Had the chance to attend another one of these this morning.  The Northwest Entrepreneurs Network is a great organization here in Seattle that puts on a variety of events including these breakfast meetings.  The last one I attended featuring Sujal Patel, founder of recently IPO’d Isilon Systems, was really good.  His point on disruptive innovation having to be 10x better than what is out there still resonates in my head.

Anyway, James Gwertzman spoke this morning at the Bellevue Harbor Club on lessons learned from failure.  There have been some other good blog posts on learning from failure including these by Brad Feld.  I think it is important for everyone to have a flame out at some point in their entrepreneurial careers to drive key lessons home.  I had mine with Idapta although the code lives on at MSA.

James is an ex-Microsoftie that started a gaming company called Escape Factory that went bust.  He regrouped, started another company, and was acquired by PopCap Games where he is now working.  Definitely an "out of the ashes" story.

Gaming is not really my thing or something I know much about, but his presentation was informative and pretty entertaining.  Here’s a few nuggets:

1. Companies succeed for different reasons, but most fail for similar ones
2. Spending too many cycles on process and administration out of the gate is a time and money drag
3. As a CEO you must avoid the tendency to personally fill gaps in the organization – dropping into a line role robs you of the valuable time you need to be doing CEO things
4. Too many eggs in one basket – they had one major deal and when it was pulled there was nothing else (see above)
5. Too much office space sucks the energy out of a company – they went from cramped to spacious…and lost something
6. Manage your business everyday like it is the last – you’ll be amazed at what doesn’t seem important
7. In people, focus on experience vs. potential – you don’t have the luxury to develop people in the early days of a company (referring to his attempt to implement the MSFT professional development model)
8. Forgot their unique selling proposition – after landing the first deal because of it, they trimmed features and lost "uniqueness" in trying to unsuccessfully hit a deadline.
9. Pay yourself first – long leases, deferred salaries, and other debt left him with no fall back after he had stopped taking a salary
10. Have someone on the team that will always tell you the worst case scenario – he was surprised by how little cash/how much debt they had