Very important comment. The biggest risk in doing a startup is not the financial risk per se.
It's the psychological risk of knowing you really, really tried -- and still failed. That is the hard part, because everyone goes in with Dilbert/mass media notions of how easy it is to be a CEO or (just as bad) Social Network illusions of how easy it is to grow meteorically while fighting off lawsuits.
The truth is that it's not easy, that it takes a special and lucky person. If you fail it's really hard to realize you aren't that special. The possibly healthier (?) way of dealing is to convince yourself that it was bad luck, or the other guy cheated. Then it's not as much of a hit to the ego, to the sense of your own capabilities. But it's hard.
It doesn't take a special person, so much as it's simply the case that no matter who you are, your startup is likely to fail.
When I was much younger and starting my first (fundably doomed) startup, one of my cofounders liked to say, "yeah, most businesses fail, but those statistics include companies trying to sell soft drinks to Eskimos and combination Chinese food/pizza restaurants". Then we'd all chuckle, knowing that the statistics most certainly didn't capture dynamic new technology firms like ours.
No. Most companies fail. Look at the list of dead YC companies. Those were screened by a team that has specialized in doing nothing but screening founding teams and then attempting to give them every advantage their considerable and growing infrastructure and connections can give them. And they still fail.
Because that is what startups do. They fail.
The best, most talented, most experienced founders in the world would presumably be among the first to tell you that you can't read anything about your self from the simple fact that your company failed. Learn what you can, but don't ever let it grind on you.
(Some people just shouldn't be in this game, for whatever it's worth, like Matt Damon said about the no-limit players in Rounders; not because they can't, but because it's not healthy for them.)
Actually I will take that further, as a small business owner.
EVERY business fails. Every single one. Some businesses somehow manage to stay in business when they run out of money and keep going on until they succeed. However, that's what businesses are up against. I think going into that armed and aware is one thing that makes success more likely.
Correct me if I'm wrong, but isn't YC focussing on relatively high-risk ventures in the hope of hitting it big? If they picked a roster of less ambitious projects, but with the same quality of personnel, then surely the failure rate would drop.
It's probably just vocabulary. We think startups as tech-related, but there's probably just as many new companies created in the restaurant sector as ours -- and they have their own restaurant investment companies.
Arguably he failed at Apple too (the first time around).
Another lesson to take from Steve's experience: the bigger the impact your startup is likely to make, the greater the chance it will fail. That might seem quite counterintuitive at first. Certainly, if there's a market and the demand is there, then success should be forthcoming, right?
Except if the problem is unsolved, it's probably unsolved for a reason. I'm reminded of something I read (I believe it was from "Germs, Guns, and Steel", but I don't have it to reference): invention is the mother of necessity! Safe startups give people something they already want. Great startups give people something they didn't even know they needed.
But humans are dumb animals. The first three times you show them something better, they'll turn their backs. So the more important your work is, the more likely you are to fail, and fail, and fail again. It's not you, it's just human nature.
>>The possibly healthier (?) way of dealing is to convince yourself that it was bad luck, or the other guy cheated
I think it would be healthier to accept that failure is normal and to rather enjoy the road to Ithaca [1]. Life without challenges/failures would be too boring.
This is not part of the american cultural narrative and thus will be harder to accept even to your own psyche.
Its important to understand how the difference between your own thinking and society's thinking can and will affect your own happiness (usually in a negative way). Its not something many people think about but has very real consequences.
I just bought the book "reWork" by the guys at 37signals and so now my opinion on every business bei doomed to fail is different. But I think we're missing the point. What if this isn't about failure at all? What if Diaspora was widely thought to be a big success?
What I'm getting at is maybe it wasn't "failure" that disturbed this man but simply the pressure to succeed. I'm someone who is succeeding in business so far but I still get bad bouts of depression and feel like a failure anyway. It's not just me either, it can be anyone.
I don't know enough about this man and Diaspora to have insight into his thoughts or to know about the success or failure of the company but I haven't seen any indications from anyone here that he was distressed over failure. It could've just been the pressure of it all. Whether you've made it big or you're still the little guy in a garage that pressure is the same. It's all relative. The little guy worried about payng rent and the big guy sweats over the down payment on the mansion. Same pressure, different context.
As s startup owner I feel like I am a sinking man and each floating wood chip around is a hope - Learning to float between moving from one wood chip to other is the key to me.
I guess I will fail that day when I will conclude that I am too tired of trying (not really, really tried -- and still failed).
I don't believe "The truth is ... that it takes a special and lucky person".
The truth is we need one or two hands on our shoulder and someone to stand during the darkest hours and say "darkest hours are always before the sun comes". ..sad to read about Ilya Zhitomirskiy.
>> It's the psychological risk of knowing you really, really tried -- and still failed.
As a successful developer who spent years thinking "with enough time, I can solve any problem" and was just caught back by reality (efforts do not always imply success), this comment stuck a chord with me.
It also takes a lot of support, and circular support as even if you are feeling down, your partner may be too, and its both your jobs to keep the other happy. Its very stressful being in the limbo state with everyone trying to kill you, you are trying to build something, you want to get money to continue working, nobody thinks its a good idea till you prove it which takes time, etc.
It definitely takes a mental fortitude and a dash of ignorance to do this stuff.
> If you fail it's really hard to realize you aren't that special.
All of the most special people in history endured many failures. So while failure can teach us many things, "you're not special" is absolutely not one of them.
It's the psychological risk of knowing you really, really tried -- and still failed. That is the hard part, because everyone goes in with Dilbert/mass media notions of how easy it is to be a CEO or (just as bad) Social Network illusions of how easy it is to grow meteorically while fighting off lawsuits.
The truth is that it's not easy, that it takes a special and lucky person. If you fail it's really hard to realize you aren't that special. The possibly healthier (?) way of dealing is to convince yourself that it was bad luck, or the other guy cheated. Then it's not as much of a hit to the ego, to the sense of your own capabilities. But it's hard.