"I’m Going to Take Full Responsibility…But I Can’t Take Responsibility for Everything"

A quick guide to taking full responsibility, except for what you're not responsible for, which is probably everything.

In last week’s episode of the Reply All podcast, an NFT entrepreneur (or “entrepreneur”) discusses his feelings when told that the buyer of one of his NFTs had the NFT stolen by a hacker:

“I’m going to take full responsibility…but I can’t take responsibility for everything.”

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Hello Gobbledeers,

I’m a bit fascinated with post-mortems from founders whose startups have had to shutter. This CB Insights list of those suggests I’m not the only interested in how people talk about the incredibly difficult failure they just went through.

The post-mortem is an opportunity to take responsibility for what happened, to look back and own the failure. Though more-often-than-not founders take full responsibility, but not responsibility for everything.

The demise of checkout startup Fast last week got me thinking about how founders tell these stories. Fast, despite some of the controversy surrounding its founder, offered a gracious goodbye on its website (I’ll forgive “Sometimes trailblazers don’t make it all the way to the mountain top,” because the rest is so generous).

Occasionally the responsibility for the closing is placed on investors, as electric skateboard startup Inboard does here:

Throughout this process we had received multiple assurances from our key investors that they would lead a bridge financing if we hit key goals. Inboard hit those goals, but in the end the investors decided they would rather seek the liquidation value of the company rather than take the risk on funding the bridge.

(We don’t suck, our investors do.)

Sometimes the responsibility lies entirely with the founder, but the blame is on employees, as Planswell’s CEO shows here:

Our revenue was up sharply, our culture was fantastic. We had a ton of investors ready to put together a $20M round and several international expansions had just signed. That’s when an ex-employee caused a social media storm around a situation that happened over a year ago.

(Despite the “fantastic” culture, the “social media storm” was an accusation of sexual harassment by a co-founder. I’m curious what a non-fantastic culture would look like.)

Given the current state of funding, and what I’m guessing will be a growing parade of companies that aren’t able to raise additional funding, I wanted to take a few minutes to explore two flavors of post-mortems.

And because a friend and reader recently asked me, “Why do I have to read past all of your complaining to get to the suggestions?” I’ll put the good one first¹. (If you love hate-reading stories about self-absorbed founders, skip to the second).

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Rand Fishkin, the founder of SEO firm SEOMoz (now called Moz), published a piece back in 2016 looking at how the company found itself in a situation where they would need to lay off a chunk of the staff and retrench from some recent new product launches.

It’s a brutally honest look back at a series of decisions and bets that didn’t turn out well, made all-the-more striking by how few founders bother to look inward when assessing what went wrong.

You can read the post yourself, but I want to call out three things Fishkin does that I think are useful for all founders and senior execs when sharing any type of difficult information with the broader team:

1. Be aware of your own biases. Fishkin shares:
   
   “Before we begin in earnest, I must provide this critical caveat — you’re reading my opinions, my experiences, and my perspective only. This post will certainly include some degree of inaccuracy and bias. I’m not speaking for everyone at Moz, or everyone on the board, or for our leadership team. Just for me.”
   
   Being transparent starts by acknowledging that what you’re writing isn’t fully objective. Opening up about that explicitly gives everyone reading it permission to acknowledge that they may see the situation differently, and that your version isn’t “correct,” it’s just yours.
   

2. Lay out the data behind why the decision is being made. The restructuring at Moz was done because the data didn’t show any other path. Writes Fishkin:
   
   ”That forecast showed Moz burning much more cash than we’d planned due to lower expectations for every product…Every product was growing in revenue and customers, but none of them were growing as fast as we’d forecast…Suffice to say, those new estimates were the catalyst for events that followed.”
   
   One of the striking things I’ve seen about Fast this week (both on LinkedIn and in my own conversations with former employees there) was how many people said the company was doing great and that they just needed more time. That clearly couldn’t have been true, as there’s no more company².
   
   I appreciate that Fishkin says that the products were growing, but not as fast as necessary given the cost structure. That detail is helpful when delivering the bad news, since team members are likely thinking to themselves, “but I thought we were doing well.” “Doing well” is different than “doing well enough.”
   

3. Lay out clearly - point by point - what you thought went wrong. And own those decisions.
   
   Halfway through the post, Fishkin lays out 5 reasons he thinks they ended up where they are. He takes ownership for each decision and walks through the thought process for each. For example:
   
   We drastically underestimated the complexity of selling many products: how it dilutes brand association, impedes funnel optimization, and puts stress on product, marketing, sales, operations, customer service, and engineering teams (I found this to be exponential — two products felt like 2X the work/challenge, but four products was way more than 4X).

   
   A side note here for every earlyish stage founder: 4 products is “way more than 4x” the work. If you take nothing else away from this piece, it’s that focus always wins, and not focusing is incredibly costly, even if not focusing seems like the best option for growth.

