“I failed. Now what?”

This article is the twenty-first, and the penultimate, in the Startup Series on FirstPost’s Tech2 section and first appeared on August the 21st, 2017.

“I failed. Now what?” Whenever I hear these words, the first thing I do is remind the founder: People don’t fail or succeed, ventures do.

A “failed” venture can mean various things e.g. the venture fails to reach key milestones on a projected timeline, the venture runs out of money before raising money, founders fall out and some or more want to call it quits, the venture is going bankrupt, the venture needs to be wound down.

In some of these scenarios, there are ways to “exit” a failing venture depending on the founders and the agreement between them. Those of you, who have been regular readers of this column, will remember I advise often that founders engage and pay competent lawyers.

If some or more of the founders are leaving, a robust shareholding rights agreement would have outlined in advance what happens to the shares of those founders who are leaving, whether they can retain them or sell them, and the restrictions on selling them including who has the right of first refusal. If such a framework is not in place, the process of negotiation can be long drawn and worsen the pain of all concerned.

If the venture’s prospects are unclear and if the venture has some assets including intangibles such as a brand, trademarks, designs or other intellectual property, one could look for a buyer for those assets. If the business has run out of cash or is barely surviving, this is unlikely to be a good option especially since the process is costly and potentially long drawn.

If all else fails, winding down the company is always an option. It is better to have gone into battle and gotten scarred then to have sat on the sidelines, worse, on the fence, and never have experienced the horrors and lessons of war. The issues of ownership of intangible assets will still need a resolution either between the founders or otherwise.

No matter what route is taken, founders are bound to feel the pain. Failed ventures hurt. And then they hurt again. But many founders go on to build other ventures after a failure. Some, who may still be hurting, are driven by just trying to prove to themselves that they can do more, achieve more. A few go on to learn lessons and build big successes. Yet others choose other career paths altogether.

To that extent, failed ventures are useful things. They provide the opportunity for a lot more reflection and embody a lot more learning for founders than successful ventures do. In my experience and observation, learning from failure is a form of success on which further success — and indeed new kinds of failures — can be built.

Before embarking on a new venture, it helps to take some time to review the lessons from the experience of failure. I also advise — and practise myself — an exercise in gratitude. Yes, as a founder of a now-failed venture, you may have a broken heart, but you still have your smarts, your body, your ability to work hard, and now, some freshly baked wisdom. Taking a pause to reflect on what one has versus what one has lost reframes the experience and helps the process of moving on. Taking a short break, if one can afford it, also helps.

It helps to remember that apparent successes can also essentially be failures. It was after a massive victory in a war, in which an unspecified number of men were killed, that Ashoka realised his Pyrrhic victory was not worth it. He won the war but the cost was massive, to humanity, to the cause of political unity. His ‘success’ wasn’t a success after all. He took note of the “transaction cost” and did not deem it a success after the fact. Following this realisation, he sought and turned to Buddhism. That decision meaningfully altered the course of South Asian history.

On Founder wellness

This article is the twentieth in the Startup Series on FirstPost’s Tech2 section and first appeared on August the 6th, 2017.

In the very first column in this series, I wrote about the loneliness of entrepreneurship. Add to that the stresses of building and running a fledgling business, with the worries of making cash last, making sales, making payroll, and just making it to the end of the month sometimes, and we have the makings of a psychological nightmare for founders. In the recent years, there has been more than one founder suicide, a sad outcome which is often preventable.

Nobody, no failed or successful founder, can tell you how it is supposed to be. A venture isn’t about rational factors alone. As founders we give so much to it that we can lose the plot. If however getting out of bed gets harder, it is time for a rethink. Here are some pointers.

Recognise the signs.

There are signs when we aren’t coping. Others can sometimes see them before we acknowledge them. These signs include (but are not limited to): poor sleep patterns; inability to concentrate or get anything done; messed-up appetite or eating patterns; loss of energy and focus; creeping substance abuse in the form of increasing use of caffeine, alcohol, cigarettes, pot etc. in the name of needing a kick, relaxation, help to fall asleep, stress relief.

Ignoring these is not wise. Inadequate or poor sleep affects our judgment including moral judgment. Poor nutrition affects energy levels but can also contribute to stress. The impact of substance abuse on judgment, motor skills and on general wellbeing is widely known too.

