Turning A Loss Into A Win

One of the traits of successful founders is their ability to turn a loss into a win.

You take a lot of losses as a founder, particularly in the early days. Investors pass on your funding pitches, people pass on your job offers, customers pass on your sales efforts, competitors take your customers and your employees, you get sued, you miss critical ship dates, morale tanks, and on and on and on.

But inside of each of those losing moments is the opportunity to turn it into a win.

You lose out on an important hire and in a pinch you promote a promising person from within and they turn out to be a superstar.

You lose out on a hotly contested sales opportunity and you do a post mortem with the customer and learn that you have a huge hole in your product and you fill it and start wining business.

You whiff on financing effort and so you cut your burn, execute for three more months, and go back and get term sheets from everyone you talk to.

My point is that losses are opportunities to win. You just have to see them as such and find the win in the loss.

This is all about resilience, optimism, and tenacity. The most successful founders have it in spades.

And it can be a learned skill. But you have to get your head in that space to learn it.


Comments (Archived):

  1. awaldstein

    It’s a freakin marathon for certain.There are always going to be very bad times.Its the truth, commonplace and profound, all at once.

  2. William Mougayar

    So true. The best entrepreneurs feed on uncertainty, challenges and set-backs, and that cranks up their resilience, optimism and tenacity.

    1. James Ferguson @kWIQly

      Great lines from Romans 53 And not only this, but we also exult in our tribulations, knowing that tribulation brings about perseverance; 4 and perseverance, proven character; and proven character, hope; 5 and hope does not disappoint,..Surely good watchwords for an Entrepreneur (and a VC)

      1. DJL

        Nice to see the Good Book quoted on AVC. Very rare indeed! And fascinating that Paul was apparently an entrepreneur.

      2. JLM

        .One of the best sermons I ever heard was based on that passage — Romans 3-5.The version you offer is one reading of the passage and it leaves off the last part of 5.A “modern” version is as follows:3 Not only that, but we rejoice in our sufferings, knowing that suffering produces endurance, 4 and endurance produces character, and character produces hope, 5 and hope does not put us to shame, because God’s love has been poured into our hearts through the Holy Spirit who has been given to us.I like both readings.In the end, we should not just meet our suffering/tribulations, but embrace them. A military chaplain once tried to sell me on this being the Biblical basis for “running to the sound of the gunfire.”Well played.JLMwww.themusingsofthebigredca…

        1. James Ferguson @kWIQly

          Hi @JLM,Thanks – Not sure If I would go as far as your chaplain ;)I used that version (despite my preference for the often poetic KJV ) for accessibility. Similarly I truncated (but left ellipsis to indicate that I had), because while not everyone has the same beliefs, wisdom of Scripture is universal, IMHO it would pay everyone, whatever their cultural, ethnic or religious background to heed great wisdom – and indeed to seek it out !One reason people congregate here is to seek it out – However while to despise wisdom because of its source is stupid – haters are gonna hate.

      3. sigmaalgebra

        WOW111 And they knew that well 2500 or so years ago and wrote it down. WOW!!!

  3. Raj

    I love your posts like this one because it’s essentially a framework for applying to one’s own situation.

    1. fredwilson

      If I can help people see the way to the other side, then I am a happy man

      1. David A. Frankel

        BTW, if any founders are wondering, this is what a good board member/advisor and investor looks like. You might not be able to get Fred Wilson to invest in your company, but you need this kind of support on your board.

  4. James Ferguson @kWIQly

    Getting back up is like a muscle – it can be trained. You only ever lose if you stay down.Fred gives some good examples -Our clearest was in terms of the headspace our value proposition occupied .When we figured out that having a really powerful analytics tool (of which we were foolishly proud) was the very opposite of what our users wanted.Think Google Search – massive sophistication behind a single text field input form.Like searchers, our customers (enterprise energy managers) just wanted to process a list of problems / priorities – They did *not* care (and rightly so) for any brilliance that we may have shown in terms of how they are compiled. This in turn lead us to a far simpler ticketing UX (built on top of Jira) which saved many years of development effort.Surviving and ;learning are just about getting up off the ground again and again and again. – It also gets easier.

    1. sigmaalgebra

      Gotta solve a real problem, pressing for your target customers, the real problem they have — or in the case of much of, say, Apple, a problem they soon believe that they have.

      1. James Ferguson @kWIQly

        Yup – 100%

  5. Mike

    It is summer so baseball comes to mind. The game will end at some point but always play to the last out. There will be another game, another season to contend for.

  6. Mac

    a.k.a. baking the P.I.E. theory.

  7. iggyfanlo

    Great expression of the overwhelming optimism required to be an entrepreneur. You have to see the glass half full, a quarter full and perhaps even an eighth full

  8. pointsnfigures

    one of the first things a mentor told me when I was trading was success was what you did with your losers. sometimes, it was cut a loss quickly-faster than others to survive. Other times, it was that the information you were seeing wasn’t priced into the market so you needed to feel the sting and be patient. Still other times, you could spread them off and wait-and turn a loser into a winner. It’s really hard in the heat of the moment to really know what to do and you need to understand where your emotions are when you are making the decision. If it’s from a place of fear, you need to take a breath.

