Failure and Redemption

“What’s gone and what’s past help
Should be past grief.”

William Shakespeare - The Winter’s Tale

We give abundant advice to founders about how to make startups succeed yet we offer few models about dealing with failure.

So here’s mine.
——–

In my experience, living through failure has 6 stages:

  • Stage 1: Shock and Surprise
  • Stage 2: Denial
  • Stage 3: Anger and Blame
  • Stage 4: Depression
  • Stage 5: Acceptance
  • Stage 6: Insight and Change

While I had been part of a few failed startups, none of them had fallen squarely on my shoulders until Rocket Science Games where my business card said CEO. It was there that I lived through all 6 stages and came out the other side a changed man.

Failure

Stage 1: Shock and Surprise
We raised $35 million and after 18 months made the cover of Wired magazine. Wired 2.11 CoverThe press called Rocket Science one of the hottest companies in Silicon Valley and predicted that our games would be great because the storyboards and trailers were spectacular. 90 days later, I found out our games are terrible, no one is buying them, our best engineers started leaving, and with 120 people and a huge burn rate, we’re running out of money and about to crash. This can’t be happening to me.

Stage 2: Deny any of it was your fault
In my mind, I had done everything the investors asked me to do. I raised a ton of money and got a ton of press. We hired everyone according to our plan. It was everyone else who screwed up. I did everything right.

Stage 3: Get angry and blame everyone else
This was the fault of my cofounder since he was in charge of game development, it was the engineers who bailed on me, it was the sales and marketing people who didn’t tell me how bad the games were, it was the VC’s who refused to put any more money in the company, it was Sega’s fault for making a bad gaming platform…

State 4: Get depressed
When the inevitability and magnitude of the failure sunk in, I slept in a lot. There were days I’d get up late and go to bed again at 5 pm. I lost interest in anything associated with my past industry. (To this day I still can’t play a video game.)

Redemption

Step 5: Gradually accept your role in the failure
A few weeks after leaving, I began to think about what I should have done, could have done and pondered why I didn’t do it. (I didn’t listen, I didn’t act, I didn’t own my role as CEO, I wasn’t prepared to do what was right or leave.) This was hard and didn’t happen overnight. My wife was a great partner here. I often reverted to Stages 2 and 3, but over time I took ownership of my primary role in the debacle.

Stage 6: Gain insight and change your behavior
This was the hardest part. While I stopped blaming others, understanding what I could change in my behavior took long months. It would have been much easier to just move on, but I was looking for the lessons that would make my next startup successful. I looked at the patterns of behavior, not just at my last company but also across my entire career. I learned how to dial back the hubris, get other smart people to work with me – rather than just for me, listen better, and act and do what was right – regardless of what others thought I should do.

Epilogue
For my next startup I parked the behaviors that drove Rocket Science off the cliff. We established a team of founders who worked collaboratively. When my co-founders and I got the company scalable and repeatable, we hired an operating executive as the CEO and returned a billion dollars to each of our two lead investors.

Now when I listen to entrepreneurs who’ve cratered a company, I listen for their stories of failure and redemption.

Lessons Learned

  • Six stages of failure and redemption
  • Don’t get stuck in Stages 2, 3 or 4  - move forward
  • Don’t skip acceptance of your role
  • Get to insight so you can change your behavior—then commit to the challenge of doing it differently the next time

Listen to the post here


or download the podcast here

48 Responses

  1. Also step 7: gradually repay hundreds of thousands of dollars in debt and unpaid salaries, eat a lot of crow around friends (and former friends) you hired, field calls from collections agencies, and then (finally, hopefully) rebuild your credit rating.

  2. Thanks for the great post Steve. On my resume I can only put the successes but it was the failures and mis-steps along the way that lead to the insights that informed the iterations and the eventual successful designs.

    The information is there to revisit the problem space for those that are willing to look for it, synthesize it and apply it to their next design.
    Jonathan Partlow

  3. Steve – you are a legend. I’m right in the middle on this and it’s made me step back and be a little more objective… there is a way forward.

