My Business Has Failed. Here’s What I Learned.
Originally posted Summer 2016.
My business has failed.
It feels weird to type that out. It took a really long time for me to admit that simple fact to myself. And even longer for me to write about it.
A year ago, I launched my law firm and publicized the good news with great fanfare. I suppose it’s only fair that I also share the bad news publicly too.
I have absolutely no regrets about starting my own firm. I made many mistakes, and learned a lot of difficult lessons. But I also received some huge unexpected benefits. For my next move, I’ll be joining a tech startup in San Francisco. I’ll give you more details at the end of this post.
I. Blogging About Transitions
For some reason whenever I go through a career transition, I feel the need to blog about it. During my senior year at CMU, I announced that I would be heading to IBM for my first job but also noted that I was still debating between going to law school or business school. After I decided to go to law school I posted my ambitious career goals and how I planned to go about accomplishing them. During my last year of law school, I described the tension between chasing your dreams and going for a high-paying job. And when it came time to leave that high-paying job as a Biglaw associate, I wrote a brief post describing my feelings.
So I guess this post shouldn’t come as a surprise. Not only am I switching jobs, I’m leaving the practice of law. (Maybe not permanently, but definitely for a while.) I suppose that’s a big enough change to warrant a post.
I’ve been meaning to write this post for a long time. Part of it’s because I believe people should share their personal setbacks more often. Very, very few people do it. I wanted to be one of them. Posting only about your successes makes it seem like you have the perfect life. In reality, life is messy and full of ups and downs. When people do write about their failures, like Brendan Moynihan did in What I Learned Losing A Million Dollars, I pay attention.
II. My Original Motivations
There were many reason why I decided to close the firm but it probably makes the most sense to describe why I opened it in the first place.
I opened my own firm because I thought it would be the best way for me to succeed as a lawyer. I wanted the autonomy–or, I guess, the freedom–to avoid doing all of the things I didn’t enjoy about working as an associate.
A. Being an Associate Sucks
I struggled under the stifling, hierarchical structure of most law firms. I didn’t like Biglaw’s obsession over details and its cultural fear of mistakes. I could sense that it had a negative impact over my personality. I guess it’s also fair to say that I wasn’t great at being an associate. Anyways, I stayed just long enough to pay down debt and save up some F-You money. Once I accomplished that, I wanted to try something kind of different but not dramatically different. So I made the jump from defense firm to plaintiffs’ firm. I thought it would be a better fit for my personality.
Turns out, it wasn’t a good fit for me. Maybe it was just the people I worked for, or maybe it was just something specific to that particular firm. Regardless, I struggled to do well there. For the first time I started to question whether I should quit being a lawyer completely. I suppose I could have tried a bunch of other law jobs, like going to the government or being an in-house lawyer.
B. Controlling My Destiny By Going Solo
But I just had to know if law was right for me. I saw opening up my own firm as the answer because as a solo practitioner, I could control both who I worked with and the type of work I’d do. If I still didn’t like it, then I could say that I’d tried everything.
There were other reasons why I wanted to be a solo practitioner. I’ve wanted to start my own business for a long time. I saw the opportunity to combine work and play by collaborating with friends. It really felt like the right thing to do.
C. What Ended Up Happening
Going solo was amazing at first. I got to meet with and talk to so many different types of people. I enjoyed counseling my clients to help them solve their legal problems.
But there were a lot of downsides. Working as a solo meant I was no longer part of a team. There were long stretches when I didn’t have any prospective clients because it’s REALLY hard to balance sales/marketing with doing the underlying legal work all by yourself. I worried about where revenue would come from next month. I spent an inordinate amount of time researching their problem only to have prospective clients say Never mind, I actually realized that I don’t need a lawyer. I was glad that they figured it out, but wish that I hadn’t spent all that time doing so much work.
At some point the practice became a weight that hung over my head. I encountered obstacle after obstacle. Each one compounded the previous one. After I experienced a particularly bad setback, I realized that I needed to get out.
The question you should ask yourself before closing your own business is this: What were my original goals, and am I on my way to achieving them? Is all the hard work I’m putting in worth it?
To me, the answer went from Yes, to Maybe, to Not Really.
I wasn’t enjoying myself. Work was affecting my mood and outlook on life. I lost a lot of my confidence. I wanted to stay home in bed all day. In the end, I thought: why put myself through that? Was it really all worth it?
D. To Be Clear
Before I continue, I want to be clear about two things.
