FAILED ENTREPRENEURS: How Founders of Fallen Startups Can Solve the Talent Acquisition Crisis!

I remember pitching my first startup in Google and having the investors ask me if this was my first startup.

I answered YES!

They replied:

Here in Silicon Valley we do not take any entrepreneur seriously unless they have failed 2–3 times before!

If there’s an upside for the common death of many startups in any entrepreneurial ecosystem in the world, it would probably be the abundance of FAILED ENTREPRENEURS!

But is this a bad label? or could they possibly be the hottest talents in the market and a potential solution for the talent gap in the market!

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Founders can spend 20% of their weekly working hours looking for top talents to hire. This is a lot of time, but the issue here is that after the hours and hours they put into talent acquisition they end up not filling many of the senior roles they’re looking to hire for!

You know what’s ironic?

At the same time these founders are complaining about the talent crisis and the gap between the supply and demand; we have some of the biggest startups in the ecosystem falling apart and their founders & top management teams might soon be in the job market looking to be hired!

This is the “Failed Entrepreneurs” phenomenon!

But first, why will we have many failed entrepreneurs?

First of all, statistically 90% of startups fail in its first year; so it isn’t really a surprise to have many founders in the market either building their second venture or looking for a role in another startup!

Secondly, right now in Egypt many promising startups are likely to fail due to factors such as:

- Adopting the ‘growth at any cost strategy’ for too long which hurt their unit economics

- Lack of available funds (investors & VC being too cautious)

- Currency devaluation

- Other Global macroeconomic factors

Thirdly, there comes a point when many founders realize their startup isn’t THAT scalable and in the best case scenario will be just another profit generating ‘Small & Medium Enterprise’; but because they want more of the entrepreneurial game, they decide to become a silent partner, sell it or maybe close it.

Many of them consider working for a startup that is achieving what they couldn’t do on their own!

Now there are 2 important questions I will address:

1) Why do founders & recruiters have concerns over hiring failed entrepreneurs?

2) Why should founders reconsider these concerns and hire from the failed entrepreneurs pool?

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Why do founders & recruiters have concerns over hiring failed entrepreneurs?

I mean assuming that the startups of these failed entrepreneurs didn’t close due to unethical behaviors or fraudulent activities, why would there be concerns on the courageous founders who did their best to build their ventures?

Isn’t hiring a failed entrepreneur a win-win to everyone?

The failed entrepreneur will have the opportunity to prove themselves again and the startup hiring them will have on board someone who did it before!

One of my founder friends told me this:

“I don’t consider hiring failed entrepreneurs because as an entrepreneur myself I BELIEVE that

Becoming an employee = paid vacation

Until my next startup idea is ready!”

But is this the only concern? Here are some of the concerns I got out of founders in our ecosystem.

A) Flight Risk is high:

i- The Entrepreneur DNA never dies out:

Failed Entrepreneurs are more likely to want to build a new venture again! This might worry recruiters & founders who fear that if they invest in these talents, they might find them leave in a few months after they recharged their motivation and momentum and became ready to try building a new venture!

ii- Misfit for traditional employee roles:

There’s a genuine fear that failed entrepreneurs will not have the motivation to commit to being an employee. They will get bored easily, not be able to be part of a structure, will despise documenting anything, won’t tolerate getting instructions etc..

B) Getting their old troops:

What if the failed entrepreneurs comes in and gets talents from their failed company that are loyal to them and match their dynamics? How will this affect the politics, growth & employer branding of our startup?

C) Ego:

This is straight-forward. There’s a fear that failed entrepreneurs might give a ‘know it all — been there done that’ vibe! They might want complete control over projects and might be super opinionated when it comes to what’s best for business!

D) Recycling your business idea:

Many founders fear that failed entrepreneurs might study their idea and go start their own which will be a spin-off! (I personally think this is BS because it’s really all about execution, never the idea).

Signing NDAs or conflict of interest docs mean aren’t enough because let’s be real, we’re not living in Switzerland here. There are bascially gentlemen agreements!

So after the massacre above, why am I promoting the concept of hiring failed entrepreneurs?

Why should founders reconsider these concerns and hire from the failed entrepreneurs pool?

Not all failed entrepreneurs have the above-mentioned issues. In fact, a lot of them are humble enough to admit their mistakes and take full ownership and accountability on what went wrong.

Failed entrepreneurs bring A LOT to the table. Their experience is not limited to their risk-taking capacities or their resilience. We’re talking about founders who potentially lived through the entire life-cycle of their products, raising funds, hiring & firing and many more milestones that very few get to live through and learn from!

Now assuming that they passed your main culture-fit filters and criterias, here are some reasons why they are great additions to your startup!

A) SWISS KNIFE:

Failed entrepreneurs are like a Swiss-Knife in the sense that they serve many functions. These founders are used to working long hours and along the road have gained a broad set of skills, making them generalists that are able to serve your startup in many ways!

B) Autonomous & Independent:

One of my mentors used to tell me:

“In startups, don’t ask for permission! Get things done, then ask for forgiveness”.

Not sure if this is a quote out of a movie but either way it tells you a lot about what founders want from their top talents.

Top talents in startups should be able to work without the need for approval and reassurance in every single step.

In a nutshell, you cannot put failed entrepreneurs on a short leash!

C) Used to bootstrapping:

Previous founders understand the importance of cashflow more than anyone! (except those who are famous for wasting their investors’ money, and I believe they’re easy to spot)

D) Firsthand experience in leading with AGILITY & SPEED:

One of the survival mechanisms of startups is moving fast. And who better than failed entrepreneurs to lead cross-functional teams with speed; I mean this was basically their Job Description as founders in their previous startup.

Previous founders were previously fulltime problem solvers so experimentation runs in their genes and they probably can pass it on to their teams in no time!

So what do you think…is it a 50–50 shot hiring failed entrepreneurs as top management in your startup?

Is the badge of their failed startup enough of a proof that they have the startup mindset or will they be rejected like a misplaced organ transplant.