Rolfe Winkler reports in the Wall Street Journal:
There is a history of introspection and commentary about failure in Silicon Valley, where success is rare. Founders found catharsis writing postmortems of their collapsed companies. Conferences examining failure have been created. The mantra “fail fast” has been adopted. Failure became popular to talk about. Startup postmortems (are) available online. “It’s WAY too much. It makes a lot of founders think it’s okay to fail. Like it’s a badge you get to wear.”
When it comes to bad news, many companies bury the announcement in a boilerplate press release. Silicon Valley entrepreneur Ryo Chiba decided the best medicine was to narrate his company’s layoffs in excruciating detail.
“I closed my eyes and counted to three while in an empty and dark conference room,” wrote Mr. Chiba, the 26-year-old co-founder of San Francisco marketing startup Tint, in a blog post last month. “I told myself that I was ready to tell my friend and co-worker that I would be laying him off.”
Mr. Chiba’s 3,000-word essay admitted business blunders, revealed Tint’s cash balance, revenue and salaries, and gave an impassioned play-by-play of the “brutal and ugly” process behind layoffs.
“Suddenly, the valve in my heart twists open, and all of the feelings start flooding out: The disappointment, the guilt, the anger, and sadness,” he wrote.
In the more established corporate world, Mr. Chiba’s detailed confession is alien. Fortune 500 CEOs don’t usually unburden themselves so personally or admit mistakes.
But there is a history of introspection and commentary about failure in Silicon Valley startup culture, where success is rare. Founders have found catharsis writing postmortems of their collapsed companies. Conferences examining failure have been created. The mantra “fail fast” has been adopted by a generation of startups.
As investors pull back on funding and startups struggle to stay afloat, some founders and CEOs are taking to the blogs to spill their guts.
“One beautiful Tuesday afternoon, Dmitry and I went out for a late lunch,” wrote Alex Fishman, a co-founder of food-discovery app Dishero Inc., at the start of a 2,000-word blog post last month. “I asked my close friend of 20 years how he was doing. Dmitry answered, ‘Awesome! I love what we’re doing these days!’…Little did we know then, that Dishero, the company we had co-founded a year and a half ago, would be shut down within the next 72 hours as a direct result of his answer.”
The dialogue, Mr. Fishman explained, led to a difficult conversation about the company’s options. He wrote about some of the company’s accomplishments, then noted, “But here is the thing—mediocre success is worse than failure. Much worse.” On Sunday, he posted another 2,300 words about the shutdown’s final 36 hours.
Mr. Fishman, 37, says he wanted to contribute to the entrepreneurial information available online. “I decided to pay it back to the community that I learned from,” he said in an interview. Dmitry Fink, his co-founder, said he helped serve as Mr. Fishman’s editor.
Behind the posts is startup esprit de corps combined with a millennial sharing culture, says Christine Mathews, who runs a human-resources consulting firm catering to startups. “In the millennial generation, what I find is the leadership is focused on transparency,” she says, adding that intense startup atmospheres mean people feel like “we’re all going to live and die by what we do here.”
Mr. Chiba, in an interview, said his values include being truthful and open, recalling a daily blog he published in middle school dealing with adolescent stress. “Now the angsty middle schoolers who used to blog every day on Blogger are becoming CEOs at young companies,” he said.
Entrepreneur Joel Gascoigne wrote a 3,500-word online essay in June explaining why he laid off 10 people. “It’s the result of the biggest mistake I’ve made in my career so far,” wrote Mr. Gascoigne, the 29-year-old co-founder and CEO of San Francisco-based Buffer Inc. “Even worse, this wasn’t the result of a market change—it was entirely self-inflicted.”
Buffer, which helps people manage their social-media accounts, grew too optimistic last year, nearly tripling its workforce to 94 due in part to “ego and pride,” wrote Mr. Gascoigne.
Excessive hiring meant the company was on course to empty its bank account by this fall, he wrote. “We moved into a house we couldn’t afford,” he continued, outlining how he first cut perks like gym reimbursements, the company’s planned retreat to Berlin and his salary by 40%.
His mea culpa was widely praised online. “Appreciate @buffer transparency,” tweeted Om Malik, a technology investor with no stake in Buffer. “More startups should do this!”
Departing employees were also grateful. “I’m sure there are times you get laid off and you don’t get answers to all your questions,” said Tia Fomenoff, a Buffer account manager hired three months before she was laid off. She appreciated that Mr. Gascoigne acknowledged the layoffs weren’t performance related.
The company shares other unconventional information, including each employee’s salary and its daily revenue. “We already had this trend of sharing things that other people don’t share,” Mr. Gascoigne said, adding that it helps build trust with employees and with customers.
The tone has shifted as venture capital has tightened. Now more startups must support themselves and are pledging allegiance to profitability instead of growth-at-any-cost.
Kevin Gibbon, chief executive of package pickup service Shyp Inc., used some version of “sustainable” five times and “profitability” nine times in a March blog announcing an 8% layoff. Announcing 40 layoffs also in a March blog, Dan Siroker, chief executive of website testing firm Optimizely Inc., said the goal is “controlling our own destiny.”
FailCon, a conference founded in 2008 to talk about failures, continues in other cities, but since 2013, not in San Francisco. Failure became so popular to talk about that it no longer made sense, says the conference creator, Cassie Phillipps.
She points to the startup postmortems available online. “It’s WAY too much,” she said in an email. “It makes a lot of founders think it’s okay to fail. Like it’s a badge you get to wear.”
Even Mr. Chiba’s co-founder, Tim Sae Koo, says there is a limit to sharing. Tint tried regularly publishing its financial numbers in 2014, but stopped in 2015 after a downturn in revenue caused customers to ask hard questions.
“I had full confidence our company is safe,” said Mr. Sae Koo, Tint’s CEO, who once blogged about managing his mental health as a founder. “But needing to explain that over and over distracted me from running the business.”
Mr. Chiba, who says it is therapeutic to hear reaction from his peers, held little back in his post.
“My eyes begin to water and my throat closes up. I try to speak, but can’t. I hoarsely force a couple words out, but stop mid-sentence…How did it get to this?”
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