Learning from the failure to maximize value

Jeremy Snyder is the CEO of The Sharing Engine with a past work experience that includes 3 other startups. All three startups were eventually acquired but here he shares what he learnt from their several failed, missed opportunities. Jeremy can be found on Twitter: @sharingengine.

It’s become pretty cliche to discuss the acceptance of failure as a pre-requisite for a healthy startup ecosystem. Articles and pundits point out that failure is almost celebrated in Silicon Valley. Some famous angels and VCs won’t invest in an entrepreneur who doesn’t have a failed startup on their resume.

But it’s not the cultural aspects or checking a box that’s really crucial – it’s what you learn from the failure experience. You learn more from startup failures than from a successful startup.

Don’t get me wrong; making it is way more fun than not making it. Trust me – I’ve done both. And I use the phrase “startup failures” explicitly – not all startup failures lead to failed startups.

“I talk about the lessons learned from a startup’s failure to maximize its value, seize market opportunity, or deliver right.”

The enterprise-to-SaaS turnaround

The first startup I joined was the leading localization and translation memory software provider. I was roughly employee number 30 or 40 worldwide. The company was Microsoft’s first venture investment outside the US, and a key Microsoft partner and vendor, and this was in a time when Microsoft really dominated computing. I was there as the company doubled revenue, grew to 250 employees, and took in more than USD 15M in funding.

Of course, I was also there in 2001, when revenue shrank and the company did 4 rounds of layoffs. This was a painful process – death by 1000 cuts, sort of like Yahoo or RIM right now.

1st Lesson learned:

Always understand that macro conditions around you can change. Have an idea of what you would do if the market fell out from under you tomorrow.

The company rebounded in 2003, after closing offices and doubling down on a product strategy. My job was to transform its enterprise product into SaaS. Enterprise software was already dead in the market. So I built a SaaS offering that ran with a 60%+ profit margin until the company was acquired in 2005. In the end, we made a relatively successful exit out of what could have been a failure.

Fighting the market

After that exit, I moved on to a difficult startup, originally an enterprise software company. I was part of a group hired to solved two problems:

1. Customers couldn’t understand what the company did. The segment for this company’s offering was generally called “Telecom Expense Management” (TEM), but the company insisted that it should be “Enterprise Telecom Management” (ETM) because the software offered ‘so much more than just TEM’.