Never Give Up: What an Entrepreneur Learned from Failure
Author Ethan Senturia
discusses his new book about launching a startup that ultimately did not
succeed.
Ethan Senturia thought he had it all. He
graduated with honors, landed a job at Lehman Brothers, then struck out on his
own when that Wall Street powerhouse shut down during the Great Recession. But
Senturia quickly learned that becoming a successful entrepreneur takes much
more than a great resume. Dealstruck, the online lending platform he founded,
ceased operation in 2016. That experience led Senturia to rethink his long-held
ideas about success. He has shared his personal journey in a new book
titled, Unwound: Real-Time Reflections from a Stumbling Entrepreneur. Senturia talked about his experiences
during a recent segment on the Knowledge@Wharton show on Wharton
Business Radio, SiriusXM channel 111.
An edited transcript of the
conversation follows.
Knowledge@Wharton: Tell
us about how you started your company.
Ethan Senturia: I
grew up the son of an entrepreneur and somehow made my way to Wharton thinking
that the startup world and the broader world of business and finance were sort
of the same thing. I learned that those were quite different. Ultimately, I
went on to Wall Street and my first job was at Lehman Brothers in 2008. I was
at this big institution, and they went through bankruptcy. I found that there’s
not really this ideal stability out there that maybe I thought there was. I
ended up going down the entrepreneurial path, following some of the things my
father did. My first journey into entrepreneurship was prior to Dealstruck with
a few Wharton alums. I decided to take the financial knowledge and training
that I had received at school and in my first foray into the professional world
and try my hand at something in the startup world….
Knowledge@Wharton: You
had a lot of expectations that it was going to be a successful venture, but
things turned out a little bit differently. What happened?
Senturia: Some people have
their vision of success and it goes perfectly. But more often than not, even if
your outcome ends up being a success, along the way you have a lot of ups and
downs. Even if you know intellectually that this journey is going to be hard —
there are going to be highs and lows — when you actually run up against them
you realize that maybe it’s not a matter of intellect to get you through some
of the hardest parts. It’s more a matter of emotional quotient and
self-awareness and those sorts of things. But I think even the greatest
successes have plenty of war stories. Unfortunately for me, we got down to our
last dollar and then we didn’t make it.
Knowledge@Wharton: What
have you learned about being an entrepreneur?
Senturia: Patience. When
you’re starting your own company, you have this big vision…. You want to raise
the money. You want to build the product. You want to get to market. You want
to scale. Everything in the startup world is about scaling. You feel this
inordinate pressure, sometimes from your investors, but sometimes just from
yourself, to be the next Facebook or the next Google or to try to hit that home
run. And you fail to realize that maybe these things take a long time. Solid,
good companies don’t get built overnight. For every single story of a company
that became a $1 billion success in two or three years, the vast majority of
the success stories out there took 10-plus years. You have to slow yourself
down and focus on one step at a time. If you make all the small decisions
right, then those add up to the big picture. Being more patient for that
success to come was a big lesson for me.
On a more personal level, we tend to associate ourselves a lot
with what we do. When you run a business and you start something, it’s even
more so. People have this idea that your business is your baby. As things go up
and down, it’s very easy to identify yourself, your value, how successful you
are based on whether your company’s going well or not, whether your job’s going
well or not. The toll that takes on you and the people around you is an
unhealthy side effect of entrepreneurship. I’ve tried to learn that business
can go well, business can not go well, careers can go well, they can not go
well, and it doesn’t necessarily mean that you are fluctuating the same as a
person.
I think that’s where it can be really valuable to have strong
partners or strong advisers, people around you who have been through it. People
who venture out into starting their own companies, whether they’re big
high-tech startups or just a bakery on the corner in the local neighborhood,
tend to be people who are ambitious, who have been successful, who have
intellect, and they’re not used to failure. I was pretty smart, got into a good
school, got a job on Wall Street. I had a good outcome in the first startup
that I was an employee at. I think a lot of people who take on the challenge of
entrepreneurship have that sort of track record, and then you run into
something where it’s not enough to just be smart and work hard. You need luck.
You need people around you. You need the competitive landscape to cooperate.
That’s a big challenge because you’re running 100 mph and hit a brick wall, and
that can be a setback.
Knowledge@Wharton: How
do you handle employees when things aren’t going well for your startup?
