My Favourite Failure: Lessons from a Dot-Com Crash Survivor - Sharath Jeevan OBE

0:28Let me ask you a question. rock solid, but a lot of startups forget about insider risk. Take one company the NPSA told us about who had a disgruntled member of staff. A state actor charmed them into stealing the company's flagship software, which they then took to the state-owned business instead, costing the company billions. If you want to get a better handle on your security, the Secure Innovation campaign can help. Check out npsa.gov.uk forward slash innovation and download their free quick start guide. There's a link in the show notes. Hello and welcome to Secret Leaders. As founders, there's so much focus on rapid growth and chasing the next big thing.

1:14But staying grounded and listening to your own instincts is just as important. In the early 2000s, like many internet companies, Sharath's business was growing. It was a precursor to the social media sites that would come to rule the world, And investors were betting on it big. They'd given him£2 million and pushed him to expand the business. There was a lot of interest. I remember talking to a number of the operators in Singapore, for example. We were close to signing quite exciting deals where we'd be offered on their sort of WAP portals. It wasn't perfect, but it worked. I mean, what was cool is it was functional.

1:51Users seemed to find it useful overall. all. The bigger thing though was that we had pitched our idea as a B2C model and got the $2 million on that basis. And then NASDAQ crashed about nine months into our journey and everything changed.

2:17We had about six months left of cash. We were, actually compared to most of the dot-com stories, is very frugal, very tight on cash. We managed it very well. We had a very good CFO. So none of the kind of dot-com exists as you hear about, none of the blue dot-com stuff. But despite that, we had been planning on very much user growth and then raising a second round. And suddenly you had that inflection moment. We had the asteroid coming out, which was the NASDAQ events, and suddenly we had to scramble. And we couldn't, we just didn't have the time to be able to do that efficiently. We We had to close the company down about eight months later.

2:53Sharath was young. He wasn't confident in his own vision. And so he went along with what his investors wanted, single-minded growth. But in the back of his mind, he wonders what would have happened if he had listened to himself, tried diversifying the company, or even tried turning it into a B2B business. It should have been really obvious to us that this was a very risky way of doing things. There was no way we were going to break even in the timeframe of the first investment round. And I think as leaders, we could have said, well, look, let's go for plan A. Our investors expect that it's all about that growth.

3:28That's what everyone wanted at the time. What happens if there is something like a NASDAQ crash, right? What is that plan B? Even better, I think we could have said, is there a third way, like a plan C, which is a medium, a middle ground? Maybe we could have gone, you know, put part of our resources into the high growth, you know, B2C high risk, B2C offering. Maybe we should have had a skunk works also working on the b2b solution and testing both arms and seeing which one of these really has traction which one of this is going to get us to where we want to go but i think fundamentally we were listening too much to what investors told us and we were kind of doing what we were told we're very young as well to be fair they were much older but um i think we could have said look what what really matters to us do we want to create just a b2c piece?

4:15Or do we want to see if this could really get traction within organizations? And in fact, maybe we should have just gone entirely down the B2B path in the beginning, almost resisted the pressure to try and grow consumer user bases quickly and do all this sort of stuff and say, actually, more sustainably, we can really create something that can be embedded in large companies, employee bases, whatever, governments, and build something that really is there to sustain and last as well. So it was a cautionary tale to me of not being too influenced by the headwinds of what a funding market tells you to do, and try to really have the time to reflect, step back, and start from within.

4:54How do they have that space to step back and say, look, is what my investor or board wants to be actually really what I want to do here? Is it really congruent with my own intrinsic motivation? Is the direction I'm taking really built on my own perspective on the problem? Or is it is it something that I'm feeling pressured to do because that's what the funding market is is telling me to do and I think like so many other entrepreneurs we got in this game of trying to be a little bit better than everyone else has to be five percent better than the other other app that's doing something similar or other company instead we could have carved real blow and found a new space it was very unique to us and really tried to make that distinctive and authentic so that was a really important lesson about that importance of setting direction for yourself as an entrepreneur.

5:41The lesson Sharath learned from this setback was that as the founder, you are at the helm of the ship. And while it's always good to seek advice, you have to make sure that you are going in a direction that feels right to you. Yeah, so I think a lot of this is about understanding these pillars of what I call authenticity, connection, and excellence. Ace, if you want a tennis-like acronym. And I think about authenticity as a founder, about them really knowing what they stand for, what they care about, and beyond just money or valuations, really, where is their unique vantage point on the problem they're trying to address?

6:17Where do they get energy from? And I think a lot of the work founders need to do is to help people around them, investors, board members, colleagues, a COO, et cetera, really help them be the best version of themselves they can be, not the version that their investors tell them they should be. and so it's really being that self-awareness that understanding that you could take this a number of different ways there's no right answer in most entrepreneurial contexts that's really really important the second pillar on connection the idea of staying in love with the problem i see a lot of founders now once they've got to certainly series b and a series a they get very jaded and they start almost treating this like a mousetrap where or sort of treadmill where they have to execute on someone else's, that's disastrous as a founder.

7:03You're going to be in high execution mode, but you also need to really build a culture that enables the founder to focus on what they love doing most. That could be a product-driven founder who loves tinkering with the product and being the product visionary or long-term champion, or it could be they're very BD, sales-oriented, love going out and selling partnerships. How do you make the role and job craft the founder role to be really driven by what connects them. And that similar principle can apply to every role in the organization for the founder down. So that's the second thing I'd say. The last thing is that excellence culture where it's not about being difficult or judgmental for its own sake, but having a culture of very high expectations and very open, honest feedback.

7:47And if the founder can role model that themselves and be self-critical, talk about moments like this where they have failed. It creates so much psychological safety in the organization that unlocks excellence in the process. So yeah, I think really the founder is key to the success of any venture. I think it's the jockey, not the horse, using that sort of analogy. If they can really build the pillars of nurturing potential for themselves, they can unlock the whole organization at the same time. While it is important to set your own direction as a founder, don't be mistaken. Even then, most things are out of your control.

8:26What you have to learn to do is accept a certain amount of uncertainty and be comfortable with your own judgment. I think I really recommend entrepreneurs have the chance to step back and reflect. I realized that I couldn't change the NASDAQ crash, right? No matter how, you know, whatever my thought of myself and my abilities, that's something out of my control. It was the asteroid. What I could have done is navigated that reflection in a moment better. And so I tried to think about what were things I couldn't change or what things I could have done differently. And most of it had to do with external environment, but it was a real wake-up call for me to realize that most of the time I was going to be founding things, leaving things in a context of a lot of asteroids out there.

9:10That was going to be very hard to change, right? I could wish for another, you know, there wasn't another day crash right now in a very, an allergist environment, maybe not as severe, but semi-dynamics, what I could do is almost be calm on myself and be at peace with that uncertainty. So I think what it's made me realise is you just have to really think about those moments and really navigate and lead well in those periods. That can make or break success for many, many years to come.

9:41Sharath is now an author and mentor to other founders He uses his experience to help founders find their own authentic direction and follow it That's it for this episode I want to thank Sharath for sharing his story and advice And you, thanks for listening I've been your host, Dan Murray-Surter See you next time

10:06New York City