If you read start-up and entrepreneur advice, it’s become a cliche for people to tell you to welcome and embrace failure. OK fine, I get it, failure helps you learn.
Here is what pisses me off about all the talk about “embracing failure.” What it never tells you are these things:
- Failure sucks. No matter how much positive bullshit you tell yourself, trying something and failing never feels good. This is why people avoid it.
- It’s really hard to learn from failure. Why? Because our brains are evolved to deceive us to avoid feeling the awful feelings that come from failure. This is why everyone blames everyone else for their problems, and why it’s so easy to see your friends problems, but so hard to see your own.
When someone tells you to “embrace failure” but gives you no explanation on how to do that, that’s like saying “buy low and sell high” or “just have confidence, that’ll solve your problem.”
No shit asshole, show me how or shut up.
That’s what I am going to do. Show you how to admit failure in your own life, and how to learn from it.
But there’s a twist.
I’m not going to give you some bullshit bulleted list of clickbait with the same crappy stories you read in Fast Company three weeks ago. That’s not what The Hustle is about. I am going to painfully and explicitly lay out ALL of my major business failures, in detail, and then walk you through how I failed and what I learned.
I’m going to show you what it looks like to learn from failure, by opening up my worst business failures to you.
My notable business experience covers four companies; three I founded, and one I joined after an acquisition:
Company #1: Rudius Media
Role: Founder, CEO
Product: Books, movies, websites and content
Best Gross Sales Year: Honestly not sure, but probably under 100k
Best Net Profit Year: Same
Number of employees: 5
Result: Failure, company shut down in 2009
What Did I Learn?: This was my first attempt at a company, and it was a fucking mess, almost exclusively because of me and my mistakes. I pretty much did everything wrong that is possible to do wrong with a startup, other than criminal shit like stealing company money to buy hookers and coke or something like that.
Mostly, I learned how little I knew about business, management, money, and how the real world works. Here is a SHORT list of some of the things I know I did wrong:
- I didn’t understand the economics of media & publishing
- I picked a business model that had virtually no chance of succeeding
- I didn’t focus at all on actually making money
- I spent money much faster that I was making it
- I put too much of my own money into projects that made no financial sense, because they filled some emotional need in me
- I spent too much time in big picture thinking (and most of that was me fantasizing about my future success)
- I spent too little time in actual business details
- I picked the wrong people to work with; either toxic people who had their own emotional issues and were terrible to work with, or people who put up with my bullshit so much that they were essentially ineffective as employees
- I was too enamored with my own ideas, and not willing to listen to people or learn from them, even when they had much more experience, or pointed out something I was clearly doing wrong
- I had too much emotionally invested in my specific vision and a specific outcome, and it prevented me from making the changes and decisions I had to in order for this company to work
That’s just the business part. My management skills were a total mess too. I hired the wrong people, but I definitely made those people worse employees by being a terrible boss. Some more things I did wrong:
- I expected my employees to do things I wasn’t willing to do (note: this is one of the two hallmarks of bad leadership)
- And perhaps worst of all: I put myself and my selfish interests in front of the company AND its employees. (note: this is the other hallmark of bad leadership)
- I didn’t set the proper goals and outcomes for them; they had no clear understanding of what result I expected (mainly because I had no fucking idea)
- I didn’t give them enough guidance on what I asked them to do, and then get pissed when they didn’t do what I wanted, and start micromanaging them
- I yelled when shit didn’t go my way. I had a serious anger problem
- Pretty much every decision I made was an emotional decision and was about either my ego or me in some way. There was zero understanding of the fact that my employees or customers existed in any way or mattered at all
This list could probably be way longer, but you get the point. This company had no fucking shot, mainly because of my flaws, as an entrepreneur, a businessman and a manager of people, and perhaps most importantly, my emotional problems. I wasn’t ready to run something–I was barely ready to take care of myself–and it showed.
It’s hard for me to go back and think about that company, not because it failed, but because I was such a fucking dipshit in how I ran it and the way I thought. It’s embarrassing to think about now, to be honest. If the guy I was then pitched me I am now, I would either laugh him out of my office, or quite possibly fight him. I’ve seen 1000’s of stupid companies, but the worst companies are not the worst ideas; they are the ones with the insanely arrogant founders who know nothing, think they know everything, and refuse to listen to anyone or address their issues. That was me.
The one good thing is that we did get some things done, even in spite of my bullshit. We developed a fledgling content network, that, with a smarter and more savvy leader (not me at the time), could have worked.
And we did make a real Hollywood movie out of this company that went to theaters. It did poorly at the box office, but has done great in DVD and in the secondary markets.
The problem wasn’t the creative effort or ability of me or my team; the problem was me, and that was hard for me to face for many years.
