The other night, I was down at Techstars listening to the companies practice their pitches. Whats always most interesting to me is how the companies have shifted over the course of three months. Some have shifted a ton (one company completely restarted), and a few have made really minor adjustments.
It always reminds me of the love/hate relationship entrepreneurship has with the concept of failure. There are volumes written about the value and importance of failure in the growth of a business. I wont rehash any of it here.
Somewhere, somehow, failure has become ok. Even more egregious, failure without learning has become ok.
True failure teaches us humility, which is the most important element, albeit the least sexy element, in true success.
True failure doesnt occur because of market conditions, or because of anyone else. True failure is directly tied to you and your actions (or lack thereof). For someone to be successful on a massive scale, they must experience true failure in their lives.
When I was in college, I played lacrosse. I came to college looking for a sport to play, and was lucky enough to have a friend introduce me to the sport of lacrosse. That first year, I started on defense on our JV team, which, despite losing a ton, was a blast.
As it is with college sports, your final win-loss record was much less important than beating the rival teams. During my time at UC Davis, that was Chico State and Sonoma State, given that our coach had come from Sonoma.
We traveled up to Rohnert Park to play a late season game. I remember playing harder than I ever had in the first half, and collapsing on the sideline for half-time. By the fourth quarter, I was spent, but the score was tied, and we went into overtime. (For those that dont know, overtime in lacrosse is sudden death, first goal wins).
The teams went back and forth for most of overtime, with neither team really making much of their offensive possessions. Nearing the end of the period, a Sonoma State attackman got the ball behind the goal. I dont remember his number or name, but I clearly remember him driving to the goal towards my left. I stepped up to slow his drive and push him to the outside. As he neared the goal, he leap up in the air.
I push him as hard as I could.
He shot the ball over my left shoulder. I remember it as if it happened in slow motion.
The ball shot down towards the back of my right ankle, and I turned to watch our goalie slide over to stop the ball. Expecting a bounce, he leaned out over the spot he expected the ball to travel.
It didnt bounce. It slipped into the lower right corner of the goal.
I watched it, helpless. Knowing that I had just had the winning goal scored on me.
Yes, one could argue that the goal should have stopped it, or that the team should have won earlier, but the truth is that at the exact moment when it mattered; I failed. Truly failed.
I watch and talk with companies constantly, and they constantly talk about failing fast, and pivoting. Its clear to me that most have never really tasted true failure, and that their pivots are reactive based on a lack of immediate success, or because the perceived path is harder than they first imagined.
Failure happens. This is true. Failure is a process, and its steps on the path. This is also true. But failure is not great. Failure is not something to strive for or accepted.
Some of the greatest entrepreneurs/investors I know understand this subtle difference. Do you?
- You Have Two Startups? You Have Two Failures. (learntoduck.com)
- Greatness (learntoduck.com)
- Failure: Necessity of Invention & Essential for Success (psychologytoday.com)
- The Upside of Failure: The Dividends of Understanding and Embracing Your Failures (philgerbyshak.com)
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For the past several days, I have been contemplating life.
I do this often. It’s almost a ritual at this point. I stop. I review. I think about things I have done; I question why I did them, and evaluate them. I try to learn from things I have done and havent done. I guess at the future; at alternative paths decision points could have created.
And, I do this quietly for the clarity it brings.
Yesterday, I was interviewed by a Japanese magazine. I get interviewed now and again, mostly about startups, often about Graphicly. This time, when asked why Graphicly, “It about the stories,” jumped out of my mouth.
One of the realizations I have come to over the past few days, is that I love story and love to tell stories.
It’s the legacy my grandmother left me.
My grandmother, who died last year, told stories constantly. Some would call her a liar. I called her inventive. Some were amazed at her tales. I was impressed with their ever-changing plots.
She would sit with me for hours spinning a tale that I would remember for years. As she got older, I would remind her of the story of the prince that lived in a speck of dirt that could only escape in a soap-bubble.
And she would tell me of the continued aventures of the tiny prince.
She taught me that everything is about the story. Everything is about how its told. It’s about the connection between words and imagination.
It’s what gets me so excited about what we are doing at Graphicly. We are enabling people to converse around story. We are helping to build community around imagination. Mostly, we are supporting the story tellers.
My grandmother once told me that stories were what bound communities together. Shared experiences and beliefs recounted in simple ways. We all love to slay the dragon and woo the princess. We strive to be the hero. We want to save the world.
“Give me a chance,” we demand in our stories. “Give me a chance, and I will change the world.”
Everything builds around the story. The truth, the lies, the inconsistencies, the reveals.
I miss my grandmother’s stories. I find that when I am contemplating my life, I often hear her voice telling my story. I see the curved corner of her mouth indicating that she knows the truth is malleable, and that the story is better for it.
