Paying Lip Service to Failure Is Not Enough

by Ben Yoskovitz

lips

Failure sucks. Let’s not sugarcoat it. No one goes into business, pours their heart (and money) into a startup, and hopes it will fail. But failure is common enough. The statistics on it are immaterial (and I’m too lazy to look them up right now) — suffice it to say, lots of startups fail. And even more of them don’t live up to expectations (even if they survive to fight another day.) It’s tough. And failure sucks.

I’ve failed before. And written about it as well. More importantly, and much more challenging than simply writing about failure, is making sure the lessons learned stay with me. It’s easy to pay lip service to failure — but truly turning a negative into a positive is something different. I don’t always succeed. Repeating the same mistakes twice is easier than you might think.

Wearing Failure on Your Sleeve

Phil Chrun recently wrote an amazing blog post: Deconstructing a Struggling Startup: MyCarpoolStation.com. Everyone should read it. (Then come back, OK?)

Phil’s post is more open and honest than most I’ve seen on failure. He lays it all out there for the world to see. He describes in detail his thinking behind the startup and where he (and the team) went wrong. And, he talks about ways he’d do things differently in the future, be it with MyCarpoolStation or a future endeavor. Rest assured, I have no doubt in my mind that Phil Chrun will start a new company someday. And he’s a better entrepreneur for having gone through a tough startup situation.

How Do We Handle Failure?

The idea of “learning from one’s mistakes” is nothing new. What’s interesting is how everyone else responds to failure. It’s often said that one reason startup communities in Silicon Valley and Boston succeed is because failure is accepted. Founders wear failure as a badge of honor. It’s a right of passage.

Failure is inevitable. In some respects it is a right of passage (although not a necessity for success!) I’m not quite sure failure should be a badge of honor — after all, you still failed…

But, the key point is this: failure is accepted.

What about in other places? I’d like to think we’re building a very strong startup ecosystem in Montreal, but that doesn’t mean every new startup will succeed. Far from it. And what happens when the failures start mounting? Will the rest of us turn our noses? Will we shake our heads? Will we cast blame on those that failed and say, “I knew that was going to happen.” Blech.

I suspect all of those things will happen. And it’s a shame. If startup communities cannot accept and embrace failure as a fact of life (and something that can make everyone stronger) then we won’t see a lot of successful startups. First-time entrepreneurs that fail won’t try again. Upcoming entrepreneurs that are thinking about starting companies will hesitate for fear of failing. A successful startup ecosystem needs plenty of new recruits jumping on the startup train and plenty of grizzled veterans getting back in the ring.

So What Should We Do?

In younger, more fragile startup communities (and I’d put Montreal in that category), handling failure is a challenge and must be done carefully. Certainly, some failures warrant severe criticism: The startup world (I’m not speaking exclusively about Montreal!) is fraught with cases of outright stupidity, stealing, gross negligence, incompetence and so forth. And don’t get me started on founders that are pulling the wool over the eyes of investors, customers, etc. Or CEOs in it only for themselves. Yes, there’s a lot of crap. And here’s hoping it all fails. But when I think about Phil (and others like Martin Dufort with Kakiloc), it’s clear these guys are honest dreamers, that tried to make a go of something they truly believed in.

  1. Don’t look down on those who fail. A startup community gains nothing by looking down on those that failed. At least they tried. Those entrepreneurs took a risk and put themselves out there. That’s more than can be said of most people.
  2. Don’t pity those who fail. No one died (hopefully) and these guys are fighters. They’re warriors of the startup world, they don’t need your pity, they need your support.
  3. Don’t judge those who fail. Nothing is gained by judging entrepreneurs that have failed. You increase the fear of failure (for everyone) and clearly send the message, “Failure is not acceptable.”
  4. Don’t forget those who fail. I’m not suggesting we put failed entrepreneurs on a pedestal, but they’ve gone through a lot and that experience is of value. There’s no reason these entrepreneurs shouldn’t continue to participate in the community, mentor potential entrepreneurs, etc.