Company #2: Tropaion Publishing
Role: Founder, CEO
Best Gross Sales Year: 2012, $2mm
Best Net Profit Year: 2012, $1.4mm
Number of employees: 1
Result: Sold to Lioncrest Publishing in 2012
What Did I Learn?: It took me a two long years to face the music from my first company and learn from my mistakes, but I eventually did it, and by doing that I was able to correct them.
I learned so much, it’s hard to write it all down; you could almost reverse the list above, and that could be the list of what I learned. This company was extremely successful by any measure. In our first year we were not only profitable, we made over a million dollars, and we did it with effectively two full time employees (me and my assistant).
I think the key thing that I finally started to understand was not just business, but how the world actually worked, and I started to get a grip on myself. I stopped getting pissed and railing at people or systems that I thought were unfair, and instead focused on doing the job at hand.
I think the big shift for me emotionally was asking myself the question,
“Do you want to be angry at the injustice of the system and fail because of that, or do you want to go around their bullshit, be effective at what matters, and succeed?”
To be clear: it wasn’t that I had to compromise my ethics or do things I thought were wrong. It was more about realizing that bitching about how unfair and bankrupt the entertainment and publishing businesses were wasn’t getting me anywhere but pissed off. So my options were to either get in the ring and do something about it, or stand on the sidelines and whine like a bitch. I got in the ring (I didn’t fully shut up though).
This is abstract, but you can read about precisely what Tropaion did in this piece. It was pretty genius, and the only way I could have pulled this off would be if I stopped trying to fight an unfair system, and instead worked to outsmart it. That’s partly being smart and experienced enough, but it’s mainly about being able to emotionally let go of anger or a defined course, and instead being willing to see other ways.
But I was not totally in the clear with my emotional issues. I just found a way to set them aside, and focus on making an actual business that works.
Company #3: Lioncrest Publishing
Product: Books, conferences, editing services, instructional materials and courses
Best Gross Sales Year: 2012, $5mm (?, I think, it maybe more)
Best Net Profit Year: 2012, (not sure of the amount actually, but it had solid margins)
Number of employees: 6
Result: Dissolution and reverse acquisition in 2013 (it’s complicated)
What Did I Learn?: I realized that Tropaion Publishing had the potential to be very successful, but it was going to take a lot of grunt work that I didn’t want to do. I didn’t want to do the things needed to take the company from 2m to 20m and then exit–but I still wanted a big exit. Looking back in retrospect and being totally honest, what I wanted was money and power without work. I did not want to admit this to myself, but it’s the truth.
I found a company who I thought could do that work and wanted to do it: Idea Incubator. It’s owned by Ryan Deiss and Perry Belcher, and they loved my business model and what I’d done, and they had the desire and resources to take my start, add it to another similar business that they had started, and scale it up quickly to an eight figure business (they then planned to exit it to a private equity firm for a healthy 4-6x earnings multiple). So they acquired Tropaion, and I agreed to stay on with Lioncrest Publishing as a partner and help them scale the business, and I’d get a nice piece of the eventual exit. I had fantasies of a big pay day dancing around my head.
Here is where my emotional issues came back to bite me again. Part of it was wanting success without work–which got me in the deal–and the other part was looking at things emotionally and not rationally.
Ryan and Perry are what is kindly called “information marketers.” They sell content, and they do it with things like long form sales letters and other direct sales tactics. This is perfectly fine, but most of the people in that space are shady and scammy; they are the infomercial people of the internet. I didn’t think they put enough focus on having a great product, but instead only cared about how to sell the product. This the complete opposite of how I like to do business.
I saw this early, didn’t like, and still I ignored it. Why?
If I was going to blame them, I’d say they lied to me. But that’s bullshit. I don’t think they ever told me a flat out lie. They just told me what I wanted to hear, and I ignored everything else.
When you combine that with the fact that I wanted to make some quick money, I joined forces with two people who see the world totally differently than I did. That does not work. I let my emotional, unconscious needs again push me in the wrong direction, because I wasn’t honest with myself, and didn’t know myself well enough yet.
We decided to part ways in mid 2013. As part of the deal, I actually got the Lioncrest Publishing name, and they took most of the assets and re-branded them under a different company. It was very amicable, and there are no hard feelings.
I still like Ryan and Perry as people a lot, but we have diametrically opposite views on business. Perry likes to say that I hate profit. I like to say that they only care about money. Either way, it was a bad idea to work together, and I should have seen that earlier.
Also, I was a terror to deal with. My anger problem may have gotten worse then before, I think because deep down I knew I did not like the way they were running the business, but I stayed in it for the exact reason I criticized them: only caring about money. I was being a hypocrite to myself, and was not willing to see it.
I will say this good thing about myself: I finally started shutting up and learning from the smart people around. Say what you want about their ethics, but Ryan and Perry are smart, and because I shut up, asked questions, and listened, I learned a lot from them.