Senturia: That’s one of the
hardest parts because there’s this need to be transparent with the people who
work for you. You’re the entrepreneur. You started this company. You have
employees. They’re working really hard to help you build your dream. They’re
participating in making that dream, internalizing it on their own. As things
start to get really challenging, there’s this delicate balancing act of
maintaining transparency but also not distracting them to the point where they
get so concerned that they can’t do the things needed to turn the business
around or get it through a tough period. But it’s definitely the most challenging
thing when you see people who have left stable jobs, who have all different
types of economic situations at their home and in their families. You just have
to try to treat them well, even as things go sideways or wind down. You have to
try to help them through financially as best you can. The other ways to do it
are to give back in kind and make sure that they get onto the next [step].
Knowledge@Wharton: I’m
guessing a lot of the employees at Lehman didn’t get that kind of support at
the end?
Senturia: No. That was a
pretty interesting scene. I remember freaking out, thinking, “Oh my God, this
is my first job. My career is over.” People just packed up their boxes and
walked out, and there were rows of media outside the office. There wasn’t a lot
of empathy in that situation. I think that’s a missing factor oftentimes in
business, where a little bit of empathy, a little bit of caring, a little bit
of extra generosity, even when you’re suffering, even when you’re having a
difficult time, just extending that little bit extra to your colleagues, your
employees, makes a huge difference to them. It’s a small give if you can just
get yourself to do it.
Knowledge@Wharton: Are
leaders able to fully understand when things are going awry and a company is
starting to take on water? Or does it hit you blind?
Senturia: I think it’s a
little of both. There’s an illusion that I had as a first-time entrepreneur,
that got debunked pretty quickly, that you have complete control. The reality
is that there is no such thing as complete control. There are situations or
things that come up where, despite your best efforts, you get blindsided and
have to react. You can try to make the right decisions and figure out the right
strategies, but that doesn’t mean that if you execute them flawlessly you’ll
have complete control over the outcomes.
But there are also situations where it’s like playing
whack-a-mole. Something pops up, you hit it, and then the next thing pops up
and you hit it. You get into this spiral of not being able to look at anything
other than your feet or your toes, and that can be a self-fulfilling prophecy
or positive-feedback loop because you’re starting to look at things so close to
you that you lose sight of the bigger picture and then really can’t turn things
around. That is one of the challenges of being in distress.
Knowledge@Wharton: Was
writing this book a bit cathartic for you?
Senturia: Absolutely. As I
was going through this difficult period with the company and in my personal
life as they were interconnected, people were saying, “Oh, in 20 years this is
going to be the best thing that ever happened to you. Everyone fails their
first time.” But I sort of said, “Gee, I’m not sure that success is going to
come. I don’t know what’s going to happen in my future.” No one knows, right?
But I felt that the way that I could try to make this failure feed forward into
success is to study it and to look at it honestly, to take accountability for
it, to try to understand what happened, what didn’t.
When we go through hard times, we tend to want to turn the page
quickly, put it in the past and get onto the next. We don’t want to dig through
the pain and unearth all the little thorny things hidden there. But I felt like
that was a really important exercise. I think there’s a lot to learn from it,
and the book was my way of doing that. I wanted to share it with other
entrepreneurs just as an example of hopefully empowering them and saying,
“Don’t be afraid to fail. Don’t be afraid to try again. And don’t be afraid to
look at it and study it and own it.”
Knowledge@Wharton: Do
you look back at your time with Dealstruck and think of things you could have
done differently?
Senturia: I guess one thing
is raise more money. That’s a double-edged sword, but we had opportunities to
raise more money earlier and we didn’t. I think if you have a chance to raise
money and you’re an entrepreneur, take the money. Until you get that exit,
you’re always fundraising. The other thing I would have done differently is
probably more around the details of the product that we were originating. I
think there was some product market fit that we didn’t have perfectly honed.
Knowledge@Wharton: Would
you agree that small business is a critical part of the American economy and an
area where there’s still a lot of growth?
Senturia: Yes. The most
enjoyable part of being an entrepreneur at Dealstruck was being able to be a
small part of the success of a couple thousand other entrepreneurs whom we
financed. That was a big piece of our mission and a big piece of what drove me
to start the company.
I would say that today the small business world is still
underserved. There’s still a need for financial innovation, both from a product
standpoint and a technology standpoint. There’s still a lot of great entrepreneurs
tackling it. And I do think that it’s an unbelievably critical segment of the
economy, of job creation. I hope that I can continue to play a role in trying
to bolster it, and I know that there are a lot of other great entrepreneurs
doing the same.
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