Whether representing a client or looking at angel investing, a startup founder’s failure track record is an important indicator of how things will go in the future.
On the plus side, many founders learn from their mistakes. Because past failures serve as important lessons on which to build a solid venture this time. For example, optimism about the current startup’s growth potential doesn’t tread into delusions that a seed venture is worth billions now.
However, there’s a dark side to founder flops. Whether it’s ego, stupidity, or a combination of the two, some entrepreneurs bounce back from their startup’s failure by doubling down on making the same mistakes that sunk the prior venture.
Now repeating the same fatal mistakes twice as fast is productive only in the sense that the train wreck happens faster each time. And with a little luck, this means less victims of the founder’s actions.
Yet it’s easy to get seduced by a serial failure who goes down this path because the founder hones his skills of bullshit as a means to market each new startup to investors, employees, and the public…while blaming others for prior screwups.
When evaluating a startup founder’s track record, don’t take the founder’s words at face value without due diligence. The amount of such research, of course, depends on your level of risk tolerance for your time, money, energy, and reputation.
Just recognize that some people learn from their mistakes. Others never do.
Your role is to identify who you’re dealing with now. And like success, failure leaves clues.
