Success Versus Failure With a Startup
The public has been conditioned to think about startup success in an odd way. The bar for success is almost always going public. If a company gets acquired then it “failed” to make it on its own. If you only have a few employees with no aspiration of getting big, you are merely a “lifestyle” business. What if the acquired company provided a significant return to its investors? What if the small business is throwing off serious cash to its owners every year? That sounds successful to me.
VCs are at least partially to blame. Given the investment category venture capital falls into, they are notorious for only wanting to invest in moonshots that have the potential to return 100000x (lots of zeros for effect) their investment. So maybe in the eyes of the large VCs anything less is not successful, but to just about everyone else involved there are many outcomes that can be safely called a success.
Defining these super successful outcomes as the only form of success leads to all sorts of problems. Many people are afraid to start a company because if they can’t take the thing public, they’ll be viewed as a failure. And with all the hubbub these days about what it takes to take a company public, I can’t blame them!
Did they create jobs? Did they make some money? Did they do it on their terms (or mostly on their terms)? Did they learn a lot? Did they meet a lot of people? Are they more marketable as an employee if they choose to join another company? Are they better positioned to do their next thing? Answers to all of these questions should factor into assessing whether a company was successful, not just if they are still around or have thousands of employees.
It’s also worth taking a moment to analyze those that are considered big successes. I know a handful of public company CEOs and most aren’t “living the dream.” They are held hostage by the financial markets and inevitably have to think very short term about their business. There are some perks to the job for sure, but it is by no means a slam-dunk role everyone should aspire to.
Ultimately, I’m not willing to define any version “success.” Much like I wrote in the Startup Failure Myth, it’s dangerous to slap a specific label on a broad category of companies and people. If you’ve been able to take a public company, that’s phenomenal. If you’ve been acquired, that’s great. If you are running a small business with no plans to do anything else but that for the foreseeable future, good for you. The morale of the story is there are many forms of success and rarely do I find entrepreneurs that view starting a company as a complete failure relative to their other options.