Snapsort was a successful startup that owned and operated more than 30 websites when it was acquired in 2012. It was a good business but one that needed a serious pivot to become great. The new parent company made some acquisitions. Some of them went bad. Others went so bad, the dream of an initial public offering (IPO) died.
This meant Christopher Reid, a University of Waterloo alumnus and serial entrepreneur, had to cram his Snapsort team, “27 amazing people,” into a boardroom to deliver the devastating news that most of them knew was coming: Twenty-three of them were losing their jobs that day.
It was a winter day. One week before Christmas.
“Does it suck to be fired around Christmas time? Yes,” says Reid, now the founder and CEO of Sortable, a Waterloo region startup that uses machine learning to help publishers optimize their online revenue. “Does that make it a failure? I don’t know.
“On one level it was a fail, but did all those people get new jobs? Yes. Did they have a good experience? Was it an incredible team to work on? Yes and yes. Is that really a failure? I don’t know.”
Reid, who graduated from Waterloo as an electrical engineer in 2001, bought back Snapsort from the parent company and pivoted the business to create Sortable, which has become one of the fastest-growing startups in the region and is looking to hire up to 50 more employees in the next 12 months.
Failure should be managed — not avoided
While Silicon Valley has long been a place where the mantra “fail fast, fail often,” shapes an innovative culture, Reid is part of a growing number of Waterloo entrepreneurs and academics starting to talk about how “failure” should be managed, not avoided.
“Success is just the process of managing failure.”Christopher Reid, Sortable founder
For Reid, failure and reinvention extend beyond his narrative to the physical space his new startup inhabits. Sortable employees are working temporarily out of a former Japanese fusion restaurant that was once known for having the best sushi in the region. The former restaurant is part of an aging King Street West strip mall that is slated to become a modern development complete with retail stores, offices and condominiums. The new development will be across the street from Google’s Canadian engineering headquarters, itself a dramatic pivot for a space that used to be a rubber manufacturing facility.
“Failure is important because if you become OK with failure you can manage it. If you’re not comfortable with failure, you try to pretend it’s not happening, or that it’s not going to happen, and that has serious consequences,” says Reid.
“Everything at Sortable is ultimately an experiment, from a new algorithm to a different hiring practice. It might succeed and it might fail. If it succeeds, we’ll try this. If it fails, we’ll try that,” says Reid. “You have to manage it. Success is just the process of managing failure.”
Should you persist, pivot or punt?
That Silicon Valley ethic of embracing, rather than running from failure has made its way into Waterloo learning spaces. Professors Jill Tomasson Goodwin and Dave Goodwin are among those who have created an environment where failure is rewarded. At Research Entrepreneurs Accelerating Prosperity (REAP), students conduct research in 10-hour sprints and engage in an iterative design process.
At the end of 10 hours, student teams decide whether to persist, pivot or punt — essentially whether to keep going, modify their idea or abandon it. The key is students are actively rewarded for a pivot or a punt. In this way, changing original assumptions or giving up on a project doesn’t carry the heavy, negative weight of failure.
“We want students to think more entrepreneurially. We want them to validate assumptions, run experiments and get valuable feedback data. Failure is learning. It’s not a setback to be avoided.”
Jill Tomasson Goodwin, associate professor in drama and speech communication
David Goodwin, a fellow associate professor in drama and speech communication, points out that professors can fall into the trap of asking questions to which they already know the answer. “With these more entrepreneurial learning techniques, we’re asking students to come up with answers that we don’t know the answers to. In academia, students often get rewarded for persisting no matter what. That’s not going to lead to innovation,” he says.
As the Faculty of Engineering’s director of admissions, Bill Anderson works on the art of figuring out who, among thousands of applicants, are most likely to succeed or fail in the program. He says young people who were not challenged to the point of failure during high school sometimes can’t cope with the inevitable fails that occur at university.
Pushing students to confront failure enhances learning
Anderson says high school averages of students entering first-year engineering hover around 94 per cent. However, if you look at averages near the end of first-year university — it’s a wider band centred around the low-70s. “That’s a psychological shock for many first-year students and for some, they view that as a ‘failure’ because they’re not getting 90s anymore,” says Anderson.
“The learning strategies that some students have completely collapse in university. For many, they’ve been able to do well in school without actually learning how to learn,” says Anderson. “While you don’t want to push students to the point of spectacular failure, you want to give them problems that force them to confront failure. That ultimately prompts better learning.”
Reid recalls failing a chemistry midterm exam in first-year. “At the time I thought, ‘This is impossible, I don’t fail anything.’ It was my first wake-up call. I realized I was going to have to work harder. It got me ready for the real world of running startups which has been this constant cycling of pushing myself to the limit, constantly failing and then pushing myself to see how effective I can be.”
James MacLean, a Waterloo alumnus and CEO of Vitameter, says his marks actually improved in university because he was studying something he loved — nanotechnology engineering. While his young startup team has made its share of mistakes and “adjustments” along the way, he says a “move fast and break things” ethic doesn’t always translate for hardware startups like Vitameter, which has developed a device that allows you to check your vitamin levels in the comfort of your home.
“You have to ask yourself, ‘If we fail in the next year or so, am I going to be OK with that?’ For us, the answer is no. We do our best to actively anticipate sources of failure,” says MacLean. He points out that building hardware entails a longer execution process and a stronger commitment than creating software. Similarly, getting into the life sciences means a long road of regulatory approvals. “Software is much faster,” says MacLean. “You can work on something for a month and then decide it doesn’t work and move on. Lesson learned. It’s not that simple with hardware. You need to commit to launching a quality product.”
“A person who never made a mistake never tried anything new.”Albert Einstein
Silicon Valley co-op jobs ‘infect’ Waterloo’s innovation ecosystem
Hardware or software, both MacLean and Reid stress that co-operative education is a key reason why Waterloo students have an easier time embracing failure and moving forward. While that first co-op job can be a shock for young people who have been protected from realities of the workforce, it often provides an early, safe environment to fail — an experience that most university students don’t get until after they graduate.
“Obviously, your six co-op terms give you an extraordinary opportunity to test things out and learn about different work environments. You can see what works and what doesn’t work. If you’ve only had one job, it’s really hard to engage in the iterative learning process,” says MacLean.
Reid points out that the co-op program has also given thousands of Waterloo students the opportunity to work in Silicon Valley and come back to campus, creating a community of innovators who aren’t afraid to take risks.
“Waterloo definitely benefits from having Silicon Valley infect the students through their co-op jobs,” says Reid. “It makes students more edgy, less docile, more willing to take risks and less willing to let bureaucracy get in their way.”
Vitameter has employees based in Kitchener-Waterloo and Silicon Valley, and MacLean agrees the startup cultures of each region are unique. However, when it comes to dealing with failure, MacLean says the best protection against colossal failure is other students.
“The Waterloo community is very strong. Your peers, especially those who are one step ahead and once removed, are great resources as you build your business,” says MacLean. “The rise of the Velocity startup program and the Student Design Centre in Engineering 5 are designed for the iterative process. Waterloo has created these safe places for students to fail on their own terms.”
From failure to success
The Nobel Prize-winning physicist had speech challenges as a child and took a job in the Swiss Patent Office after he was unable to find a teaching post.
Struggled to write novels early in her career before becoming a Nobel Prize-winning short story writer.
Dropped out of Harvard University and had a failed business before founding Microsoft, the world’s largest software company.
Early in her career, the self-made billionaire entertainer was told she was too emotional and not right for television.
Photography: Light Imaging