By Marie Williams — Marie is a member of the Computer History Museum’s NextGen Advisory Board.
Work in Silicon Valley long enough, and you’ll end up with your own private collection of startup paraphernalia: T-shirts, tchotchkes, branded office supplies, and other relics of companies failed but not forgotten. At the “Day of the Dead” event on October 28, co-hosted by Exponential Center and the NextGen Board, attendees sported them like badges of honor.
Computer History Museum board member Len Shustek wore his Nestar Systems windbreaker. Exponential Executive Director Marguerite Gong Hancock brought a Pets.com puppet onstage to everyone’s delight. The “startup graveyard” was littered with paper tombstones written in by event goers.
For an event on failure, the mood was surprisingly upbeat. Silicon Valley seems hell bent on facing missteps with a grinning, “mistakes made are lessons learned” attitude. Some could argue it’s the secret sauce of the Valley’s success: Every failure is just one step closer to the payoff.
That theme of persistence in the face of daunting odds set the tone for this event as Clearstreet Chairwoman Kim Polese, Garage Technology Ventures Managing Director Bill Reichert, and serial entrepreneur and Y Combinator partner Justin Kan walked through their biggest failures and the silver linings behind every setback.
Bill Reichert, who’s been funding tech companies at Garage Technology Ventures since 1998 (he’s reviewed one hundred thousand business plans!) and served as an exec at startups like The Learning Company, kicked off the series with the familiar tale of a startup innovating before its time. Infa Technologies thought it would be a bright idea to create a touch pad. After creating a pioneering tablet that was too expensive to seize the market, they created an even smaller, palm-sized version that investors said was far too tiny for anyone to use. Infa folded, but the team went on to build Apple’s Newton, a personal digital assistant and precursor to the iPhone and iPad.
Kim Polese, one of the most influential women in Silicon Valley and CEO of multiple successful startups including Marimba and SpikeSource, continued with the near-failure and last-minute reprieve of one of technology’s most important platforms: Java. Originally an internal project at Sun Microsystems called Oak with incredible promise, Kim was brought in as product manager tasked to build adoption.
After porting Oak to the desktop computer and attempting to gain traction, efforts were flailing. Then Mosaic came along, an early web browser that enabled the team to remake Oak as Java, which became a central piece of Sun’s strategy moving forward and a pillar of the nascent internet. The key? The persistence and never-say-die attitude of the team, Kim said, and their willingness to do anything and everything to get it out to the world.
Justin Kan, founder of billion-dollar Amazon acquisition Twitch and multiple other startups like Justin.tv and Socialcam, talked about his first attempt at the startup world, a little-known failure with a humorous exit. Justin and his college buddies launched Kiko, a calendar management app, soon after Gmail had launched. After flailing, getting busted by Google’s addition of a calendar service to Gmail, and a failed acquisition negotiation, Justin had the bright idea to sell the startup on eBay. It sold, for $268,000, eking out a slight profit over break-even and a hilarious startup story for the ages.
The panelists talked about knowing when it’s time to close up shop or keep on grinding. Justin talked about AirBNB’s months of failure and near shutdown before deciding to give it one last push by entering Y Combinator. Bill mentioned his awe of Pandora’s Tim Westergren, a paragon of persistence who’s key to success was always figuring out a way to survive, live another day and aim to create value, not just make money.
Kim shared a story about how her company Marimba, profitable with plenty of money in the bank, went to a fifth of its market value after market fluctuations, leading a panicky board to push to sell. Luckily, the market lifted before the sale went through, enabling Marimba to continue until its successful $239 million exit in 2004. It was a reminder, Kim said, of the fact that sometimes failure isn’t related to the value you create but external factors beyond your control.
In a darker moment, Marguerite asked Justin about his onetime comment that startups don’t die, they commit suicide. He talked about the fact that most startups don’t peter out because of their competition or market factors, but because founders run out of ideas and give up, self-selecting the death of their company. It’s critical to be a survivor. Only an infinitesimal fraction of startups achieve rocket ship-level success, so you have to maintain that irrational belief that you’ll be successful, even when things don’t look very good. Taking risks, being willing to go into cockroach mode, putting the success of the company above your own health and safety; these are the sacrifices we make on the quest for success.
In another moment of tough love, Bill said that many startups should give up, though he hates to say it. He mentioned that it’s often clear which startups are going to fall apart when facing a dark day, or wake up one day and decide they’re done with the startup life. His experience has been that the hardest part isn’t actually failing. It’s firing people, letting down your employees and the other people that trusted in and relied on you. Starting a company? That’s easy. It’s keeping it going, when other people’s money and salaries are on the line, when things get rough.
The prevailing theme of the night: The difference between failure and success is those that keep going. Perseverance is key. To watch the full conversation, with more inspirational stories and wisdom on overcoming and moving past failure, check it out below.
For more photos from the night, please visit the Exponential Center online.