Two specific things:
- They showed me how valuable all my marketing and media skills were to business. I knew my skills were valuable in the entertainment business, but I had no idea how truly bad almost all businesses are in every aspect of outward facing creativity, marketing, etc, and how much I already knew about “normal” business, without even really realizing it. It was crazy how well all the skills I developed while writing books and at TuckerMax.com translated to “normal” business marketing and sales. Basically, they showed me very clearly how valuable storytelling was to business.
- They also really drilled some basic business skills into me that I was lacking. Perry has a point about me and money–I don’t hate profit, I just never think about it. That is VERY BAD if you are running a business. They showed me how to think about converting a product into sales, and how to monetize an audience you have earned. They are really good at that–at turning content into a sellable asset–and I learned a ton watching and listening to them.
Company #4: Story Ark
Role: Co-Founder & Partner
Sector: Marketing & Digital Media
Product: Marketing and Business Consulting; Information Publishing
Best Gross Sales Year: $1mm+
Result: Dissolved in 2014
What I Learned: This company was never really a company. It was experiment that me, Ryan Holiday and Nils Parker tried. We basically tried to combine three different businesses (book publishing, marketing consultancy, and editing service) into one agency, with what we thought was a new business model.
It wasn’t, and it didn’t work.
Part of the problem was me and my issues, which still weren’t fixed. I was still angry, I was still not fully understanding all my issues, and I was still driven by emotional decisions.
But I think the biggest problem was that Ryan, Nils and I wanted different things from the company, and from our lives, and this ultimately is what caused most of the friction.
I wanted to build a big awesome company that changed the world.
Ryan wanted easy passive income that got him in the press and allowed him to write books full time.
Nils wanted to make Hollywood movies.
These are not reconcilable goals. They’re all valid, they just don’t go together. Seems obvious, right? Yeah, I know, we all should have talked this through and figured it out. We didn’t.
I also made a ton of mistakes dealing with the employees there, and my co-founders. I still wasn’t ready to be a serious CEO, who has his shit together and makes the people around him better. But even if I had been ready, I don’t think this would have worked. You can’t have three founders with three different goals–but if I had my shit together, then we’d have figured that out before the company ever started, and I didn’t.
The good news is that it made a lot of money–we were profitable when we shut down–and everyone in the company ended up better off when it dissolved. That is pretty rare and was cool to see.
Company #5: Book In A Box
Role: Co-founder & CEO (along with Zach Obront)
Sector: Books & Publishing
Product: Book writing and publishing as a service
Best Gross Sales Year: $2.5mm+ (current year, 2015)
What I’m Learning: I don’t want to declare this a success yet. But so far, we’ve done 1.5mm in sales in the first year, and not only are we growing crazy fast, but our growth rate is growing–which is the gold standard for a start-up. It’s easily the best business I have been involved in.
What changed? Almost everything. A short list:
- I have better people around me. My co-founder Zach Obront is great at a lot of things I am bad at, and we work really well together. And because I have my shit together (and so does Zach), we’re able to recruit an amazing team to join us on our mission.
- We have a tested business idea that is very well thought out, from all angles. first we created a service that met a real need people had and would pay money for, then started building a company around meeting that need. This is the smart way to do it, but not the way that makes you feel the best emotionally at the early stages (because it requires a lot of delayed gratification).
- We paid attention to our company culture and our emotions from day 1, and the driving ideas are our mission (unlocking the world’s wisdom), and how our team relates to each other (we act like a tribe). Basically the opposite of how I used to do business (made everything about me).
- We also embedded in our culture a relentless drive to challenge every assumption and ask the hard questions, at all levels. Again, the opposite of how I used to be (because hard questions didn’t make me feel good in the moment).
- But here’s the big lesson:
I finally recognized and accepted where my personal problems are, which allows me to deal with them.
After four years of psychoanalysis, and an on-going meditation practice, and marrying an amazing woman who helped me, I now have a grasp on my emotional issues. They don’t stop me anymore.
Notice I did NOT say I have fixed them. Far from it. I still have anger issues, I still don’t communicate enough then get frustrated and micromanage, I still don’t pay enough attention to profit, and I still do fail at 20 other things on a consistent basis.
I STILL FAIL AS A LEADER AND CEO ALL THE TIME.
So what’s the difference?
I owned my failures, recognized them for the painful realities they showed about me, admitted them to my team (and my wife), and then started putting in the work to fix them.
This article is actually part of the process for me. Writing for The Hustle forced me to own not just the fact that a failure happened, but my role in causing it. And that actually makes it much easier to take responsibility for my previous failures, and see where I was doing things wrong, then admit hard truths to myself, and start working on fixing those issues.
Basically, this whole fucking thing is therapy, as all writing is. It’s just helping you and me both, instead of just me.
And that is big takeaway, the way you can learn from failure. The only real problems you have are the ones you don’t know about or identify. The ones you know about, you can deal with, and dealing with them is how you stop failing, and start succeeding.