  4. as your friend for 20 years i’ve read every single post you’ve written…this is one of the very best, if not the best. CEO’s must OWN the direction of their companies–not boards, not investors, not c-level staffers. That’s why they’re called “chief executive” or, in military terms, HMFIC(head…in charge).
    In my global customer development travels, I hear founders blaming others all too often for things that have gone wrong. I’ve probably done it myself at least a few times. Your suggestion of “own it or quit” probably says it all…

    • Agree with Bob; my feeling was this was one of the best and perhaps one of the most important. Sociologists teach the acronym ‘DABDA’ when we lose a loved one to death and dying. Denial, Anger, Bargaining, Depression, and Acceptance.

      On a personal note to you (& Bob) for teaching Entrepreneurship:

      RESPECT!

  5. Great article, I’m just learning and think I have a great idea, but sometimes fear of failure comes my way. This lessons on failure give me confidence in a second or a third chance to be successful…

  6. This is great Steve. I’ve tried many startups and had many failures. The first steps I took to trying something different led me to learning about lean and it’s made all the difference. It not only helped me recover, it also gave me risk controls to put around failure via the lean framework.

    Thanks again for sharing your hard earned wisdom.

  7. I think Bob Dorf is right- this should be read by everyone that has not just led a start up, but any initiative big or small.

  8. Failure and Redemption is loaded with insight and wisdom.
    It left me with one big question, How do you define failure?
    In the case of Rocket Science the answer is obvious. “We raised $35 million” and went “off the cliff.” However, many startups do not have such Great Expectations, huge investment and great publicity.

    For many startups, failure is tougher to define.
    If the founders of a firm are insightful and pragmatic, they can jump from Stage 1 to Stage 6 (multiple times) pushing failure aside and living to see another day.

    Iteration is the lifeblood of innovation. It worked for T.A. Edison.
    If iteration is not built into the plan, the founders and investors are gamblers, not entrepreneurs or venture capitalists.

  9. Failure is the fuel of evolution.

    No failure, no insight, no progress.

    Embrace your failures:-)

  10. What a great evolution piece. The idea of embracing failure – in order to learn from and move on in a (hopefully) better direction – is so refreshing.

    This article is a bit reminiscent of my favorite Lee Iacocca quote –
    “So what do we do? Anything. Something. So long as we just don’t sit there. If we screw it up, start over. Try something else. If we wait until we’ve satisfied all the uncertainties, it may be too late.”

    It’s what we know rationally, but when you’re stuck in the trenches of actually trying to execute on the failure so that you CAN move on, it’s great to be reminded that life does indeed have an next step.

    (FWIW, another great piece on the topic was recently published by Bubs Monsef, and is worth a companion read: http://bubs.co/if-you-ever-feel-alone-in-this)

    Thanks, Steve – for all you do!

  11. The excellent and enthusiastic responses above reflect and complement a truly outstanding piece of writing and advice. Identifying the stages allows people in this situation to see themselves and accept where they are, complete the stage, and move on, which is a key part of your message. It is not just an empty platitude, which is out there a lot recently, that failure is great! It’s not great. It sucks. You say how and why.

    The regrouping/reflection part is difficult because it is about not taking action, and that’s what CEOs and founders know how to do best. But, if the actions they were taking were wrong, continuing to take them takes them faster and harder and further in the wrong direction.

    Being a founder and CEO is risky and thrilling. It takes guts and vision and moxie. But when you know your old direction isn’t right, and you don’t yet know your new direction, it’s not the time to act. It’s time to hop off that metaphorical horse and sit on a bale of hay with a stogie, look inside, and gaze at the horizon. And that’s super hard for us men and women of action. Herein, you have given permission, good reasoning, and a roadmap for doing so. Bravo, and thank you.

  12. Great article.. I think I am in Stage 4 . ofcourse “you can’t expect different results doing the same thing again and again” . It also reminded me of Gartner’s Hype cycle.

  13. Great post Steve, more broadly applied we are all the CEO of our lives and of the responsibilties we take accountablity for in our work lives (CEO or individual contributor). These 6 stages, and your lessons learned, apply to the failures we experience in both roles, which are often so inextricably tied together.

  14. Great post… So grounding, preparing me for what might happen to me if I don’t quite understand what is coming in the way of our success.