First, I didn’t close my business because of the money (or lack thereof). I started my business with a lot of savings because I knew from reading The Illusions of Entrepreneurship that many entrepreneurs fail because they’re undercapitalized. I made certain I saved up some money before I started out. And because I worked out of a home office, I had an extremely low burn rate and could have gone on losing money for a really long time. Many businesses go without any real profits for years, and don’t make significant money until much later. I knew this going in.
Second, I definitely did not close my business because of any social pressure. On the contrary, my support group was more confident in me than I was myself (see below for more) and that I’d eventually become an enormous success. If there was anyone who doubted me, they surely kept it a secret because I never heard a single word about it.
III. Let Me Write Openly About My Failure
One of my major beefs with social media is that no one ever talks about their setbacks. I’ve written about this in the past. This selective news-sharing is the reason why so many people are depressed. Facebook is full of everyone’s highlight reels. It’s easy to feel like you’re alone in the struggle.
I once told myself that if I were to ever encounter any serious setback in life, that I’d like to publicize it on social media. I haven’t had the courage to write about a lot of my setbacks but I thought I could about this one.
So without further ado here are some things that really suck when you fail at starting your own business.
I knew I was making a financial sacrifice. And know I said I wasn’t in it for the money. But still.
In the twelve months that I worked as a solo, I would have generated more profit by working a full-time hourly document review job. I could have taken the most lifestyle-focused legal job and had great hours, earn a good living, and enjoy full medical benefits, matching 401k, etc. And if I was still working in Biglaw? I’d be working hard, sure, but I’d also be making over $300,000 this year.
Damn that really hurts just to type out.
I like to pretend that it doesn’t matter. But you know what?
It kind of does.
B. Wasting Time
If there’s one thing worse than losing money, it’s losing time. I lost an entire year working at something that ultimately failed. I realize that it’s not a complete loss because I learned some important lessons from my experience.
But it still sucks.
Especially since in the past twelve months my peers have gotten better at their jobs, made more connections, and saved even more for retirement. I would have been better off taking six months to travel the world, drink beer, and visit my friends. If I went back to work right after that, that would have been a far more efficient use of my time.
C. Dirtying Up The Resume
This is a pretty big downside that will keep many of you lawyers from doing something off-the-beaten path. If you want to retain your earning power, and ensure your own future employability as an High Powered Attorney you simply cannot have anything out of the ordinary on your resume. (This is also probably true of many other types of careers in conservative industries.) Future legal employers will question your commitment. I dirtied up my resume a little when I left S&C to join a plaintiffs’ firm. And I really mucked things up when I ran off and opened up my own law practice. Now I will never become a big-city AUSA, work in-house at Goldman Sachs, or make partner at a top Biglaw firm.
Looking at my peers’ LinkedIn updates in the next few years will be challenging.
D. Not Headed in the Right Direction
This is something I really struggled with. I recognize that I shouldn’t have to convince strangers that I’m Headed In The Right Direction. But it still bothered me.
Let me explain what I mean.
Let’s say you just met me and I tell you I’m headed to law school. You might say Oh that’s pretty cool, you’ll have a stable job and make some money. You must be Headed In The Right Direction.
Now you really have no idea whether I’m actually headed in the right direction. I might be taking out hundreds of thousands of dollars in student debt with no serious job prospects. But for the purposes of that conversation, I have successfully convinced you that I’m Headed In The Right Direction without having to expend any real effort explaining how or why.
Now let’s say I didn’t say I’m going to law school. Instead, I say I’m going to drop out of college and travel to India to explore myself. What’s your reaction going to be? Probably something along the lines of that dude is lost and doesn’t know what he’s doing with his life. He’s definitely Not Headed In The Right Direction.
Again, you don’t know whether I’m actually headed in the right direction. Maybe I’m Steve Jobs in the 1970s and that India trip will have a transformative effect on me and I’m going to build a juggernaut of a company in the future. But again, for the purposes of that brief conversation, I probably haven’t convinced you that I’m Headed In The Right Direction.
For the past 10 years, I’ve had the luxury of not having to explain to people that I’m Headed In The Right Direction.
I’m taking the LSAT.
I’m going to law school.
I’m going to work at S&C.
I’m Headed In The Right Direction.
I know I don’t need to explain myself, certainly to strangers. And most of us know that life moves ahead in squiggly lines and not linearly. So why did I care so much about what they thought anyway?
I really don’t know.
