Truly Failing Fast

“True failure will grant you all the benefits of success: stress, performance anxiety, and shattered expectations. But with failure, you’ll gain humility, perspective, and a liberating lack of responsibility.”

Post-Tootly’s demise, Ben and Jacob parted ways. Ben spent a requisite year with iLuvMobileApps in order to vest some of his equity options (a concept called the “one-year cliff” in the Valley, named because working for a soulless company for a year to receive uncertainly lucrative stock options compels many to drive off a cliff). After that, he leveraged his relationship with the venture capitalists to receive seed funding for a “mobile social meetup” app with “heavy gamification elements.”

Exhibit: Gamification

In early 2012, investors were going apeshit-crazy for “game mechanics” since the popular and pecuniary success of simple “social” games like Farmville and Foursquare. “Social” is in quotes because, as you’re probably aware, there’s nothing social about spamming a crop-watering request to all your Facebook friends or proclaiming yourself Mayor of your office’s bathroom. These game mechanics layers are now commonly referred to as elements of “gamification,” since a single word is easier for marketing executives to comprehend. Gamification typically involves adding points and badges to otherwise boring ideas and services; for example, imagine how amazing you would feel if you received valueless, meaningless points to go to the dentist or buy a particular brand at the supermarket. If this makes you feel bored and ripped off, congratulations! You are (sadly for society) in the minority.

As of the time of this writing, Ben’s company is without profit, and countless competitors have appeared to threaten his app’s dominant position. On the plus side, he’s managed to use his own service quite effectively to create a vibrant “Extreme Juggling” community, a recent obsession of his. He currently has the most points in his Meetup group, and recently received the “Digitally Challenged x2” Badge for losing two of his fingers during a particularly challenging knife juggle. He readily admits it wasn’t an even trade.

Tim of TOAD fame and Jim the JOCK are still prodigious, high-flying investors of venture capital, though Tim is ensnared in a rather nasty piece of litigation from another venture capital firm claiming lack of disclosure and misallocation of capital, among other things. TOAD has defended its reputation expertly, and entrepreneurs still line up, expecting TOAD to transmogrify their pitches into gold. In a sign of the firm’s strength, Tim recently purchased a helipad-equipped yacht and christened it “Dropship Liquidity.”

While Jacob didn’t lose face with the venture capitalists by agreeing to the Tootly takeover, he didn’t exactly make any friends by his immediate departure. He lost his iLuvMobileApp equity investment when he refused to suffer through his one-year cliff, and instead became a rapid-fire serial entrepreneur. Despite his dismissal of the lean startup methodology, he seemed to enjoy emulating “fast failure.” He went through a startup every few months, relying on everybody from scary Russian angel investors to family members to second-tier venture capitalists. Eventually his successive failures (and a run-in with the Russian mob) wore him down. His sense of wonder with the startup world was soon destroyed, leaving him with a jaded perspective on startups previously reserved for 80% of his unenviable time at business school. To this day, he’s convinced that his “Social Mobile Skeeball” app could have been huge.

Both Jacob and Ben were part of an iconic failure in Silicon Valley, and despite the outcome, both were at least thankful for the ride. Ben remarked, “Who would have thought the stuff of dreams was powered by virtual farts? Well, potential dreams anyway. I guess our hopes dispersed as quickly and as randomly as the occasional bout of flatulence.”

Jacob was more dour, but appreciative in his own way. “The entire Tootly experience really shook the foundations of my belief in the startup world. I discovered a pernicious, cutthroat atmosphere (even within my own company) and couldn’t believe the randomness of our success. Every time we believed we understood the ‘why’ behind our company...we’d have conflicting data saying contradictory things, while our half-baked hypotheses led to wild goose chases rather than verifiable facts. Everything was ambiguous and changing, we had organizational trust issues, and our super-fast growth destroyed our transition to a mature organization. And all we did was make a fart app.

“Frankly I think it’s a miracle that complex web operations like Google and Netflix actually work, but perhaps they were just extraordinarily lucky survivors with the right idea at the right time. Who knows? I’ve learned that it’s really impossible to know ‘why,’ but if you catch yourself doing well...just do your best not to screw it up. As my friend Voltaire might say, it's probably best to ignore the riff-raff and ‘tend to your own garden.’ In this case, that also means ‘don’t take outside investment from shifty individuals.’” Jacob conceded that his own entrepreneurial days were likely over, as it required an eternal (if pragmatic) optimist to continue to stomach failure. Besides, his money was still on Ben. “I just hope he’ll have a job for me when he makes it big. Or at the very least, he’ll let me invest.”

Both Ben and Jacob came away from the experience broken, poor, and unsuccessful by traditional measures. But they were wiser, and wisdom, properly applied, is worth a great deal more. They both learned to scrutinize potential investors and their terms more closely, to meet optimism with skepticism, to use extreme caution when growing an organization, and most importantly, to trust new business methodologies about as much as they trust venture capitalists and a well-rounded management curriculum. They had a last piece of advice for future entrepreneurs: learn from failure, but not too much; cherish success, but cautiously. They needn’t have broken Tootly’s bank as quickly as Ben had broken wind...if only their ambition had been tempered with experience. From experience comes respect for the serendipity of success and the capriciousness of failure; a respect they tragically earned as victims of both.

Discussion questions follow below.

Exhibit: Discussion Questions

Discussion questions are a requisite part of any business school case study; usually they’re completely irrelevant lines of questioning that leave the reader (and their study group) confused and unsatisfied. They’re very effective at inducing the reader to doubt their own interpretation of the case. Outside of Punk’d and the stock market, probably one of the best opportunities to fuck with people.

Copyleft MMXIV Josh Cincinnati