In my daily life, I lean on the story. I talk in pictures, I see problems and solutions visually, and find explaining issues is easier when there is a bit of a story surrounding it. “It’s like my grandmother once told me,” I explain. “Our users are like the little prince living on his own little planet. They want their planet to be theirs, but they also want to show it to their friends.”
Story lives everywhere. Today I read a post written by a friend about three other friends. The quick of it: Sarah Lacy wrote a post about how Bijan Sabet‘s Spark Capital reneged on a term sheet that was presented to Lauren Leto and Patrick Moberg of Bnter, enraging the NYC investor world and showing that VCs are evil.
It’s always hard reading Sarah’s posts because I know that she writes in a way that forces the reader to love or hate the content and, by association, her. It’s a great style that clearly drives a lot of readership.
As I finished reading the story, my first reaction was a mix of disappointment in someone I have a ton of respect for (I have told Bijan that he is one of three people I would love to have on a board one day) and disappointment for two people who I have a ton of respect for (Patrick drew a picture a few years ago that got me to dive into blogging with both feet, and Lauren is an interesting mix of focus, savvy, luck and energy – and while this sounds stalkerish, I am fascinated with the fascination people have with her, and the image she has cultivated. Plus they are both cool as shit. People I’d probably hang out with and invite to my parents house if they ever happened to be in my home town.).
But, as I stepped back and started to think through the story — and there is no doubt that regardless of the amount of truth present, it’s a story — it began to remind me more and more of my grandmother’s twinkle.
The evil VC; the wide-eyed and naive entrepreneurs. Their cliché hollywood moment. And the anger and outrage that ensued.
Did it happen? No idea.
But here is what I know: Bijan is one of the most standup people (let alone VC) that I know.
And, when I wrote my post that 2011 is going to be the year of women entrepreneurs, my biggest mistake was missing Lauren. She is neither naive or wide-eyed, and with Patrick could very well make Bnter the biggest story of 2011 (if it can move outside of NY effectively).
I am excited to speak at Big Omaha with Sarah. She is a fantastic storyteller. Her ability to weave truth, opinion and supposition into a relatable story is second to none. Hate or love her, her writing is amazing.
And when I am at Funded By Night in Detroit, I will certainly be excited to hear about Bnter’s progress and what Lauren has planned (and, of course, which VCs are going to be lucky enough to be part of that future), and commiserate about investors that bailed out at the last minute or came in at much, much lower amounts that originally promised).
My grandmother once told me that an adventure not worth telling a story about was not worth going on.
We entrepreneurs have plenty of stories to tell, and at the end of the day, it’s the adventures and stories that make it all worth it.
- The Betrayal of Bnter (techcrunch.com)
- Pitch Perfect – Playing With Your Toys (learntoduck.com)
- (Founder Stories) Lauren Leto: Texts From Last Night Was A Million Dollar Idea, Bnter Is Next (techcrunch.com)
- Grandmother chronicles: What’s the story? (sarahjansen.wordpress.com)
- Pitch Perfect – Get Your Story Straight (learntoduck.com)
Yesterday, there was an explosion on twitter and some investor blogs about AngelList. It all started with Bryce Roberts of OATV writing a post about why he deleted his AngelList account, which was quickly followed by tweets and posts by folks like Shervin Pishevar (Angel), Mark Suster (Angel/VC), Jason Calacanis (Angel) and others (I hesitate to include Robert Scoble, who is someone I consider a friend. I consider Robert to be a self-contained hype machine. As someone who has been part of the Silicon Valley startup scene as a reporter rather than operator, his personal lens has become skewed in a way that many times is just not helpful to the discussion. Sorry Robert, I still love you.)
What I didnt see was a post from any founder or startup that is currently listed on AngelList.
The fact that there wasnt one is exactly why I think AngelList needs a bit of rethinking.
My startup, Graphicly, is on AngelList. We came on after our initial round of financing, mostly because AngelList didnt exist when we first went out. According to our profile page, we have had 15 intros and currently are exposed to ~750 investors. We have received at least one investment due to AngelList and have met many awesome folks, some of which I continue to interact with outside of the financing paradigm. (Go David Shen and 4HB!). In total, we have raised $4.2mm, of which 99% have come from folks I know or have been directly introduced to (no unsolicited calls turning into investment.)
When we first were nominated to AngelList by one of our angel investors, I was stoked. I saw AngelList as a great resource to connect to angels (not VCs) in an interesting new way. I was vetted by the AngelList team, where they helped me craft my description and asked all the right questions. To be fair, because we had already raised $1.2mm, I had low expectations in terms of interest. AngelList seemed to be (and in many ways still is), for extremely early startups and for new(er) angels looking to increase their deal flow.
