Once I’d officially failed, my friend, colleague, and investor Alice asked me, ‘are you happy you did it?’.
A hard question.
I failed last year. Closed down the startup I started. An adulting, unarguable, and public failure. I let people down - my investors and team members were mostly friends. Thinking about it now I feel ashamed and a bit sick. This isn’t a complaint. I’ve had plenty of good luck in life, some earned though lots not, and I deserved what I got this time.
So, am I happy I did it? That seems easy. No, I’m not happy I did it. Starting a startup was a painful way to lose my time, and (mainly) other people’s money.
But it’s not that simple, even if it wasn’t worth it.
Calculating About Magic
Magical products are curious experiences. When you try to explain why they’re magical, it’s often impossible. Yet once you experience their magic, it’s self evident.
Why is TikTok spellbinding? You can (in retrospect) tell a story about short, vertical, music accompanied videos, displayed in an order you’ll like. But no analysis beats the experience. If it did, TikTok would have been obvious without hindsight.
People have written books on trying to reason your way into magical products. There are Customer Developers with Minimal Viable Products, Hackers Doing Things That Don’t Scale, Zero to Oners Keeping Secrets. But there is something difficult and pointless about this reasoning. If it worked so well, magic wouldn’t be so rare. Following a method is a safety blanket, but the method is not the point, magic is.
And magic is easy to see but hard to prove. You may know 1+1=2, but you almost certainly can’t prove it. Probably, without help, if you spent your life on it you couldn't. This is startup complexity theory - there are answers that can be computed easily (P) and answers that can be checked easily (NP). And, you don’t need to. It’s up to writers and artists and academics to prove things we already know are true. Not the founders of TikTok.
Concentrating on the startup method can, sometimes, mean failure. You can’t prove future magic with tests and interviews. And if you try to prove things that don’t need proving, you’ll go slower than competitors that build the right thing the wrong way. The riskiest strategies win. It’s no use trying to explain TikTok when you can build it and show it. Reasoning ends when magic begins.
For smart people, this is hard to accept. In school, getting the right answer isn’t the point - you need to show your calculations. But in startups, it’s enough to make something magical, and not enough to do what you’re supposed to. No one really cares how you win, as long as you do. And if you fail, no one cares how you did that either. There is no right way, beyond winning and losing. No marks for calculations.
If writing about music is like dancing about architecture, eventually, talking about startups is like calculating about magic.
A Gambler’s Logic
When what matters is the magic, not the method, you must seize your chance.
So, 2020. My friend and I built a site that within a month had hundreds of thousands of people watching social esports content millions of times, with zero marketing. Magic. We'd made the site in a weekend and the esports competition was over soon - there were no calculations to be found, and there was no time to do them. We had to decide, do we go all in? Our answer, of course.
This opportunism is a common startup story. Take Entrepreneur First company Souschef, which made automation robotics for F&B retail, and started about as well as you could hope for. Within the first few weeks of EF, they had a sales deal worth $1million, ready to sign. Magic. Did they sign it? Of course.
Today, both my startup and Souschef are dead. We didn't capitalise on our magic, for reasons good and bad. Without magic you can’t do anything, but magic doesn’t tell you what to do next.
Judging by our results, following the magic and starting a startup was the wrong decision. Should we be happy we did it? No. But results based analysis doesn't quite make sense for startups.
In a competitive world, you win by making correct decisions before it's reasonable to. To stand a chance of winning, you have to take risk. By the time you can accurately assess the risk, it’s too late. Someone else skipped that step. No marks for calculations.
Taking risk means sometimes things don't go your way. That doesn't mean, given the situation, you shouldn't have placed the bet. In poker, the starting hand with the highest win probability is two aces. But, on a six person table, even with two aces, your odds of having the winning hand in the end is still less than 50%. Were you wrong to bet on aces because you lost on the final card? Of course not. It's what you're there to do.
Starting with magic is like starting with two aces. Most startups die young, because they can’t find any magic at all. If you find some magic, you’ll never have a better shot. If you might want to start something someday, you absolutely must take your chance. Even if you don’t succeed, it's not wrong to gamble.
Prison Breaks
So once you’ve failed, should you regret it? I think not. Starting a startup is like attempting a prison break with a life sentence: it probably won't work out, but you gotta take your chances.*
I’m still locked up. And while I’m here, I often think about all the people at EF who didn’t succeed either - by definition almost everyone. I can’t help but feel a little guilty. Have I encouraged thousands of people to do something they regret? Do they feel a little sick about it too? I'm sure some do.
But I hope, for most, they see EF for what it’s meant to be. A chance I’m grateful I had. An opportunity, that might never come again, to start with aces, to prison break. And that’s magic.
*Incidentally, I think this is the best argument for people who have no opportunities to make millions to still play the lottery, even though the expected value is negative.