, touting its vision rather than waiting until it had something to sell.
When the product finally hit the market, Hoffman said, she didn’t have the money to convince people to buy it.
“No one bought it,” she said, noting that General Magic sold about 3,000 devices, almost all of which went to friends and family of employees or to its corporate partners.
Dalton Caldwell (Picplz, App.net, iMeem)
Becoming a late-stage company — even one that ultimately fails — means winning a lot of coin flips.
“When you are running a startup, you constantly have near-death experiences,” said Dalton Caldwell, who sold iMeem to Myspace in 2009 before starting PicPlz and App.net. “Think about all the times Tesla almost died.”
Companies often fail, he said, when the founders lose their faith in the venture. “It’s actually hope that sustains you through these near-death experiences.”
Earlier on Thursday, Tinder CEO Sean Rad talked about his own challenges, saying that getting fired from the top spot was one of the hardest things that happened to him, but also one of the best.