To avoid repeating errors during rapid growth, HubSpot used a 'Pothole Report.' This process involved a post-mortem on every significant mistake, asking how it could have been handled or what data was needed a year ago to prevent it, effectively institutionalizing learning from failure and promoting proactive thinking.
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The optimal time to analyze mistakes is not immediately after they happen, but at year-end when time provides perspective. This emotional distance allows you to extract lessons without self-criticism or ego getting in the way. As the speaker notes, hindsight isn't just 20/20, it's also "thick-skinned," enabling more effective learning.
As a company grows, new hires lack the context of early struggles. To preserve the original culture, formally document and share stories of early failures, pivots, and near-death experiences during onboarding. This reminds everyone of the core principles that led to success.
To combat self-inflicted setbacks, HubSpot created a "Pothole Report." When a metric blew up (like support wait times), they identified the leading indicators they missed. These indicators were then added to a comprehensive report, reviewed monthly, to prevent the same issue from recurring.
The 'fake press release' is a useful vision-setting tool, but a 'pre-mortem' is more tactical. It involves writing out two scenarios before a project starts: one detailing exactly *why* it succeeded (e.g., team structure, metrics alignment) and another detailing *why* it failed. This forces a proactive discussion of process and risks, not just the desired outcome.
The most valuable question a VC can ask a founder is, "Why are customers churning?" According to G2's Godard Abel, investigating what's not working provides the most critical insights for improvement. While founders naturally market successes, the real opportunity for growth and learning comes from understanding and addressing failures.
Instead of stigmatizing failure, LEGO embeds a formal "After Action Review" (AAR) process into its culture, with reviews happening daily at some level. This structured debrief forces teams to analyze why a project failed and apply those specific learnings across the organization to prevent repeat mistakes.
After a startup fails or you exit, dedicate time to writing a detailed, private postmortem. Critically analyze interactions, decisions, and outcomes. This exercise helps transform painful experiences into a concrete set of operating principles for your next venture.
Instead of an immediate post-close review, conduct retrospectives 6-12 months later. The true quality of due diligence and strategic fit can only be assessed after operating the business for a period. This delay provides deeper insights into what was missed or correctly identified, leading to more meaningful process improvements.
Before starting a project, ask the team to imagine it has failed and write a story explaining why. This exercise in 'time travel' bypasses optimism bias and surfaces critical operational risks, resource gaps, and flawed assumptions that would otherwise be missed until it's too late.
A sophisticated learning culture avoids the generic 'fail fast' mantra by distinguishing four mistake types. 'Stretch' mistakes are good and occur when pushing limits. 'High-stakes' mistakes are bad and must be avoided. 'Sloppy' mistakes reveal system flaws. 'Aha-moment' mistakes provide deep insights. This framework allows for a nuanced, situation-appropriate response to error.