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On the flip side of that, is this quite remarkable piece of gobbledy from the founder of home buying start up Knock.

I’ve often found that when a company has bad news to share with its customers, it sends a letter or email where the first paragraph is the opposite of the the rest of the note. For example, if the first line of a letter from your credit card company is, “More than anything, we value the importance of providing incredible value to our loyal customers” then I know that the rest of the letter will involve the various fees they are going to hike.

Knock’s founder does an incredible job of pulling the ol’ credit card letter move:

This story is an honest, transparent account of how we grew transactions, revenue, and gross profit triple digits at Knock over the last 12 months but thanks to a global pandemic and five macroeconomic implosions we missed the IPO window, were nearly acquired and ultimately secured a $220M round of financing in what was a painfully prolonged, but successful, fundraising process.

So you know that when you see “honest” “transparent” and “successful” that the credit card letter strategy suggests - perhaps - there’s a tiny tiny bit more to this story.

I’ll cut to the chase: They laid off 46% of their team.

Before any of that gets mentioned, the founder pulled all the shitty founder moves out of his hat:

• Invoke Steve Jobs: “Our innovative new concept spawned a slew of copycats and an entirely new category known as Buy Before You Sell. Steve Jobs said that imitation is the highest form of flattery and we were downright³ blushing!” 
  

• We made the right decision around our financial structure, but the market sucks. They decided to combine with a SPAC, and you can guess how that ended up. (“We hired Goldman Sachs to help take Knock public on the New York Stock Exchange via a SPAC. Internally, we called this Project Cosmos.⁴)  Then “Just two months later we were ready to start our investor roadshow, but enthusiasm for SPACs started to wane and companies that went public via SPAC suddenly traded at an average of 39% below their highs.”
  

• Seriously, the business is incredible. Why are we the only ones who get it????
  ”On one hand, homebuyers needed the Knock Home Swap more than ever and our business was on fire⁵. On the other hand, the SPAC market continued to cool down.” On the third hand…
  

• Won’t somebody think of the bankers!!!!!!!
  ”We abandoned the incredibly arduous process that half our executive team along with 40 highly skilled bankers, lawyers, analysts and private equity folks spent months preparing for and months more executing.” HIGHLY SKILLED! And what were those lazy pieces of crap on the other half of the executive team doing??? And those analysts worked neither for the banks nor the private equity firms - Who did they work for?

  
  (I’ll skip the parts where he blames the Delta variant; Zillow - “investors needed a timeout to understand how the Zillow Offers news” would affect them; Omicron; a possible acquisition offer that went bad because “timing is everything”; a rout in tech stocks “including Facebook and Netflix”; and the invasion of Ukraine.
  

• Success! “We have secured $220M of new funding from investors including…M Night Shyamalan.” (He sees dead companies). Then “huge shout outs” to the investors and board members “without whom our dream would not be a reality.”
  

• Then…the full credit card letter. Under the heading “People First” (which you KNOW will not have “people first,” as we’ve already had a few thousand words that don’t mention the people and if they were first, maybe they wouldn’t also be last.)
  
  ”Although this is good news, it’s not a happily ever after ending. While substantial, the capital we raised is much less than what we set out to raise in our IPO, requiring us to rightsize the business, including the difficult decision to part ways with many of our beloved Knockstars. This is why today’s announcement weighs heavily on us and me, in particular.”
  
  A couple of notes:
  1) I’m fairly sure the 46% of the staff who were let go don’t see this as “good news.”
  2) There’s a pretty awesome switcheroo in there where he reveals that the real victim here is him. (“Weighs heavily on us and me, in particular.”)
  3) “Knockstars”

• If you invoke Steve Jobs, wrap it up with Jeff Bezos:
  ”Amazon founder Jeff Bezos famously coined “It’s Always Day One” to denote how critical it is for companies to maintain their nimbleness, entrepreneurial spirit, passion, and, most importantly, obsessive customer focus.  For the first time in decades there is a ton of momentum behind fixing the very broken home buying process and we at Knock have been and will continue to be at the forefront of that revolution. We are just getting started.  Onward and upward!”
  

Upward, indeed.

1. Though for a better essay structure this example should be second because the other example is such an egregious example of gobbledy. You’re welcome, Amit.

2. I’m being flippant here — that they weren’t able to raise additional funds doesn’t mean the business wasn’t growing. It probably just has something to do with their founder wearing underwear while skydiving (see note at the bottom of the article here).

3. Sometimes a single word can bring up a whole novel worth of feelings. The use of “downright” here is that word.

4. I assume this wasn’t named after 1970s soccer phenomenon the New York Cosmos, which famously also was overvalued before it imploded.

5. Maybe he meant “on fire” like “every summer half of California is on fire.”