Last night I called one of my favorite entrepreneurs.
And about ten seconds into the call, I could hear him crying.
At that point, I knew the Company we had invested in, that had pivoted with hopes of rising like a phoenix from the ashes, was actually much more likely to crash and burn.
Although we had spent the last six months trying to recapitalize and refocus the business after losing the co-founder, it became clear it wasn’t going to work. It was now time to switch from being an investor to being his friend.
Money comes and goes, but the relationships with my entrepreneurs should last a lifetime.
So I immediately realized what he really needed was support, not beratement. He already felt horrible for failing and losing people’s money.
And I am a VC. We expect to lose money trying to innovate and build great companies.
Thus, we shifted our conversation to focus on what he needed to accomplish:
- Complete an acqui-hire so his team and product had a home and a chance to deliver on their vision
- Agree to take a job working at the new company, leading his team and providing him a salary and stability after a tumultuous period in his life
- Focus on getting mentally and physically healthy via a short vacation that includes silent meditation, self reflection and yoga
- Develop a 3-5 year plan of where he wants to be in life and as an entrepreneur
He mentioned that I was “The Dreaded Call.” I was the hardest person to tell he had failed, that the financing had fallen through and that the acquisition offer was 1/10th of the original price.
While all that sucks for the investment, he told me that it meant the world to him that I was treating him like a friend, helping him through an entrepreneurial valley, and making sure he knew I wasn’t mad.
I’ve talked often about the stresses of being an entrepreneur and how lonely and isolated it can be as a founder. I’ve felt that way many times over the years as I’ve been building Scout.
So I am grateful that I was able to make him feel just a little bit better. Yes, the outcome is obviously not ideal, but having perspective is crucial when a company fails.
We should never frown upon an entrepreneur trying to build something truly special. Failures happen, it’s just part of the game.