“SUCCESS?” or “FAILURE?” [Spoiler Alert: It’s NOT always as obvious as you’d think!]
Would You Rather: A) aim for ~$25M, but hit $2.5M? -or- B) aim for $250K, but hit $2.5M?
Below are details of 3 real startups (A: Angel-Funded, B: Bootstrapped, C: VC-Funded) + outcomes of each. I was personally/financially involved/invested in all 3 of these companies and *EVEN I* go back and forth as to whether I would consider each to be “a success” or “a failure” — Jeff
What would YOU consider each of these to be? Success? Failure?
- **A) had 7-figure profits for 4 straight years — (Success?) — but never got the exit we wanted and were eventually forced to sell off assets, lay off employees, and shut it down — (Failure?)
- B) was profitable each year and was acquired — (Success?) — but those “profits” were only ~$12k/year and the “acquisition” was only ~$50k — (Failure?)
- **C) lost money each year, never came close to profitability — (Failure?) — but was acquired for ~$20 Million Dollars — (Success?)
At some point I’ll do full write-ups on all 3 of those companies (in the meantime, feel free to ask me offline for more/any/all details on each), but in regard to the “success” vs. “failure” question, in most cases (including the 3 above), the answer is usually: #ItDepends
#ItDepends on factors like: who ARE you? Founder? Co-Founder? Investor? Employee? Unaffiliated 3rd party looking in? What were your goals, your expectations, your investment (time? money?), your opportunity cost… and you can’t possibly weigh in on “success” vs. “failure” for any company without knowing about funding, valuation, etc.
**Example: In the case above with Startup A and Startup C, I definitely didn’t give you enough information to determine “success” or “failure”… I initially neglected to mention that Startup A had only raised $1 Million at a valuation of $2.5 Million while Startup C had raised $12 Million at a valuation of ~40 Million. So, regarding that $20 Million Acquisition…? #ItsComplicated :)
QUESTION: Would You Rather: A) aim for ~$25M, but hit $2.5M? -or- B) aim for $250K, but hit $2.5M?
Spoiler Alert: A = $2.5M and B = $2.5M but A ≠ B — (wait, what?)
There is actually very little about those two “$2.5 Million Dollar Companies” that will be similar! From internal and external perceptions of “success” vs. “failure” to the personal financial impacts of everyone with equity (co-founders, investors, employees, etc.)…
[To Be Continued — but the main point is illustrated via the image below]