Published in UT San Diego, October 7, 2013
Rule No. 323
When an entrepreneur asks me to serve as a mentor, the assumption that both parties make is that we are working together to build, grow and manage the early-stage company for success. But I am beginning to wonder if perhaps a different kind of mentoring experience might also be useful — one that helps the entrepreneur manage and deal with failure.
Elisabeth Kübler-Ross is famous for defining “the five stages of grief.” These are denial, anger, bargaining, depression and acceptance. (Lenny Bruce has a famous performance on this topic that you can find online). Entrepreneurs in failing companies go through these same stages.
• Denial. I have seen entrepreneurs continue on, blindly, fueled by the mantra and belief that an entrepreneur needs “passion” for his project. “If I can raise another small round and get a few more downloads.” This chant is oblivious to the fact that maybe no one wants it. It is the famous joke about the man who jumps off the Empire State Building. As he passes the 46th floor, a man at the window shouts out, “How are you doing?” and the jumper answers, “So far, so good.” A good failure mentor is needed to point out the concrete below.
• Anger. Why me? All those half-baked companies that obtain financing at crazy valuations. This becomes the “why not me” version of anger. Now, this person offers an interesting case because it is wholly possible that their company is actually terrific and the fact that some venture capitalist somewhere barfed on them is not necessarily indicative of the merit of the company. But again, the failure mentor has to act in a way that honors the anger but does not allow it to enter the realm of rage and self-destructive behavior. Look, I have been passed over for things that I felt I deserved. My answer is a simple one — revenge. The “I will show those half-wits” anger and so I go back to work with even more purpose.
• Bargaining. This entrepreneur says. “I will do anything if you will give me more time, more money” — more, more, more. This entrepreneur is dangerous for the investor because you can make a great deal, but be careful. I am not sure I want to be a contributor to the human train wreck that is coming down the tracks. So the failure mentor needs to preach acceptance — preparation for the end that is looming.
• Depression. This feeling is real. A young friend recently asked me, “If my company fails, I will probably end up homeless living out of a garbage bin.” When you live by comparison, when you look around you and your friends are getting married, having children, buying houses and getting paid outrageous sums of money, feeling depressed may actually be perfectly reasonable. The failure mentor needs to refer our friend to a shrink who can prescribe meds.
• Acceptance. The ultimate state of Zen. I acknowledge reality, and I am at peace. Now, look, that sounds great, but I do not want to fund an entrepreneur who is accepting. I am more of the anger and rage school. The key to acceptance is the recognition that it is not the end, it is not death. In fact, acceptance is wonderful because like a divorce or a bankruptcy or a failure, you are free to get up and try to do better the next time. What is important is accepting the current reality and letting go of the past. The failure mentor’s job here is to encourage our entrepreneur to analyze the failure, really wallow in it, dig deep into the issues — not just the business, but the psychological, the personal, to do the hard look in the mirror — and to come out the other side ready to crush the ball the next time.