    1. sigmaalgebra

      There are some anecdotes about how James Simons made trading decisions that are very different.

  9. DJL

    Perfect for today! And applicable to life in general. Thanks.

  10. Dan Epstein

    As a UVA hoops fan, this reminds me of a quote Coach Tony Bennett used this year (from a TED talk) as the team played to the national title after being first the #1 seed to lose to a #16 seed last year.”If you learn to use it right, the adversity, it will buy you a ticket to a place you couldn’t have gone any other way.”

    1. JLM

      .Bennett is such a good coach and a fine person that it makes me suspicious.I like the guy.JLMwww.themusingsofthebigredca…

      1. Dan Epstein

        I think he is the real deal (granted, biased). He’s been leading with his 5 pillars since he came to town.Quoting from an interview after he was hired (~10 years ago):Do you have core principles as a coach?We have five pillars that our program is based on. The first principle is humility. Don’t think too highly of yourself. The second is passion. Don’t be lukewarm. Our third is unity. Basketball is one of the greatest team games there is because there can be individual talent, but boy, if the guys come together, they can be so good together. And they can overcome more talent or tough situations. The fourth is servanthood. Whatever your role is, be a servant to the team and make your teammates better. The last one is thankfulness. Be thankful certainly when there’s great success, but also be thankful for what you’ve learned through the hard times, because there’s great wisdom in those experiences.

        1. JLM

          .UVA got caught up in the FBI investigation of Christian Dawkins, a scumbag sports agent. In the records the FBI seized, they found a restaurant receipt that showed $64.16 for a meal between Malcolm Brodgon’s mother, Jann Adams, and Christian Dawkins.Tony Bennett handled it perfectly. Interestingly, nothing has ever been heard of this again.I think it was the day that UVA won the ACC Championship.Young men are so desperately looking for order and discipline in their lives at that age, even great athletes. Then, the money shows up and the framework goes to shit.JLMwww.themusingsofthebigredca…

  11. Andu @ Widgetic.com

    Thanks, Fred.

  12. Girish Mehta

    Tenacity is an important quality, but do not apply a normative value to it. It can be a great asset, and it can blind you as well.I have seen loss-aversion and ego wearing the garb of tenacity.Some losses are simply just that, and not an opportunity to find a win.Tenacity can help you turn a loss into a win. But it can also have you wandering and lost in the desert for the next 10 years.

  13. falicon

    You don’t think of them as losses, you think of them as challenges…and in my experience, entrepreneurial people LOVE challenges.

  14. Tom Labus

    Sometimes it’s opportunity. Drew Bledsoe goes down Tom Brady gets s shot! Sometimes there is no back up.

  15. FlavioGomes

    I don’t think “resilience, optimism or tenacity” can be learned at all.. you have it or you don’t…there are lots of folks starting up because “everyone else is” and they are doomed….You need to prepare for the hardest thing you’ll ever do in your life, and have a burning desire to achieve it beyond any other priority and then and only then, will you have a slightly better chance at winning…

    1. JLM

      .Having watched you power through challenges, I know it is truth and that you speak the words of experience.Well played, Flavio.JLMwww.themusingsofthebigredca…

      1. FlavioGomes

        The accumulation of scar tissue my friend 🙂 thankyou

  16. JLM

    .As an entrepreneur, you get the outcome you accept. Easy to say when you are at the pay window, but getting there entails a lot of travail.These kind of things are “losses” only if you accept them. I am not quite ready to call in the marching band if I get kicked in the teeth, but the point is you do what has to be done.I am going to take the “under” on the subject of being able to “train” people to develop character traits. Friction — what is really happening in the List of Horribles that Freddie lays out — is required to expose one’s character.But, the character has to be there.I saw this time after time in hard Army training and active service. The big football guy and the little 140 lbs guy often had different outcomes. The little guy’s 140 lbs was all heart and the big guy had never lost a fight until they got to that training. Even more pronounced on active duty because you were dealing with soldiers and soldiers can smell a dud from a mile away.Under real stress — life and death situations — you would be very surprised who the performers turn out to be. They are the guys who have a reservoir of calm. The shit is hitting the fan and these guys just take a second, assess the situation, and bark orders. I think it is at least 50%+ a gift.In a well known study of MOH recipients, the single common element was they all turned anger into action. Slow to anger. Quick to act.The List of Horrible that will — not may, WILL — happen to most CEOs is long and deep. I would say that every single CEO I have coached could make the same list I made here:http://themusingsofthebigre…It is a real thing and you don’t get to the pay window unless you put a few of these heads on your wall. Good hunting.JLMwww.themusingsofthebigredca…