Ignoring any of these is unhelpful to your ability to be a good founder.

Take stock and distinguish busyness from strategic progress.

When I see stressed founders — and I include my former self in those — I ask if they stop and take stock. It is a simple step but powerful in its impact on focusing one’s efforts.

Do you feel purposeful in your pursuit, or are you just cranking the handle? Can you distinguish busyness from strategic progress?

Being permanently busy hampers our ability to engage in deep and creative thinking.

Schedule leisure.

“What is this life if, full of care,
We have no time to stand and stare.”

Welsh poet William Henry Davies’s ode to Leisure might be anathema to most founders, as they flinch when I ask what they do in their free time. “I have no free time.” “But you have the same 24 hours as everyone else.” “Um…”.

Every once in a while, the question gets heard. And then they stop.

You schedule meetings, don’t you? How about scheduling a form of downtime as you would an important meeting? This is after all just an appointment, one you keep with yourself.

What should your leisure look like? Anything you want it to look like, as long as it utterly distracts you from work, recharges you and energises you. Some find solace in nature walks and hikes, others in books. Yet others cook or find time to help social and charitable causes. A few engage in extreme sports. Find what works for you and commit time to it, weekly if not daily.

Talk to people not related to your work or Startuplandia.

And do that regularly. One of the key essentials as a founder, focused on one’s narrow goals, is to keep perspective. That requires looking above the parapet and being open to being challenged.

The story of the well-known “innovator” Square comes to mind. The idea was to let small merchants accept cards using a square dongle. It worked well in the USA. But Europe and the UK were far more advanced in their card security features. The dongle had no capability to accept chip-and-pin enabled cards. The famous founder did not dig in his heels, but worked to understand the limitations of their offering and explored other avenues.

People not invested in your space may detract but many a time, they also have views which may make you think.

Build a wellness and self care routine.

It wont be much fun, would it, if your company is celebrating milestones and you are sitting under your desk rendered immobile by your anxiety, or worse, in hospital with stress related illness.

Wellness is not a hipster idea. Wellness – physical, mental, psychological, spiritual – enables us to follow our dreams, giving our best to all we do.

And if we don’t give the best to our startups, really, why are we bothering?

Work and isolation

On the same day that I saw a journalist in London seeking to speak with people about workplace isolation, a friend in California noted that she wanted to have a little social but found that her real world community was either virtual or non-existent.

My friend in California chalked her lack of community down to her being an entrepreneur, where long hours of work mean one’s options to socialise are mainly people who are employees or customers, both of which can be awkward.

When I mentioned workplace isolation to friends in senior corporate jobs, one quipped that this isolation malarkey was all down to people opting to work in the gig economy. Another noted, with a sigh, that the more senior one became in a large corporation, the more isolated one became, with fewer and fewer people seeing one as human, and fewer still willing to speak truths to power, so to speak. Indeed the story of António Horta Osório, the CEO of Lloyds Bank in the UK, and his spiralling into depression that led to a breakdown is well-known and one of the few honest stories of the impact of isolation to come out in public.

Without even reflecting over my own career of over 20 years, I know instinctively that the gig economy did not create workplace isolation. It is an existential condition of human beings to seek both camaraderie and company, and solitude: the former perhaps to generate ideas and to rejuvenate the self, the latter to reflect, create, and indeed, rejuvenate.

My experience of isolation in corporate life came from many sources. One  of them was being a gender minority. I even wrote a piece about my experience in Cosmopolitan magazine’s India edition around 1996-97. While my male colleagues were good people, it was tricky to socialise with them weekend after weekend. The city I lived in, Delhi, did not then have public transport so it was expensive, unreliable, unsafe, or all of the above to go across town to attend book readings or see films etc.  My solution was to start learning German on the weekends, which earned me much mockery but also a career break into Europe to open a new country office.

That unfortunately brought its own flavour of isolation. This time I was in Switzerland’s German speaking region, as a gender, ethnicity, and apparently age minority in the IT industry. My coping was hugely eased by my friendship with two others in a similar boat, both foreign to the German speaking regions in their own ways.

I then transitioned to a role in the UK where my team was spread across time zones. That was splendid isolation indeed as I began work at home at about 4.30am to catch my Asia-based team members as they began the day and the work day rolled on all the way to California. Going into the office was an option but I needed a few hours in the day unplugged. This is the bit of my experience now cited in this FT article the journalist mentioned earlier was writing.