E. I’m a Failure
This is the worst one. By far. Although I am a big fan of taking risks, there is definitely a negative psychological impact every time you fail. I’m not talking about money, time, or job security. I’m talking about that little thought in your head that goes What the F was I thinking? that eventually grows into I’m never doing anything like that again.
You become timid.
You become afraid.
You tell yourself that you’re going to be smarter about it next time but let’s be real. That’s just a rationalization.
If you look at the most successful people in life, every single one of them has had a succession of failures. I used to think that was a unique feature of being successful. But it’s not.
Experiencing failure is just a natural part of life. Everyone’s life. Some people go through big failures. Others go through little failures. But we all go through them. Massively successful people just happen to be more vocal about them. They celebrate failure because they’ve overcome them.
When a person encounters failure one of two things happen to them. They could overcome it and grow emboldened; I just lived through my worst nightmare and it wasn’t so bad! Or they become timid; I have to make sure that never happens to me again.
Sometimes it’s better to be more timid–for example, I would hope that one becomes more timid about drinking and driving after getting a DUI. But when it comes to career decisions especially while you’re still young, becoming timid is one of THE WORST things that could happen to you. You become too scared to ask for that promotion, or ask for that salary raise, or put yourself out into the job market, or try for another job that might make you happier and wealthier. You end up, as Thoreau famously said, like most people who live lives full of quiet desperation.
So what’s the downside here? I’ve taken a few career risks in my life and I now feel like I’m currently on a losing streak. This latest move to become a solo practitioner failed. It is tempting to become more careful.
More risk averse.
I used to be proud that I took more risks than most lawyers with my background. Usually my risks worked out, and I saw myself as a successful person. Since then, my self-perception has changed. I sometimes see myself as a failure.
That’s the worst part.
IV. Lessons Learned
A. Be Patient
I’m believe in moving quickly and going for things before you’re completely ready. After all, moving quickly is how a lot of people become super successful. I remember reading about billionaire Eli Broad’s sudden decision to leave accounting at the age of 24 to start a home-building business in his autobiography The Art of Being Unreasonable.
Having said that, there’s tremendous value in not rushing the process. The biggest lesson I learned from my business failure is related to a major unforced error that I could have dodged if I didn’t try so hard to become successful quickly. I’ll write about it in more detail someday. But it’s probably the biggest lesson I learned from this entire experience.
B. Entrepreneurs Have to Say Things are Going Well
I’ve learned to never ask an entrepreneur how business is going. I was asked this question a lot. The problem is that you can NEVER say business isn’t going well because that perception will negatively affect your commercial prospects. Answering this question was really hard for me because while I wanted to be up-front about my struggles, I knew I could never talk about it because I was afraid it would make it even harder to land clients.
I don’t know. Maybe it was just in my head. But now I realize that I probably shouldn’t ask my entrepreneur friends how their businesses are doing. It puts them in a tough spot.
C. High Tolerance for Non-Fatal Mistakes
I have learned to respect and love trial and error. When you make a mistake, you’re receiving valuable feedback from the world. As long as it’s not a fatal, you should make as many little mistakes as quickly as possible. This is actually something that doesn’t come quite as naturally to lawyers because we’re trained to produce perfect work product. That focus can affect our ability to deal with setbacks.
As a business owner I wasn’t able to analyze and optimize every possible decision. So instead I prioritized making non-essential decisions quickly. As long as I found an option that was Good Enough I went ahead with it. I hope to carry this mentality with me in all of my future pursuits.
V. Unexpected Benefits
In the end, I was surprised to find that I did get a lot out of the experience of opening my own business. The benefits were kind of unexpected though.
A. Support of My Community
This one was by far the most important one and the main reason why I have absolutely, positively, have zero regrets about starting a business.
Let me start from the beginning.
During law school, for the first time in my life I experienced some success. I collected all of the standard law school accolades. I went to a top school, made law review, landed a job at a prestigious firm, was elected graduation speaker, and clerked for a federal judge.
And during that same time, I made a lot of friends.
I’ve always suspected that all these people befriended me because they thought I would be successful in the future. I was Headed In The Right Direction so to speak, and they wanted to get to know me because it was the smart thing to do. For networking, connection-building, etc.
When I decided to open my own firm, things changed. I became someone who was Not Headed In The Right Direction. I started to sense that some of these friends lost their confidence in my ability to be successful in the future. They were less interested in getting to know me.
But then something else weird happened.
The people who stuck around were those who sincerely cared about me. They showed me an extraordinary level of support. More than I expected to receive.
