I Co-founded a Failed Y Combinator StartupāāāHereās What I Learned Part II
I Co-founded a Failed Y Combinator StartupāāāHereās What I Learned Part II
If you havenāt yet, I encourage you to check out Part I. Here is a quick recap:
StrattyX is a no-code strategy-creation tool for the stock and cryptocurrency market.
Now, the is has changed to was.
ā¦Embracing failure is a step forward, but failing somewhat publicly is not easy. But,itās worth sharing the lessons I learned so that others can benefit.
Iāve divided my thoughts into two main buckets: (1) the hard side of a startup (e.g., legal, team, etc.) and (2) the soft side of a startup (e.g., dealing with failure & stress, etc.).
Disclaimer: These thoughts and lessons are my own. I do not presume to know the perspective of other members of the StrattyX team. This article is also not to finger point but to share my own honest lessons and reflections from this exciting journey in the hope that this will help other founders.
So with that, here are the more personal lessons Iāve learned:
Building a failed startup is not a reflection of myself as a failure
I canāt count the number of hours of sleep that I lost in this process. Yes, the startup was a financial failure. 90% of startups are. But, I learned more in the last few months than I have anywhere else. From that perspective, StrattyX was a huge success, and I am beyond excited to continue moving forward.
Communication is key
Any good founder would acknowledge that building a company means minoring, if not majoring, in communication. You know every detail of your company and have to determine the level of abstraction most appropriate for each of your audiences.
I had to constantly ask myself, what does my audience really care about? What will move the needle for them? And why?
To investors, I shared our vision of becoming the go-to source for market sentiment data, which is especially important in the age of narrative economics. To Grace Hopper Conference attendees, I explained how our app would be watching the markets for them, so that they could go about their day without worry. To mentors in finance, I spoke of a no-code algorithmic trading tool that could bridge the gap between the analysts and quants. The list goes on and on.
I argue that this skill is essential to perform well in any type of role, and it is a skill that I continue to sharpen and refine.
Manage expectationsāāābe honest and transparent
Source: http://businesscoachingofpa.com/blog/2019/04/03/no-april-fools-here-why-being-transparent-in-business-is-beneficial/When things are going haywire, you should tell your companyās stakeholders. Never, ever do otherwise. I am so glad that we were honest with our investors. We explained to them what happened and gave as much of their money back as possible. I understand and respect their decision to withhold future investments if years down the road I decide to become a founder again.* The majority of startups fail. That is a risk any early-stage investor shoulders. I am comfortable with the fact that I have done my part as best I could, given the situation. I wonāt stress about factors beyond my control, and you as a founder shouldnāt either.
*If you have good investors, this will very unlikely be the case. It takes a great level of maturity to go down the path that is the best for all stakeholders involved. In my case, all StrattyX investors (including Y-Combinator) commended us for making the difficult but right decision to dissolve.
You canāt help others if you havenāt helped yourself first
As a founder, you are the cornerstone of your company. Any cracks in that cornerstone will cause the entire building to crumble. Thatās not to say you canāt build a startup if you arenāt a perfect person. No one is. Just be prepared to vulnerable and adaptable.
From my observations, here are a common cracks cracks in the startup world to watch out for: inflated ego, lack of self-respect, low self-esteem, inflexibility, impatience, overprotectiveness, lack of empathy, and stubbornness.
These are not exclusive to work. Many of these involve personal traits that are exhibited in all aspects of life. A startup will force you to become a better person.
Building a venture-backed startup is not all rainbows and unicorns
This is more for younger, starry-eyed founders, many of whom I met within the college community.
Know that investors give you money because they hope that you can return the principal and much, much more. As a founder, you have a fiduciary duty to serve the companyās stakeholders. You are bound by law to always look out for their best interest. And itās in their best interest that you generate revenue.
From my observations of later-stage companies, this direction may drive the executive team to make decisions that may not be the best for the customer. For example, Netflix would never remind you to cancel an inactive subscription. After all, a significant portion of their revenue comes from users whoāve forgotten to cancel.
Some people feel comfortable making these decisions. And some may not. If you fall into the second bucket, building a venture-backed startup may not be the best fit for you.
Be proud of what you have accomplished
When we decided to dissolve StrattyX, the very last thing I wanted to do was to tell others about it. I wished I could erase StrattyX from my personal life and work history. It took some time and perspective to realize that thereās absolutely nothing to be ashamed about in building a startup that failed.
In fact, there are only things to be proud of. This year was a crash course in business school and I learned more than ever before. And itās enabled me to advise and mentor fellow founders and students and write articles like these. After I published my first article, I received many touching messages from fellow founders dealing with their own failures. It was not easy to write this article and share so publicly my personal experiences and lessons. But, I want to put into practice what I believe:
I wish more people shared their experiences of working very hard and then failing. Itās often in these vulnerable times where we learn the most but also need the most support. To any founder also struggling, you are not alone.
Being a founder can be a lonely journey. Donāt hesitate to reach out if you need a shoulder to lean on. Find other founders and create your own community.
Also know that there will always be some people who look down on you. But, there are many who will respect and admire you for taking on the challenge of making something from nothing.
Startups are high risk, high reward. While my reward wasnāt bringing a company to IPO, I received something much more valuable: a goldmine of knowledge and experience.
The door to the startup world is still open
This is a wonderful aspect of the startup community. There are many people out there, many potential co-founders, employees, mentors, and investors. You can always start again. All that matters is fixing a problem in the world. That is the legacy I want to leave behind, so I will certainly be back. :)
TLDR: Donāt waste your energy living in a past that you canāt change. Instead, look back, extract what lessons you can, and continue moving forward.
To my family, friends, mentors, investors, and more, thank you for supporting and following me on this journey. To any other founders reading this, I wish you the best of luck on this thrilling journey and hope this article has helped you in some way.
All the best,
Kristen
P.S. Please follow and give this article a clap if you found this article useful! You can find Part I here.