  15. Great post Steve. Really authentic. Would you please share the next few steps, 7, 8 and 9 from your experience? How does the entrepreneur that has “failed and learned his lessons” get back into the ring, rebuild his network and try again. How does he get back in the good graces of the angels and VCs? There is always a lot of talk about how good it is to fail and learn but I question how many angels and VCs throw their support to these entrepreneurs who risked it and lost. Everyone wants a winner. Love to hear your advice how to best handle this transition for all the entrepreneurs out there risking everything and then wanting to do it again.

    • Nick,
      It took me a long while, but now when I talk about my career I start with saying, “I learned more from the ones that failed than those that succeeded.” You’d be surprised how much investors appreciate a _short_ “let me tell you what I learned from screwing up at company xx.”

      It tells them you’re at least Stage 5. It tells them that you’re not going to make those mistakes again. It makes you more valuable, not less.

      I suggest you try it with a few and see their reaction.

      steve

  16. Great post…we all make mistakes but not all of us learn from our mistakes which begins with admitting we made them in the them first place. Thanks for the insight.

  17. And now for the difficult part:-)

    Start to forgive failures others are doing which are affecting you in business and/or private.

    And after that, learn from errors others have done, and do it better.

  18. It’s more or less the Stages of Grief (with shock and surprise being an early form of denial). Failure is a form of grieving and loss, grieving for the end-of-life of a project and losing the identity attached to the project (“I am project lead”).

    What’s more interesting is the acceptance of the transient nature of things. All things begin and ends. You might not know *when* it is ending. You can, however, see the signs of the end well before things end. Shock happens after a prolonged bout of denial, that the end is near.

    I’m not sure how this integrates with entrepreneurial tenacity, other than that, it is much easier to find creative ways to move forward when you’re not desperately trying to find ways to hang on to the past, your identity, and the “way things are supposed to be.” Sometimes, it’s the fundamental assumptions that needs to be let go. When you do that before everything falls apart completely, I suppose that’s called a pivot.

    • Ho-Sheng,

      Everyone handles leaving something differently. For me, while I’m happy to extract lessons from my past companies, letting go was easy. I never look back because I believe my best days are still ahead of me.

      It’s tougher if you are still mourning “that was the best job I ever had,” or “I want to get back into my old job/company.”

      steve

  19. While I have never made a mistake, these are good words to live by gosh darn it.

  20. As someone who has gone through all this, I appreciated this post.

    regards

    Chris

  21. Great post. Interestingly, I’ve seen much the same pattern in the companies (and specifically in their leadership team) we work with, as they try to come to terms with a major disruption in the business. They often add in a stage of magical thinking:”if we only do X, then it will all go back to the way it was”. (But, of course, it never does.)

    Even for organisations, it’s only once they’ve accepted the situation as it is, and renewed their sense of who they are, can they start to move on.

  22. Great replies…
    As for me I have decided to work harder on myself than on my job… last stage if you will… Went back for another degree and then on to a new masters program and of course taking Steve’s courses and attending the business design summit to gain more skills.

    With great platforms like coursera and udacity available to help learn design thinking and access to generous teachers through events like the business design summit and Amazon dropping of books to my house and audio books to my phone and tablet the task of making myself better and more valuable as a leader and learning is really on me.

  23. thank you so much for this post… i recently recovered from stage 4 and 5 (now i’m in stage 6)… the depression part was awful, i was very near to make everything ending, i wouldn’t wish to try that state to anyone… but thankfully i step up and started to look around again… the fact that i’ve did this all alone without speaking to anyone probably made things much worse and harder, but i’m glad i did it and now i’ve started a new adventure, with all the experience i gained during the last years

    you know, you can’t go back to normal works once you feel what’s like being an entrepreneur… if you fail it’s part of it, just step up and do it again, and again, until you’ll succeed

    I leave you with a japanese proverb i found and put on the back of my business cards: 七転び八起き – Fall down seven times, get up eight

  24. Great post! The Rocket Science experience made us both better entrepreneurs.

    • Mark,
      While the Nietzsche quote, “What does not kill me, makes me stronger” seems apropos when thinking about Rocket Science, at times at times I imagine an IPO would have been an equally educational ending :-)

      steve

  25. Great post Steve, look forward to hearing of the day you’re able to play video games again!

  26. Good topic, especially since the failures far outnumber the successes. You’re right – it’s the place people need more help. Thanks for addressing.

