by • September 19, 2011 • Founders, Pitching & sellingComments Off48

The elevator pitch of failure

I needed about 18 months after the end of my first company to learn how to effectively pitch our failure:

“We were betting on the social advertising ecosystem trending toward openness, which it didn’t. On the enterprise side, Buzz and Beacon set bad legal precedents which spooked the big brands, slashed our price point, and meant we couldn’t scale our sales team.”
–Me, at every meetup and introduction ever

It’s concise, it’s clean, and it’s hard to argue with. It’s everything you want an elevator pitch to be, except the opposite[1].

Listeners used to be unconvinced when I said I was moving on: “Have you tried this product tweak? What about that market? Can it go self-serve instead of heavy sales?” I’ve spent entire lunches anti-pitching my old business, hoping to make it as dead in their mind as it is in mine so we can move on to the task at hand.

The explanation is now watertight enough that they generally just give a shrug of condolence. But it wasn’t always this way.

As founders, we stalled the decision for months. We called a board meeting to tell our investors and I prepared a special doom deck. It was just like a pivot pitch deck (“look at all the stuff we’ve learned”), except it explained, one iteration after the other, why the company had failed to scale. It then went on to attack each potential pivot and to kick the legs out from under them, concluding with the rather grand claim that we had no viable product strategy, a spooked pipeline, no funding path, and a shattered team.

It was a long meeting.

I am relating this for two reasons.

First, you probably hear a lot of these stories at conferences and in case studies and mistake them for the truth. To be fair, I’m a bit tired of justifying my decision to shut down the company. It was a hard choice at the time and I could drive myself crazy trying to pick it apart in retrospect. If you ask me what happened, I’m going to rattle off the fatalistic explanation you’ll most quickly accept. But that version is decidedly not a case study and any lessons you learn from it are based on a story created after-the-fact and polished over 18 months of nega-pitching.

Second, cause and effect is so ambiguous in startups. I’m still not exactly sure how/why we failed. I can tell you about stuff that ended up being wrong, and I can fairly accurately judge the condition of the company and eco-system at the time of failure. I can even pull out a few critical decision points, like choosing between being an advertising technology provider or a consumer media site. I know that was a big choice, but I can’t say what would have happened if we had chosen differently. You’ll see successful startups talking about all the things they did wrong (and vice versa), so it’s clear that making a couple mistakes isn’t the deciding factor. It weighs against you somehow, but you can’t simply single out and lynch the culprit.

I haven’t had an opportunity to hear too many people pour their hearts out about why their company failed. You have to get pretty lucky on being in the right place (a mostly abandoned bar) at the right time (about 10 drinks deep). I think the mourning process for this type of failure begins with a self-centric view of “oh-my-goodness-I-have-regrets” and shifts toward an environment-centric view of “we gave it our damn best and it didn’t work out.”

I may be going through just another phase of narrative fitting, but currently my mental model is founder-focused. We had 4 founders, and when I think about the company, it inherited a major vice and a big virtue from each of us. Maybe the best founders have no drawbacks, or maybe you’re meant to recognise the danger-zones early and hire to fill them.

Sadly, I don’t have a big conclusion or easy answer here. I just thought this was story which hadn’t been shared much before. I hope someone who knows more than me will be able to shed a little light on the whole issue. Thanks for listening.

[1] Elevator pitches convince the listener that you are destined for fame and stardom in a market too good to fail in. My anti-pitch aimed to convince that we were destined for doom thanks to environmental factors beyond our control.

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