Jerry Jao, CEO, Retention Science
You’ve heard it all before. Successful CEOs are driven, hardworking, thick-skinned. Starting a company requires the courage to take risks, and an aversion to backing down. Even Elon Musk came toe-to-toe with bankruptcy with both Tesla and SpaceX, living off loans from friends as he poured all his resources into keeping the companies alive. Determination and the will to push through adversity are celebrated as hallmarks of strong leadership.
Yet, the same qualities that drive CEOs to Elon Musk-level success can just as easily lead to disaster. Scrappy, tenacious leaders are often particularly ill equipped to deal with the flipside of starting a business: knowing when to walk away from it.
In the startup world, “pivots” are often described as “structural course corrections” that test new assumptions of your core business model or product. In my own experience, pivoting is how my co-founder and I course-corrected as entrepreneurs, walking away from two failed companies before starting our current company, Retention Science.
Of all my responsibilities as a CEO and the accompanying stress of wearing multiple hats, shutting down your own company has been the hardest. I’ve done it twice, and while I’m still learning, I feel more prepared when it comes to managing the ups and downs of growing a business, as well as facing the hard truth when needed.
Here’s what I’ve learned:
1. Above all, plan for failure
Planning ahead for failure isn’t bad luck or pessimistic thinking; it’s pragmatism. Being realistic about worst-case scenarios will make you braver, because you have acknowledged the risk involved and have decided to move forward anyway. What’s more, planning for failure will force you to look at every aspect of your business objectively, which means higher chances of discovering problem areas before they’re unfixable.
Actively preparing for failure will also provide you the perspective you need to stay rational. Passion is a crucial motivator, but it can also lead to rash decision-making. When you are faced with the unthinkable scenario, fall back on reason, not emotion.
2. Work hard to stay grounded
There is a fine line between confidence and arrogance, and staying grounded and self-aware is crucial to recognizing when you need to pivot. This applies to both your own skills as a leader and the company overall. Motivating your team to get through rough patches is good leadership, but doing so to the extent of ignoring warning signs and stretching your team too thin is reckless.
On a company level, staying grounded goes back to being realistic. Develop the strengths of your company, but acknowledge and address the weaknesses, too. Remember that it’s easier to fall than it is to rise, and be prepared to make changes, sometimes even drastic ones, to keep the momentum going.
3. Create a support system
It goes without saying that both starting and shuttering a company are incredibly difficult tasks. What’s more, the path as CEO is a lonely one. Your team relies on you, and your investors are betting on you. Admitting uncertainty or difficulty often doesn’t register as an option.
Having a partner, co-founder or mentors you can seek advice or support from is instrumental in making those tough decisions. Sometimes, it helps to just talk out the problem with another person. I’ve found it especially helpful to have a network of CEOs to share knowledge and experiences with. As fellow CEOs, they understand your perspective on your company’s issues because they’re often in the same boat.
As an entrepreneur, I can attest to the difficulty of walking away from your company. I’ve experienced the disappointment, even heartache, of realizing the business you’ve dedicated yourself to building is not going to work out.
But the key is realizing that walking away isn’t the same thing as giving up. The difference lies in the definition of the word itself. To pivot means to turn, to swivel, to face a new angle. It doesn’t mean to stop, and it doesn’t involve throwing away what you’ve already built.
Pivoting, then, is to change direction using the momentum of the initial movement. No matter how radically different that direction may be – from one business concept to a totally new one – you are still building on that first try. That experience and its hard-earned lessons are universally applicable. All those experiences put together, failures included, will contribute to your eventual success.
So entrepreneurs and CEOs: don’t react to failure by ignoring it or by pretending it’s not in your vocabulary. It absolutely should be. Instead, embrace it, learn from it and use it as a stepping-stone to your next venture.
About the Author
Jerry Jao is the co-founder and CEO of Retention Science, a retention marketing leader and innovator that helps retailers and brands understand, engage and retain their customers. He previously founded two other marketing software companies, and before that, held positions with Morgan Stanley, KPMG Advisory and Clear Channel Communications. He is a graduate of the University of California, Berkeley and Yale School of Management.
[Image Courtesy: Phil Whitehouse]