  27. I really liked this post Steve. I was asked to leave my startup a year ago by my partners. I think I went through all of those stages and am probably still on the last one. It is hard yet necessary to look through the rubble and learn the lessons. You are such a better entrepreneur after you take the time to objectively examine what happened.

  28. Achilles in the Iliad follows the first 5 stages, he begins with rage and ends with acceptance. He goes through denial, isolation (blame), and depression. If u read the Iliad hermeneutically, it teaches you these lessons. Stage 6 is completed in Odyssey where you are taught the clever skills to get home, or in this case bring home a winner. Congrats to you and note Ben Affleck ad Steve jobs went thru same process.

  29. I just love this. So few people are honest about failure other than to say it is “inevitable” I spend much of my time working with entrepreneurs abroad where cultural aversion to trying anything new – ESPECIALLY because of fear of failure, is so dominant. I’m going to broadcast this story widely to my network precisely because it is so genuine and encouraging. Thanks much.

  30. Hi Steve; my compliments to you, this is one of the best posts I’ve had the pleasure to read. I appreciate your honesty as it resonated with me as having gone through a startup failure. I had a hard time dealing with Stage 4 as I put my heart and soul into my company and beat myself up for not having listened to my inner voice when I knew I was in trouble and could have taken steps to mitigate the ultimate demise.
    After reading the all responses and comments it started me thinking that there are a lot of us who have gone through this and are now in Stage 6 and I was thinking that it would be of value to create a group of likeminded people who can share their insights as they rebuild themselves and their lives and perhaps would want to network with each other.

  31. Thank you for your honesty and openness Steve!

  32. This reminds me of the four phases we see when organizations try to become data-driven:
    1. Hubris
    2. Insight through Measurement and Control
    3. Semmelweis Reflex
    4. Fundamental Understanding

    See slides 25-31 of http://www.exp-platform.com/Pages/2012RecSys.aspx

    — Ronny Kohavi

    • Ronny,

      Thanks for the comment. The presentation is awesome. Everyone doing Customer Development ought to read it.

      steve

  33. excelent Steve. thanks for sharing your experience

  34. Steve, excellent post. I’ve only been following your blog for a few weeks and already I’ve been blown away by your articles. Somehow you’ve shown a truly inspiring story from a huge failure. Thanks.

  35. A very nice post Steve!

    It’s always the failure that teaches better than success. And you captured a great lesson for all of us from your experience. I am no CEO (yet) but can easily relate to several instances in my career when I could’ve owned up and done things differently. Now that you’ve captured the “process” it’ll be easier for so many of us going forward…

    Thanks
    Shekhar

  36. Truly helpful advice, really helps put what can feel like a slow motion car crash into perspective. Superb quote from Billy Wagstaff too.

  37. [...] Failure and Redemtion , par Steve Blank,  même si je préfère adapter les étapes décrites dans son très bel article. [...]

  38. I’ve been a reader of your blog for a while, but this is the first time I actually comment an article.

    Not because the other articles you post aren’t worthy of a comment, but because I found this one particularly insightful.

    I myself am an entrepreneur (not a tech entrepreneur) and I’ve struggled with failure. When I felt failure in a way that really moved me I decided I would become more resilient and that I would make a deep research into resilience so that I could help others overcome their failures as well.

    You have no idea how valuable this article is to my notes, and how valuable your 6 steps are to conceptualize a framework for helping others overcome failure and become more resilient.

    Thank you very much.

    (I’ll quote you every time I promise).

  39. Having just lost my company 7 months ago, what you’ve said has really resonated with me. Thank you for having the courage to talk about it. I find myself still going back to Stage 3 and 4 but I keep moving forward and I’m taking baby steps…not quite sure where everything will end up but it won’t be the same business.

    I so relate to your feeling of not picking up a video game again ever!! LOL Looking back is not an option and as you’ve mentioned the best is yet to come. Thanks Steve!

  40. Steve, I would love to republish this post on my site The Mistake Bank (http://mistakebank.com), with attribution and linkback, of course. This is such a great story and lesson all in one that the readers of our site would really benefit from it.

    If you haven’t visited the site, it has 300+ stories of mistakes and failure and another couple of hundred posts on learning from them. You are referenced several times… for both failure and redemption!

    regards, John

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Follow

Get every new post delivered to your Inbox.

Join 136,394 other followers