Over the course of the next week or so, we were introduced to several angels, and had many great conversations. Frankly, if any startup gets to talk to David Shen, Ludlow Ventures, Ash Patel or Hussein Kanji via AngelList and you get them to invest, you will be extremely stoked. Trust me. (Of that list, only Ludlow Ventures is currently an investor in Graphicly – and I listed only the angels we met through AngelList, there is a huge list of others that are equally as awesome, I just met them in other ways.)
Now the question is, if I was starting a new company TODAY would I list it on AngelList?
I dont know.
My biggest issue is that its no longer just qualified angels [UPDATE: I spoke to Nivi and I want to make sure I am clear, I am not questioning if the angels are accredited, I imagine they are. To me, a qualified angel is one that is BOTH accredited and active.]. I follow the AngelList twitter account, there are 3-5 new folks being added daily. Some are my friends, and I know their backgrounds as investors (zero to less than zero) and some are associates at VCs trolling for deals (Im sorry, tracking startups). The noise on AngelList has become deafening. I couldnt imagine the influx of introduction emails I would get if I launched a location, gamification, group messaging startup right now.
Its what I like about the Open Angel Forum. You have to be 1) an accredited angel AND 2) an active one.
On AngelList it seems that you just have to say you have money to invest. (Sorry, investing $10-25k in 1-2 startups a year does not an angel make.) [UPDATE: See my comment above around having to be accredited]
Why is that bad for entrepreneurs? Especially young ones?
Imagine, you are a founder. Its your first startup. You have been working 20hrs a day for weeks and weeks to push out the next great thing. You get into AngelList, your deal goes out. Emails start flooding your inbox.
Whats the first thing you do?
You start focusing on the money, rather than the product.
Its not uncommon – shoot, I did the same thing in this last raise. Every founder does it at some point.
But for a service built to help young entrepreneurs connect with experienced angels, AngelList fails at this one thing. Its now connecting anyone who is interested in being an investor with semi-vetted startups. (Sorry, I do know for some like Jason, he views angel investing as a hobby, much like his poker playing. I have no interest in a hobby angel. I want folks that can add support, not just money.)
In many ways, this is what happens when any venture starts to grow. I have seen it with Techstars. It started as a great program to help startups and in an innovative way, allow potential investors see a company grow and work over an intense 3 months. Now 4 years later, there is a book, 3 more locations and a Techstars Network. I have been impressed that David Cohen hasnt allowed the program to lose its initial mentor driven focus – but now everyone wants to be a Techstars mentor. If David allowed everyone to be a Techstars mentor that wanted to be, the companies would get an enormous amount of conflicting advice some which would be quite harmful.
I like that Shervin views AngelList as another information channel. But what happens when that channel is overloaded? Or that there is a false sense of urgency to invest in startups. Mark filters his AngelList email and then ignores most of it. As a founder, who would I rather invest? Neither Shervin or Mark are investors. I dont know Shervin at all – although, I would love to, and expect to some day. I truly respect his world philosopy, and given our similar family backgrounds, I think we would enjoy each other. Mark I do know and consider a friend. He once told me he has 10 mistakes that founders make, and I was making 8 of them. While that is a solid B, it did force me to think through what I was doing and make significant changes.
As a complete aside, I have been saying for the past six months that 2011 would be the “Year of Intimacy” where smaller more private networks will reign supreme. My friend Dave Morin‘s startup is the first of these to appear in scale, but it certainly wont be the last. Since my days at Lijit, I have strongly believed and advocated that trust has to enter the online conversation at some point, and in many ways, Dave has done a great job exploring trust relationships with Path.
AngelList has the ability to be another trusted resource for entrepreneurs. If the angels that are accepted to it are truly vetted for accreditation (I believe its pretty simple, just a net worth north of $1mm — UPDATE: According to Nivi, they are vetted for accreditation, which is awesome) and activity; and the startups are vetted for quality (In essence AngelList becomes their first “investor” by providing resource) then AngelList has the ability to become that trusted resource. Its goal should be to reduce noise and allow founders to focus less on the fundraising process and more on building amazing products. AngelList should allow angels to increase their deal flow and connect with founders that they can really help and support.
As it is now, it is becoming a hype machine that is driving undue pressure and creating a potentially toxic relationship between investors and entrepreneurs.
[UPDATE: I am getting some personal emails asking if I would recommend AngelList to a new founder. The answer is yes, I would and do. I also make sure that they are educated to the noise, and give them some tips on how to handle it. Research, dont take all intros, and research some more. I also highly recommend Open Angel Forum to all founders.]
- Why I Deleted My AngelList Account (bryce.vc)
- As Angel Investing Booms, So Does the AngelList (gigaom.com)
- What’s The Real Deal With AngelList? (techcrunch.com)
- My response to @bryce crying about @anglelist (calacanis.com)
- Robert Scoble: The new Silicon Valley hype machine: AngelList (scobleizer.com)
- New AngelList Feature Lets You Control Which Investors See Your Startup Pitch (readwriteweb.com)