So my cofounder and I started to materialize what we thought this company needed, and assembled a team of people to work on it. The fact that we could come in and substantially change product direction—that we could create and staff and launch a project—was due to the fact that the company had paid extra for us. Leadership assumed we knew something.
Failing Up, Down, and SidewaysYou said that most projects in software fail. Why is that?
Because you never know what’s going to work. Market timing is everything: something that makes perfect sense two years from now, or made sense two years ago, might fail today for no good reason. Everything changes so fast: the technology stack, consumer demand, even the fundamental capabilities of these devices.
I mean, everything I’ve ever worked on has failed. I’ve worked on some ambitious projects at several of these big companies, and none of them have succeeded. But I’ve still been rewarded and promoted. And I think that’s a good thing about Silicon Valley. Failure isn’t looked down upon, which is a positive aspect of tech culture.When you fail inside a big company, does it still feel like failure?
The average time spent on a team is well under two years at most of these big companies. So when a company wants to change direction and abandon a product, people usually don’t take it that hard because they weren’t planning on being there for very long anyway.
On some teams, however, that’s not the case. I’m currently on a team that has been working on something for several years. And it’s failing. We have been launching small representative parts of our product, but users aren’t using them.
This is partly a problem with what constitutes success within a big company: if you launch a product with a million users, it’ll get killed because a million users is nothing. That’s one of the reasons that big companies have trouble innovating, because achieving a 1 percent gain in users of your main product will win every time over launching a new product with a much smaller user base. I mean, a million users would be a rocket ship success for an early startup. For a big company, it’s a drop in the bucket. That’s why big companies tend to get stagnant, because they’ll always prioritize growing the main product over funding experimental ventures.
Anyway, on my team, failure has really depleted our energy. We’re demoralized because we’ve been grinding for a long time on something that just isn’t taking off. It used to be one of the best teams I’ve ever been on—but within a period of six months, we’ve become very unproductive. We have no direction.That sounds like burnout.
People get burned-out not because they’re working too hard but because they’re not feeling rewarded by the work they’re doing. They get burned-out because they believe their work has no impact. On my team, since we know it’s only a matter of time before leadership kills our product, people are burning out left and right.
At work, there are certain things you have to do. But what the company is really paying you for is to come up with new things to do. They’re paying for your creativity. When I’m burned-out, I’m still doing the things I have to do—I’m filing the TPS reports—but I’m not coming up with new things to do.2 Burnout is when the creative part of your work is dead. There’s a muscle I go to flex and it’s just not there.What about in the startup world? Failure must look different inside a startup.
If you launch a startup that goes out of business, no one thinks you wasted your time. People still revere a founder whose company has failed, even to a fault. Plus, because there’s always more money being pumped into tech, it’s a soft landing for almost anyone whose startup fails.
That changes depending on what you’re working on and the time period, of course. For instance, I don’t think if your social app failed today you would have a nice acquisition offer waiting for you, unless you knew the potential acquirers on a personal level. And that ends up being the major way that the opportunities for “failing upward” are not distributed equally.Who is allowed to fail, and who gets to fail upward? Your startup wasn’t failing, exactly, but it sounds like the people you met in college were the determining factor in your ability to land acquisition offers.
Definitely. In our case, that was the main thing. We didn’t have an impressive piece of technology or an impressive user base. But we did have social capital.
There are other ways to accrue social capital. If your startup gets press attention, that raises its acquisition price. If you have a really stellar team, that’s another way to fail upward. You could assemble a dozen excellent engineers to work on a very hard problem and then fail at that problem. But you found a dozen engineers that can work together without killing each other and maybe even manage to ship something. That’s worth a lot.On the one hand, Silicon Valley seems to revere entrepreneurialism. On the other hand, the industry is increasingly dominated by a handful of big companies—companies that, as you’ve explained, frequently acquire startups and burn down all their assets to ensure they don’t become competitors. How do you make sense of that contradiction between the cult of the founder and the increasingly monopolistic structure of tech?
The funding model for startups is venture capital. And venture capital is a hits-driven business: you expect the vast majority of your investments to fail, so the ones that succeed have to succeed on a massive scale. Venture capital is risky, and it requires a lot of money.
Until relatively recently, tech companies didn’t have enough money to compete with venture capitalists. But now they do.
