Lessons - Why Most Startups Fail (And Why You Shouldn't Care) | Dennis Mortensen, CEO of X.AI

Welcome to the lessons episodes of Success Story. These lessons episodes will be shorter clips from past guests, accomplished value community members, and myself. In each short episode we'll feature concise and insightful actionable conversations and tactics providing you with real-world strategies and tips to help you achieve your personal and professional goals. If you're seeking a no-nonsense approach to growth and progress, you've come to the right spot. Settle in, take notes, and enjoy. I love it. I think that you're describing what a lot of entrepreneurs describe because from the outside they look absolutely, you know, batshit crazy, but it's a love of the game. It's a love of understanding how to play the game of, listen, we're in 2020 and people are realizing that jobs are not secure, that working for big companies are not secure. Obviously nobody expected this, but you know, the traditional work for somebody, work for an IBM, we're for business machine, like the place to go work, it's not the safe option anymore and people don't spend 30 years in a career. So I think that the takeaway is go try something, go try something. And I think there's at least that from me and it sounds like I'm on commission, from some organization, I'm not, but there's this need for me to tell people to at least go try the ones. It might not be for you, you might actually dislike the initial chaotic setting and what I see as romantic, you see as frightening. And for every kind of step forward, what I really end up liking and falling in love with just gives you anxiety. But I still suggest you go out and try it, even if you lose, I think you spend 18 months trying to bring something to life that just didn't survive, it was still born. That's okay. That is probably the cheapest, most valuable MBA you can go acquire. I said you can go spend that 200K up at Columbia and I'm not saying you're going to come out dumber, but if you really want to come out smarter, I suggest you do the two years on some startup idea because that is just knowledge that is very hard to acquire elsewhere, almost impossible. So that's certainly one bullet. I think the other bullet is, if it is for you, when you do lose that first startup, which must be the assumption, I said almost every startup will have a super optimistic beginning and a very sad ending. That is how most of them are defined and that is okay. You just need to at least assume it won't go well, but then you should imagine not only single venture, but probably a lifelong career as an entrepreneur for where you can do 10, 12 in-reaching ventures. Only two or three of them need to work half okay, it's going to pay for the remainder of them. So that's a lifelong entrepreneurial career, or as I tend to call it, it's the 50-year fund. So most ECs will run a four-year fund, you can't do all of them at the same time, you have to do them over 50 years. I'm 23 years in, on my fifth venture, am I got five more in me, perhaps? Yeah, well listen, I think the biggest thing that you mentioned that's important to remember or take away is you're going to fail a lot, and if you can get over that hump, then you're just on to the next one, on to the next one, on to the next one, and you learn every time. And that's why you hear, I don't want to hijack this, but you hear about Zuckerberg and whatnot, and he's like, how many things do you try before Facebook? And I'm sure like all the other apps that you can name you use on a day-to-day, they've all tried and failed like many, many things before they become successful. And I know it's easy to say, but you certainly see plenty of people, and you must have friends who work at Margaret Stanley and finally assemble the courage to quit their job, go do that thing that they've dreamt of doing for years and failed on it. But they sometimes attach their life's worth to the success of their company, which is completely unfair, and those two got nothing to do with each other. So your life's worth, I said, you're just a nice guy, whether you're making 40K minus 300K or 800K a year on your newly established venture, you're still a cool guy. So somehow, which is why I tend to, not out of disrespect, speak of startup as a game, just like any professional football. If you want to really become good at your craft or any other sports that you go watch, you must just assume that you play a lot of games and you lose many of them. But the reason you're at this particular level is that you were willing to lose along the way. So your life's worth, it's not this particular venture, it's just how you play the game, and if you assemble a little bit of knowledge along the way, you'll probably smash on the next one, and that's how you become a pro. But not one for where, sadly, some end up with not a full on depression, but just a sad set of months, if not years in life for where I hated the last eight months, I had a difficult time in assembling, again, the courage to kind of go back out into life and tell people who I am, given I told everybody up until this point that I was an entrepreneur, and now I have to tell them that, well, it didn't work. So I have, this is my fifth venture, one of them didn't work. I proudly put it on my CV, and I proudly speak of all the mistakes, why I think we failed, and hell, I might even still pitch it, and I said, hey, I think we could have made it work, had we done this, but it's not something I would want to hide, it's only not a part of my life that I want to be without. But how do you, why do you think that is? Why do you think that, like, how do you get over that, because I know, actually I know why it is, the silly question, it's tough, innately to accept that you're bad at something, but how do you get over it, how did you get over it, because I think that that's a lesson people can definitely learn from. I wish I had some magical process if you just weren't about applying that, then you would escape this depressive moment that might come along with not winning. I do think, and it's the best thing that I've come up with, and I know I'm repeating myself, that if you try to at least not attach yourself to the success of the company and think of it as really just a game, it sounds extremely disrespectful. If you raised any amount of money, $100,000 from a pool of friends and family, or millions of dollars from institutional investors, it's probably the same emotion that comes attached to any one of those pools. You should still make both yourself and them aware of the fact that I'm taking this very serious. It's still a game, though, for we all agree, I'm probably going to lose. All the odds are against us, but we know that, otherwise, it wouldn't be a start-up to begin with. It would be a going concern, and you're wanting me to sell whatever witches we can buy for $10 or we can sell for 13. So we know we're going to lose, and at least making sure that all of your constituents are equally aware of where this will end. If we then escape it, we should all be ecstatic. That's just not what we expected. We expected that the next 18 months, 24 months, will be an unfair amount of work, and come to the end of it, we'll have nothing to show for it. But you know what? It'll be an amazing story. If we do, you want something, otherwise, where else would you think you'd get hundreds of percent of return? If you want something else, well, I think Citibank is doing 0.2 percent at the moment. You should put your money there. It's true, and I think that I think that a lot of entrepreneurs, they go in and they get money, and I think they may be intimidating, especially for first-time entrepreneurs. But you have to align with the right money. You have to have smart money. You have to have a partner that's going to invest, it's going to provide value, and you have to have a partner that is putting money into 100 ventures knowing that only one is going to be successful. And if you have the right partner, then it's not so stressful anymore. But the venture has an owner to educate entrepreneurs too. I think you're right, and yes, he picked up on a point where you can add unnecessary stress to the equation yourself. If on your very first venture, your first 40k is your parent savings, all of their savings. Not one out of many investments that they will make, this is their only investment. That is not healthy. So you should try at least to find people where you know I'm one out of many, and they have a portfolio. And in that portfolio, there'll be a lot of bodies, and it'll be okay, because there'll be a few winners, and it'll pay for the rest, and I can still come back, be in his next portfolio. So in that regard, try at least to design it in such a way that you aren't adding unnecessary stress yourself.