You see, there are many ways the structure of corporate work and workplaces can be isolating.

My life as an independent consultant and advisor, an entrepreneur if you will, after the corporate stint, has been a solitary experience, save for meeting clients at lunch and sometimes friends for coffee. This fits the cliched image of the gig economy that I mentioned earlier.

Yet somehow we cope. And many of us continue to thrive.

My sense is that women cope better. Most women are socialised to seek and build communities, “to tend and befriend” not just in times of great stress. The web is helping break geographical barriers and enhance some sense of community. MumsNet is a well-known example of such a community. Several closed and secret groups of women founders and leaders thrive on Facebook. Some such as Blooming Founders and NOI Club have physical world components too. With the burdensome expectations of performance of masculine behaviour, men suffer silently — and alone — in their loneliness. This does not help workplaces or society.

Institutionalised solutions are emerging too. The gig economy worker, the entrepreneur and the small-corporate worker alike now have options. WeWork provides co-working spaces, designed to foster serendipitous and organic networking. The company has diversified into providing co-living in a few cities around the world too and it is branded WeLive.

Some criticise WeLive as an extension of dormitory or student halls living but really now! In the face of all this evidence of loneliness and isolation, that is the best criticism you can come up with?

As I said to Emma in that FT article, loneliness can have an existential quality. It forces us to examine the meaning of life in ways being surrounded by people all the time does not make feasible. From that isolation emerge creativity and ingenuity. But it can also foster mental health and addiction problems for many.

The real solution for us all lies perhaps in Goldilocks’s perfect porridge — not too much isolation, not too much cacophony of human company. Each person’s “perfect” however will differ.

What does all this mean for the design of work and workplaces? And indeed for our lives and societies?

As I see it, we may need a complete rethink of our shared and personal spaces. For workplaces, it could mean the provisioning of both open spaces to socialise and banter, and closed, quieter spaces to think and do actual work, sometimes energised by that interaction. Our living spaces need similar possibilities, if not within our own homes, then within the larger context of our neighbourhoods and cities we live in.

Politically and socially, we seem to be in an upheaval worldwide. Many are selling us the nostalgia of a glorious past, which, some argue, keep us from imagining better futures.

In this churn, could we hope to create a new order of things that are actually designed to serve the humans that use or inhabit them? Much like the Arts & Crafts movement’s thinking on spaces, a hundred years on?

I need to reflect on this. Alone. Perhaps you do too. Let’s convene later!

Of untenable CEOs

The positions of two CEOs are being discussed this week as untenable. One of them is the British Prime Minister Theresa May, fresh from the weak and wobbly win at an election where she campaigned as the “strong and stable” alternative. The other is Travis Kalanick, the CEO of Uber, who is currently running an organisation without a COO, a CFO, a CMO or SVP of Engineering, and is under pressure to take a leave of absence following an investigation by Eric Holder into the pervasive sexist culture in the company.

On first glance, there are no similarities. What can a British PM fond of speaking in tautologies possibly have in common with a CEO of an organisation widely seen as having “disrupted” public transport and valued at US$ 70Bn (though some disagree)?

On a bit of reflection, one key similarity emerges: a leadership style that fosters a toxic organisational culture.

On becoming PM first, Mrs May famously operated a kitchen cabinet of sorts, with a small coterie of advisors and throwing out anyone who seemed to be out of line with her authoritarian way of working. She called an election presumably buoyed by a 20-point lead over Labour in the polls to seek an absolute majority to enable her to negotiate a Brexit deal without needing the support of the Parliamentary colleagues. Having called the election, she did not discuss her manifesto with her party or her team, focused on “Theresa May” and not the Conservative Party, and uttered meaningless soundbites that earned her the moniker MayBot over the campaign.

Mr Kalanick, on the other hand, presided over an organisation that thought nothing of threatening journalists and “weaponising facts“, nor of accessing and sharing medical records of a person raped by one of their drivers in a country far flung from California. Privacy was not a thing to bother with. He also deemed it acceptable to issue guidelines on how to have sex with a colleague at an office party.

Culture, as the developments this week show, does eat strategy for breakfast.

