Two things I want to get out of the way up front: first, I don’t know why I’m most inclined to start writing once a company notably fails, but I’ll use that both as a prompt to myself to write more and as an opportunity to broaden the perspectives that I share. Second, and this may seem sort of odd, but I’m a chronic non-sharer; it’s not that I don’t read things that I find interesting, rather I convince myself that no one is all that interested in my perspectives on that topic. So if you do read this and even find it interesting, let me know. I’m a positive feedback responder so it will definitely have an impact.
So, anyway, on to the topic at hand. Unless you’re very connected to the tech world on a day-to-day basis, you probably don’t know that Shyp, an on-demand shipping startup that raised $62.1mm failed and shut down today. It was followed, perhaps predictably, with a heartfelt goodbye letter from Kevin Gibbons, their CEO.
The post-mortem really is worth reading. But responses were, uh, divisive. Take it away, Josh Constine from TechCrunch:
How not to startup, starring Shyp:
1. Sell a service for way less than it costs.
2. Focus on sporadic customers instead of consistent ones.
3. Raise too much money then haphazardly spend ithttps://t.co/Bdhbub9cGo— Josh Constine -SignalFire (@JoshConstine) March 27, 2018
It should be noted as an aside that TechCrunch certainly plays a large part in the hype cycle, certainly for previously hot sectors like on-demand. Reminds me of celebrity culture, where they build you up when it’s a win for both sides and tear you down when it benefits them and you can’t absorb the blow.
But anyway: here’s where I land with this, with the caveats that I don’t know Josh personally (possible I interacted with him at some point for numberFire or FanDuel) and I hadn’t heard of Kevin or his business at all before today: there is a massive gulf of difference between the cynicism of that tweet, and the earnest, occasionally gross tone of Kevin’s post and it’s attendant comments in response.
I will give Kevin some credit: it’s difficult to internalize failure, and he is doing the right thing in owning up to his mistakes. He’s not casting blame, and he’s casting his team in the best possible light for their future prospects. I don’t however feel the need to excessively laud him for that as that is something every CEO should do, and when the comments start to veer towards congratulatory, I get sick to my stomach for the reasons that Josh somewhat cynically mentioned above.
The bottom line is that a ton of people are out of a job, and the fact that zero meaningful outcomes could be gained from raising over $60mm from truly top-tier investors is far from something to be congratulated and feted. As Josh rightfully points out, the unit economics were questionable from the beginning, calling into question both the theses behind the investment and the culpability of Kevin as the CEO, who clearly took a long time to realize that. Kevin even doubles down on this point, casually recalling a story in which he let his team be romantically compared to Uber, which makes it nearly impossible to reconcile the bad decision making without wondering if that press-related ass-kissing exacerbated that blindness.
There have been so many company shut-down post-mortems that they all tend to run together for me, and a majority of them personally read as a last-ditch effort for people to tell the founders that they were great, that their sins are forgotten, that they gave it our best and that there’s nobility in failure. Or, to put in another way, you could absolutely read this as a founder who raised a ton of money, didn’t listen to anyone as the company floundered, realized it too late to return anything on that investment, costing hundreds of people their jobs. Literally only in Silicon Valley is the response to that story “Congratulations! How brave!”.
Can you imagine how that looks to someone outside of the Valley? Can we just stop for a second and think how someone – even someone without an ax to grind relative to the inequality tech entrepreneurship has wrought – might view raising $60mm in funding and having nothing come out of it?
I understand that’s a super negative read, and well, I need to own that. But I own it from a place of having to struggle like crazy to raise any kind of funding, to have bootstrapped and fought and kicked until I got a good outcome for my team. For me there will never be nobility in taking investment and squandering it; there is no partial credit for trying.
I don’t believe that fetishizing failure does the next generation any favors, but I don’t think kicking a founder when he’s down does, either. It’d be a sad and negative world if all we did was celebrate success in the tech world given how rare it actually is, but there’s surely a middle ground between that and celebrating failure. How do we figure out the right way to talk about failure that doesn’t make excuses and isn’t needy for reassurance? How do we own our mistakes while reminding people that tech is a ridiculous and absurd industry?
(One idea I was once had – in the spirit of the same transparency so many VCs claim to wish to want – was for my VC friend to list the companies that he’s invested in that have failed in the same way he lists the ones who have been successful exits. He declined, saying that there was no need to put those companies on blast and air dirty laundry, thereby ruining any chance those founders might have at a successful second go at it and potentially ruining his deal flow for having done so. I can understand his point, but still wish that investors would.)
As an analog, I’m reminded of relationships. Sometimes when one person breaks up with another person, they can break that person’s heart, yet they still want to be told that they’re a good person, to be reassured that despite a painful outcome, they’ll be remembered fondly. In my mind, that person doesn’t get the right to expect or ask that; they forgo any claims to that expectation by having executed the breakup. While I can sympathize for the jobs lost and appreciate the earnestness of Kevin’s post, I can’t get myself anywhere near the congratulatory tone of other people, nor do I feel tacitly supportive of the callous dickishness of Josh’s tweet.
I wish there was more conversation in the middle.