Our Failures(and what we’ve learned from them)
We believe deeply in the work that we do. And we’re proud of what we’ve been able to achieve! However, we’ve experienced a number of failures and false starts over the past few years. To keep us humble, and make sure we’re always striving to learn and improve, we describe some of those lessons here.
Our biggest failures, from where we stand, come from when we fail to live our values. We have had moments when we were scared to be truthful, when we forgot to celebrate someone on our team, and when we didn’t support each other. We’ve learned that values are about posture, not position. We’ve learned that we will invariably fail to live our values, but that so long as we are willing to learn from those mistakes and endeavor as best we can to improve, we have to forgive ourselves. This is, in our opinion, our greatest challenge.
In the past year, we have made this a huge priority. We’ve read books like Delivering Happiness by Tony Hsieh (on building a world-class team culture), we’ve learned from experts on building teams like Unreasonable Mentor Jerry Colonna, and we’ve dedicating board meetings to learning how to best support our own team. We now have health insurance and vacation policies. We have a clear, replicable on-boarding process. We have semi-annual check-ins with the team to understand where teammates are trying to go in their next 5 years of life / career (thanks to the recommendation of Unreasonable Mentor David Kyle).
But we still have more to do (like establishing KPIs and getting each member of our team a coach) to deliver the support that each dedicated, hard-working member of our team deserves.
We recognize that Mentor Whiplash will always exist and that some of it is good for an entrepreneur to be reminded that “there are no maps” (as Unreasonable Mentor Pascal Finette says). But we believe there are a few things that we can do to mitigate its effect.
(1) We have developed a better process for entrepreneurs and mentors to “date” before committing to working together. We work to understand our entrepreneurs’ needs before the Institute and then scan our existing network of mentors for those who might have the expertise our entrepreneurs need. We check in with both the entrepreneur and the mentor to ask if they would be interested in connecting. If they say yes, we connect them so they can have an introductory call. We then follow up with both to get feedback on how it went. If both the entrepreneur and the mentor, enjoyed connecting, we take steps to help them deepen the relationship. By the time entrepreneurs get to the Institute, they have flagged a few mentors who they already have a bit of a relationship with, which they can explore in greater depth. This stretches out the amount of time that entrepreneurs have to get to know mentors, which allows them to “test out” their advice.
(2) We are helping our entrepreneurs build “Mentor Teams.” Getting different mentors together in the same room or on the same phone call to hash out differences of opinion can help a lot with Mentor Whiplash. It also helps mentors to be part of a team – they take the commitment of mentorship more seriously, they can focus on what they are best at (meaning if their expertise is in marketing, they don’t also have to feel pressured to advise the entrepreneur on their financials if there’s another mentor on the team who can do that), and they crave relationships with other Unreasonable Mentors as well. Everybody wins!
(3) We are training our entrepreneurs on how to better engage with Mentors. When we first started the Institute, we assumed that you could just put a Mentor and an entrepreneur together and magic would happen. Not so, we’ve learned. Entrepreneurs need to show up prepared for conversations with mentors, follow up, and keep them engaged. We’ve detailed our approach in this blog post.
(4) We plan to train Mentors on how to better engage with entrepreneurs. Unreasonable Mentor Cheryl Heller wrote this post wondering out loud about the need to better train mentors. We agree this is something we need to do.
But our earned revenues (excluding donations) only covers about 44% of our annual budget (although we expect this to go up with a few new revenue generating ideas that are in motion). The other 56% of our annual budget comes from foundations like Blue Haven Initiatives, Halloran Philanthropies and from individual donors like some of our Mentors.
We don’t believe this is a failure, as of yet. It’s hard given who our main customers are (entrepreneurs, typically working in developing markets or on really hard social or environmental problems). But we hadn’t given finding our own path to a profitable business model enough attention until 2015 when we began making some major changes.
So we still rely on philanthropic support to create much of our impact, but we hope to do so less and less!
While we don’t consider the entrepreneurs who have moved on from their ventures failures by any means at all (in fact, some of them have gone on to greater heights), we want to recognize that some of the ventures that come through the Unreasonable Institute don’t survive. We spend most of our time and most of our marketing talking about all the our active ventures have raised, for example. But at the same time we know that this isn’t everyone’s story. We honor our entrepreneurs who had the courage to move on from their ventures.
In every situation we know of, we stand by them and support their decision, believing they did the right thing. We’ll continue to support them as they move forward into other adventures because we believe in them. We know the work they do will be a manifestation of them and their beliefs.
We also will begin highlighting some of their stories on our Impact page under “Stories of Impact”.
We were wrong. In the first two years of the Unreasonable Institute, we took all of our entrepreneurs to San Francisco, the densest concentration of impact investors in the world, for a pitch day. Some notable funders showed up, but zero dollars were invested in our entrepreneurs as a consequence of these two days.
Why? We’ve learned since that pitching is a very small part of raising capital. The pitch is what you do to get an investor interested to meet with you. But that’s where they really want to get to know you as an entrepreneur and to get to know your business. We spent so much time preparing our entrepreneurs to pitch in our first two years, and very little time helping to build real businesses and to make the most from the one-on-one conversations with investors that might eventually lead to capital. We also didn’t properly “pre-dispose” the investors in the room. In other words, they came in relatively cold without knowing what the entrepreneurs were doing already. They didn’t know which entrepreneurs they should really pay attention to and which ones weren’t as relevant to them. And we didn’t set the investors up for success by giving them the chance to “syndicate” with other investors.
All these learnings, along with some inspiration from Startup Weekend, ReWork, and Unreasonable Mentor Tom Chi (of Google X), helped us to build the current version of our take on “Pitch Events” – we call it Investor Days.
At our Investor Days events our entrepreneurs only pitch for 2 minutes each, specifically mentioning the challenges they are facing and what they need help with. Then they host a “breakout session” with investors where everyone can dive deeper and get their hard questions answered.
As a team, we ask investors to parachute into the role of “board members” for the entrepreneurs they are meeting with for the duration of the breakout session. In the sessions the entrepreneur explains the business, fields some questions, and articulates the key challenges they are facing, whether those are related to getting funding (including how to structure term sheets, how to spend the money, etc.) or operations (including how to scale, who to hire, etc.). The openness of the entrepreneurs and the invitation to solve challenges together brings entrepreneurs and investors to the same side of the table as teammates.
And the results were extraordinary. In our first year running this new format of Investor Days (2011) 21 of 22 entrepreneurs left Investor Days with an average of 8 investors following up with them. In the month that followed, 11 ventures already secured firm commitments.
Still, we realize that we need to do even more. While a lot of our ventures have raised funding (see Impact page), most of our ventures continue to seek funding.
So in 2014, we hired a Venture Funding teammate whose only job is to help our ventures get funding. The job of this team is to help entrepreneurs figure out the amount and type of capital they want to raise, put together a list of ideal prospects, get their financials in tip-top shape, assemble term sheets, understand how to build relationships with the right funders, build syndicates of funders, and ultimately secure the capital they need.
This was a big priority for us in 2014. We revamped our ask of mentors to have their expectation and goal to find a venture to provide long-term support to. Also, along with Renee Freedman (creator of the TED Fellows coaching program), we have launched a coaching network, enabling each of our alumni to work with an executive coach once per week for free! We built a network of service providers who can work with entrepreneurs for long after the Institute. We hired a new teammate to work on Venture Funding and host alumni Investor Day events so that we can focus more time on getting our entrepreneurs investment-ready and connecting them actively to funding opportunities after they leave the Institute.
We’ve still got a lot of work to do, but we believe we need to invest in on-going support to truly deliver on our mission.