    1. sigmaalgebra

      > Under real stress — life and death situations — you would be very surprised who the performers turn out to be.When I was in grad school, that last part was the summary of the faculty after the Ph.D. qualifying exams. The students worked hard and had terrific academic records. In some significant ways, I was an outlier. There were five exams. I did the best on four of them and for the fifth had already done the research for my dissertation.I was an outlier because I did well on three of the exams due to study I’d done so far in my career. So, my academic record didn’t have evidence I’d do well. For the fourth, nearly all of that was new to me, and I did well because I studied the material really hard for weeks after the course was over. A key difference was that I was really trying to understand the material. The exams were challenging enough that working just to please a teacher in a course — the usual way to make good grades in school — was not enough.That I’d done so well on the exams totally torqued off my department Chair, a guy who apparently had done well in academics by picking relatively easy directions and working with high precision there.So, before the exams, I looked like the 140 pound guy; after the exams, I looked like the big man on campus. But all that was about what I had learned that was already in the library,What really worked was a project I did in two weeks that solved some long outstanding problems with results that were publishable which is valued far above all else, yes, above straight As since kindergarten, PBK, summa cum laude, etc.! That two weeks put me no longer the big football player but in line for a coaching slot!While high end academics is all about publishing research, the earlier parts of academics are nearly useless, even misleading, on how to do research. I learned outside of class, Maybe one of the secrets is just to go a little deeper and try actually to understand the material, how it works.So, right, sometimes the guy who from the usual views looks like a 140 pound guy actually has the real “secret sauce” for success.It’s nearly only a tautology, but the exceptional, especially the exceptionally good, is rare and not much like the rest!

  17. jason wright

    loss + x = win

  18. Eric Friedman

    Never waste a good crisis.

  19. sigmaalgebra

    TheMy point is that losses are opportunities to win.is at first glance a concern: After all, from the beginning the project was supposed to have been well considered. But there is another view: As R. Perot sometimes mentioned, need “finger-tip feel” for what the market wants. Or there is the common “A good businessman knows his particular business really well.” or some such.So, going to the market, seeing what is really there with respect to your business is no doubt one of the best ways to move to knowing the business “really well”, in some ways better than any prior planning without that market contact,For the rest, I can believe most of it. The exception isYou whiff on financing effort and so you cut your burn, execute for three more months, and go back and get term sheets from everyone you talk to.In only “three months” and the “everyone” sounds a bit overly optimistic.

  20. Kirsten Lambertsen

    In acting class, my teacher liked to frame this as being cybernetic vs ballistic. It was less about tenacity than about adaptability. If the ground underneath you changes, you can drive forward on the same path (ballistic) or plot a new course or change the destination (cybernetic). Cybernetic was, of course, always the more exciting and successful approach.

    1. sigmaalgebra

      For “adaptability”, if want to use some technical language, adaptive is better then cybernetic.And a fixed plan is better wording than a (colorful!) ballistic one.For the dichotomy, it’s, say, a fixed plan versus an adaptive (or dynamic) one.Or, say, in football, given a first down, it’s the difference between (i) calling all four plays at once or (ii) calling the second play after seeing the results of the first one. This dichotomy is easy: No quarterback would think of doing (i).Best decision making over time with no uncertainty in the problem is essentially deterministic optimal control, a special case of optimization. With uncertainty, and in practice with likely more data than one would have, the subject is stochastic optimal control.For a few years, deterministic optimal control got to be a hot field due to the problem of how to land one of the Apollo spacecraft on the moon safely for minimum fuel.Essentially deterministic optimal control started with Newton and his solution for a shape of a frictionless wire such that a bead on the wire would slide, from some point A to some lower point B, down in least time. That was essentially the start of the field calculus of variations. That field got an update with more recent work, e.g., by Pontryagin.A roughly current problem in deterministic optimal control is how to climb, cruise, and descend an airplane for least fuel, or least fuel with on-time arrival. Another one was how a high performance fighter jet could climb from takeoff to 100,000 feet in least time. Supposedly an F-4 tried this and found that it was good to climb part way, dive, go supersonic, pull up, and stay supersonic all the way to 100,000 feet. When I was at FedEx, I got this from M. Athans in his office at MIT.On real world problems, stochastic optimal control typically needs both more data and more computing than is reasonable. Still there are efforts at MIT by D. Bertsekas and a project at Princeton’s Department of Operations Research and Financial Engineering are trying. There have been claims that stochastic optimal control is necessarily the ultimate, best forever, approach to AI.Yet there are some useful and quite doable examples of stochastic optimal control, e.g. sequential testing, by A. Wald. Actually that work is a special case of the topic stopping times in stochastic processes — with a role in high end approaches to exotic options.My Ph.D. dissertation was in stochastic optimal control, and I’ve done several fairly serious projects in optimization.

  21. Yb927

    Fred. This is the ESSENCE of real entrepreneurship. When you write a blog like that you are energizing all the people who fight every day to bring their visions to life and make businesses hugely successful. NOTHING happens without “…resilience, optimism, and tenacity.” It’s the key to life itself. Thanks as always!

  22. Manoj Pawa

    This reminds me of The Chinese Farmer parable by Alan Watts

  23. Artem K

    After years of turning negative to positive you are almost stop consider fails even emotionally negative, building around the machine that converts fails to opportunities focused on success.

  24. JLM

    .Lyrical. Better than half the stuff I read at my writer’s group last night.Well played.JLMwww.themusingsofthebigredca…