In Britain, the electorate was able to challenge Mrs May so much so that at the time of writing, there is a scramble on, and many Tories do not see her leadership going unchallenged.

In case of Uber, however, the three co-founders own a controlling stake. That may appear, at first glance, to make the job of the board harder if they wish to ask Mr Kalanick to step down. But the board has voted unanimously to adopt the Holder report and is said to be considering the option.

However, much as deposing Mrs May and Mr Kalanick may give a sense of having done something, the real challenges remain.

Uber’s culture will not repair itself overnight. Nor will the company magically be able to attract talent* to fill the key roles. Bad reputation and the whiff of scandals can endure, as another organisation unable to attract talent is currently experiencing.

Nor will Mrs May suddenly become better at being collaborative, discursive, amenable to advice, and realistic about Brexit negotiations, although this is precisely the advice being given to her. To be fair, she has apologised to Tory MPs. But despite her apparent contrition, “I will get us out of this mess” doesn’t sound like a departure from me-centricity.

Whoever takes the poisoned chalice, or chalices in case of Uber, shall face the challenge to be a vigilant steward of the interests of investors, shareholders, and citizens alike.

After all, in this brave new world of breaking coalitions and disrupted industries, “Eternal vigilance is not only the price of liberty; eternal vigilance is the price of human decency.”

*Link dated June the 14th added two days after this article was published.

Founder Conflict: Key Asset Ownership

This article is the seventeenth in the Startup Series on FirstPost’s Tech2 section and first appeared on June the 7th, 2017.

In this and the next couple of columns, I shall write about founder conflicts commonly encountered but not often easily resolved.

Some are foreseeable e.g. what happens to the equity of a co-founder who ups and leaves, and hence addressable, e.g. in the case of this example, through a shareholding rights agreement for which you ideally paid a lawyer, who helped you understand what you were agreeing to.

Some arise from human beings being human beings, ranging from unpredictable and flaky, to stubborn and demanding. These conflicts are harder to resolve because they require us to think creatively, to minimise immediate and future damage to the startup, and to stay focused despite all provocation.

One of the most common disagreements arises from the ownership of things that founders may bring to the potluck called the startup, and that really are essential business assets. The social media real estate is sometimes acquired before the company has been formed. Getting handles on platforms aside, this may mean one of the founders, who may not yet legally be in a contract with other founders, pays for the domain name or names. In the hubbub of early days, the domain name ownership transfer never happens and the founder, who paid for it, continues to own the domain name.

Should he? The short answer to that question is: No.

The domain name is an intangible asset of the business, among other IP. The renewal incurs a recurrent cost. If the person makes the expense out of his pocket, he can solidify his claim on the domain name. If the company reimburses him this expense, it is further unclear why he continues to hold on to the domain. This creates a fog for accounting and governance purposes.

As the business grows, in revenue and in value, the domain name will also grow in value. But hey, if you didn’t effect a clear transfer of ownership, it doesn’t belong to the company. How will it be accounted for in the books? At any rate the person owning the domain can hold you to ransom and play hardball at any time he likes. This is unlikely to end well.

Should the business wish to file a trademark on the name, the person holding the domain may be in violation of the trademark, assuming he lets you file trademark in the first place and doesn’t stake a claim. See comment about hardball above.

Should you attempt to raise growth capital at some stage, this will come up and raise a red flag as to the vigilance of the directors and founders. See comment about hardball again.

Transferring ownership is the ideal scenario. But let’s imagine, other founders agree that he can continue to own the domain.

The company may then want to consider signing an agreement with him to let the business use the domain name. Such a deal will have an agreed monetary consideration and will hopefully be for a clear but renewable term. Your shareholding rights agreement should allow for such a deal, and as cofounders, you should consider the governance and risk impact of such a deal on the future developments in the business. If you don’t, your investors, if vigilant, will point out what a bad idea laxity on this account has been!

While this sort of a deal remains a possibility, you may want to consider negotiating a one-time offer to buy the domain off him instead. If there is resistance, I would ask you to consider the possibility that the domain name ownership issue is just an indicator of other undesirable issues that may arise in the future.

As cofounders, you can apply this test of ownership to any other assets essential to the business that one of the cofounders brings to the table. It is worthwhile taking stock of “who brought what” at the time of forming the company and start with a clean slate where all assets are placed on the company’s books, with adequate compensation made as agreed.