And certainly more than I felt I deserved.
I have to single out Christiana here.
She was unequivocally, unbelievably 100% behind me the entire way. She believed in my goal more than I did myself. Her confidence in me was so strong that she insisted that I decline side jobs to make money because they would be distracting from my practice. She insisted that I focus on building the practice, and to let her worry about covering living expenses.
She could have asked that I take a part time job. She could have suggested that I give up if business didn’t pick up in a few months. She could have complained that she wanted to buy a new house instead of staying in our tiny one bedroom rental. If she mentioned any of these things, it would have been completely and utterly reasonable.
Instead, she did whatever it took to help me succeed. Like the time she took the initiative to scour the Internet for low-cost monitors so I could be more productive without spending too much money, and then immediately drove me to a faraway discount warehouse so we could buy them before someone else did.
Christiana’s support wasn’t just in private. It was very public. When she heard someone express doubt about my prospects, she would get mad at them. What are you talking about, “might not be successful?” she’d ask. What the hell do you know anyways?
She was more proud of me than I was of myself. She’d go around telling people: My husband owns his own law practice. She’d say it in the same exact way I imagine she’d tell people if I was a Supreme Court justice or NBA player.
I would not have known these things about Christiana had I not gone through the entire process of starting and failing at my business. In Antifragile: Things That Gain From Disorder, Nassim Taleb said that you can learn a lot about someone’s character by putting them through difficult times. Well, I put Christiana through some difficult times. If I remained a fancy-pants, high-earning lawyer, I could not have experienced her support, or her exceptional level of belief in me. Experiencing temporary professional failure is a small price to pay for gaining this knowledge.
Beyond Christiana, I also received tremendous support from my family. My parents seemed to believe that I would be making a lot of money shortly, and kept describing my success as a question of “when” as opposed to “if.” My sister and brother in law were excited for me when I launched, and provided valuable advice and emotional support through the ups and downs. My closest friends served as trusted advisors who helped me navigate all the difficulties I encountered. Even friends who I’ve failed to keep in touch with would drop me notes of encouragement or a referral (or two) signaling their trust in my abilities.
I learned that I’m a really lucky guy.
B. The Blog and Internet Marketing
Owning my own practice gave me the freedom to express myself on the Internet by reviving this blog without worrying about how it would impact my career. I mean, I don’t think I’ve written anything controversial here. But worrying about writing something that Could Be Bad For Your Career hung over my head did make me less inclined to blog.
As a business owner (and blog owner too, I guess) I learned a lot about Internet marketing and Search Engine Optimization (SEO). I learned all the nuts and bolts of how to put up your own website, including finding your own hosting, signing up for a domain, and having a content strategy. I learned a lot about Facebook advertising.
This stuff isn’t rocket science, but I’ve always had trouble figuring it out. So this was a pretty big unexpected benefit.
C. Discovering Something That I Enjoyed
The best part about being an entrepreneur is that theoretically you can spend most of your time focusing on the things you like to do, and less time on the things you Have To Do. When you don’t have a boss telling you exactly what to do, you naturally gravitate towards the things that you want to do, and the activities where you have a natural competitive advantage.
For me, that was sales and marketing. I loved finding ways to promote my practice. I loved talking to people and helping them fix their problems. That was by far my favorite part.
The problem was that after I gained some clients, I began to spend most of my time working on their cases. I didn’t have the bandwidth to continue doing sales and marketing. In retrospect, I simply didn’t have enough experience setting up a system to continuously bring in clients.
That’s why I’ve decided to make my transition to sales. It’s my way of (1) doing something I enjoy and (2) learning about the sales process and sales skills that can help me farther down the road. As Scott Adams said in How to Fail at Almost Everything and Still Win Big, you can combine basic skills in different domains to produce a rare, unique, and highly valued skillset.
My hope is that I can combine my legal skills with some sales skills.
VI. The Next Episode
As for my next specific steps: It took a few months but I eventually landed a new position in sales that I’m really excited about. It’s with a San Francisco based technology startup company that sells Software as a Service (SaaS) to law firms and in-house departments. I’ll have the ability to learn sales skills, but at the same time, also leverage my knowledge and experience in the legal industry.
How do you quit being a lawyer? Well, the transition was simple but not easy. I had to do a lot of research. I had to practice interviewing. And I had to change my approach because sales interviews are very different than lawyer interviews.
I can’t wait to see how the new job works out.