Most books about startups are about the ones that worked. This is not one of them, which makes it the more useful kind.
The companies that worked are statistical freaks and the lessons of a freak are the lessons of luck, pretending to be wisdom.
I have spent more than twenty years on the check-writing side of early-stage investing, long enough to have backed a handful of companies that went on to be worth a great deal and a great many more that quietly did not, and the second group taught me most of what is in this book.
The far more common experience, the one almost every founder and almost every angel will actually live through, is the experience of watching something they believed in go wrong, slowly or quickly, and having to decide what to do next. About three-quarters of venture-backed startups never return their investors’ capital.
That is not a marginal risk to be managed at the edges of an otherwise triumphant story, but the central event of the asset class, and the strange thing about the literature is how little of it is honest about that.
This book is written for both sides of the table at once
The founders raising the money and the angels writing the checks, because the failures it describes belong to both of them and almost never to one alone. The temptation, when something goes wrong, is to find the person responsible, and the temptation is usually satisfied by pointing across the table.
The founder blames the investor who turned, the investor blames the founder who hid the bad news, and both are partly right and therefore both are missing the point, which is that the failure was a thing they built together, out of incentives and silences and reasonable decisions that became unreasonable in combination. So there are no villains in these pages. There are only people behaving the way the structure rewarded them to behave, right up until the structure killed the company.
What unites the failures collected here is that almost none of them arrived as a surprise.
They were visible, often for months, to anyone willing to look, and they were survivable, or at least improvable, far later than the people living through them believed. Failure in a startup is rarely a single catastrophic event so much as a process, with stages and warning signs and a series of moments at which someone could have acted and did not, usually because acting meant admitting something nobody wanted to admit.
This book is a field guide to those moments. It will not tell you how to avoid failure, because most companies cannot, and anyone who promises otherwise is selling the freak’s luck again, but it will tell you how to see it coming, what to do while you are inside it, and how to come out the other side as a founder or an investor people still want to work with.
A note on how to use it.
You can read it start to finish, and the failures are arranged in a rough order, from the ones that begin with the product to the ones that arrive from outside. But it is built, really, to be opened at the chapter you need on the day you need it, which is to say the day something has started to go wrong and you would like, for once, to have read about it before rather than after.
It is the book you keep on the shelf and hope not to reach for, in the full knowledge that you almost certainly will, because in this business the question was never whether something would go wrong. It was only ever which thing, and when, and whether you would be ready.
Available now for $24.99 or $18.99 for Free subscribers only using the button below:
Paid subscribers get this book FREE as part of your subscription using the button below:
If you are a free subscriber, upgrade now to access your free copy of this latest book as well as Susan’s two previous books, plus a host of other benefits
Interested in investing alongside Susan? She invests before deals have a story, which means most of what she backs is still raising by the time anyone outside the round hears about it, and she’d rather see twenty people write $5,000 checks than wait for one person to write $100,000 once the outcome is obvious.
If interested DM her and she’ll add you to a monthly email list sharing full breakdowns of any completed deal she’s done but which still has allocation remaining. No introduction required.