I lost a deal last week.
To be clear, it wasn't really a deal that I "had", but there was a company that our team at First Round got excited about and offered an investment to. There were lots of other investors interested and even when we had relegated ourselves to just having an angel-sized piece, when the music stopped, we were left without a chair to sit on. The company didn't offer us the opportunity to invest--and I take the responsibility for not being able to get us in.
It was surprising, because I thought I had built a great relationship with the entrepreneur and I know we can add a ton of value, but, it happens. It's kind of like dating. You could think something went terrifically well, but if the other person doesn't feel that spark, you just have to accept it and move on.
That's hard for me, because my initial inclination, as I'm sure it comes as no surprise to anyone who knows me, was to keep pushing--to keep giving the pitch, selling hard, and finding *some* way to get in.
Josh gave me great advice. He said to just signal that we accepted that things weren't going to work out, but most importantly, figure out what it was that the company felt like we were missing, and do what we could to be better for next time. He suggested I ask the company for five or ten minutes on the phone to just get some honest and direct feedback about how we could be on that "must have" investor list for *every* team of smart folks doing interesting stuff that we like. Pushing and selling any more would run the risk of alienating the company--and then we'd really come up empty. There's nothing worse than failing and having no idea why, because then you're destined to just repeat the same mistakes over and over again.
As a baseball guy, this resonated with me. Baseball is a sport full of failure--where seven out of ten times you could fail and still be one of the best players. You have a lot of failure data to analyze as a baseball player. Even in softball as a player now I still think hard about what I did in each at bat that made my execution not what it should be. Sometimes, you hit the ball right at the center fielder on a scorching line drive--you do everything right and still, it doesn't work out. Other times, like I did on Sunday in the first game of a doubleheader, you pop the ball up three times. That gave me a lot to think about between games--especially since I pride myself as being an on base guy and a leadoff hitter that isn't supposed to do that. I replayed each pitch that I saw in my mind, thought about my swing, and made adjustments. I went 3 for 4 in the second game, hitting the ball on the ground three times before opening up for a home run to right field the last time up. It's funny to think that after playing a sport for 26 years, you can still lapse into bad habits, make simple mistakes, and get off track--but get right back in it with some careful thought and readjustment.
Whether you're on the venture capital side or you're an entrepreneur, you're going to have to think a lot about failure. You'll have someone get hired away from you, lose a deal, or have an partnership fall apart on you. If you don't accept your fate at some point, and take some learnings out of it, that is the true failure.
You have successes and have lessons. There is no failure. On to the next at bat, the next hire and the next exciting founders to work with.