Failure sucks. You gain nothing by belittling failure or pretending it’s not serious. It is serious, and it’s bloody hard to deal with. But the challenge comes with accepting it as a fact of startup life. And how entrepreneurs who have failed are handled and treated in your startup community will have a huge impact on the success of that community.

A strong startup ecosystem cannot be built on fear of failure. And in many startup communities, we need to do a lot more to alleviate that fear, so more people are encouraged to enter the startup world.

December 3rd, 2007
More in Entrepreneurship
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Viewing 39 Comments

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    Phil didn't win the lottery this time, nor do millions of other hopefuls who seek their fame and fortune in professional sports or Hollywood. There really is no difference for the entrepreneur. But if one is persistent he/she will find their place in the industry and will succeed - albeit at the average rate of return. Phil didn't fail. He placed a bet on the long-shot and the pony didn't come in. He gambled and he lost. That's not failure. Nothing he could have done would have changed the odds otherwise. That's just how markets and ecosystems work.
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    If we reduce this to a lottery, failure is useless. In this case Phil learned a lot, and he won't do things the same way. No doubt there will be fewer founders next time, and one of them will have technical expertise. He'll do more market research, and know his target market has money and will be repeat customers.

    His odds for next time went up.
    • ^
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    @Stanley - thanks for commenting, but I'm in agreement with Daniel. The failure of MyCarpoolStation rests in large proportion on Phil's shoulders. If you read his post, he understands that completely and has learned a great deal from it.

    It is possible for businesses to fail due to outside circumstances - say a recession - but generally, one should look inward for who to blame. The key is while Phil may blame himself and his partners, it's not the job of everyone else in the startup ecosystem to blame or look down on him. That was my point.
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    If you look down on failure then it's likely you look up to success. But, failure is a relative term judged according to certain criteria. I look at those that have 'succeeded' in a conventional sense as some of the most complete failures!
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    Hey Ben:

    One of your best post that clearly explains the failure situation and how you can get the best of it.

    Thanks - Martin
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    Guys (and gals) don't be fooled by the drawing. You should view everything in terms of rate-of-return and markets. That's all the matters. Phil participated in a market (transportation) in which, just like all markets, there are only a finite number of opportunities and return available. The market size and shape are driven by many economic factors outside of one's control. Just like in the stock-market, best returns are achieved when you have some "inside" information. Otherwise, you're basically gambling.

    Professional investors hedge their bets. Why should it be any different for the entrepreneur? Entrepreneurs can hedge with information and relationships. You achieve your insider status by working in an industry and making friends. Otherwise you're hoping to get lucky.

    Operationally, Phil made mistakes and he'll learn from them. There is a formula to this "entrepreneur" thing and dusting yourself off and trying again is not it. Get a job, learn your industry, and meets lots of people. Then when you recognize a gap where the market is being underserved that's your time to pounce! And if you've done your networking, you'll have plenty of friends ready to support you. After all, you understand their needs the best.
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    Well, thanks for the support. Failure stings, no doubt. Especially when you're a wannabe perfectionist, like I am at times. You're 1000% right when you say "I’m not quite sure failure should be a badge of honor — after all, you still failed…". I mean, it's more like the Scarlet Letter than a badge of honour, haha.
    Indeed, I have failed into turning MyCarpoolStation.com into a profitable, sustainable business. I have only succeeded in gaining business/technology experience, realizing the long term importance of a business/technology focus, and getting into an MBA program. I'm 24 yrs old; I'll live.
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    Great post Ben.

    I read Phil's blog and took many mental notes. You can't learn to ride a bicycle without falling a few times. If you don't then you're just lucky or damn good. Most people will fall, some even AFTER they learned to ride.

    Some people will laugh at you when you fail. However these people rarely take initiatives like Phil did. They would rather work at Mcdonald's and one must learn to ignore them even though it's very hard. If you think that you did the right thing then no one can make you change your true belief.

    @Daniel: nice way of seeing this. It's kinda true. We're looking for the golden ticket and we don't know when (or if) we'll even get it.

    We need to keep trying. Failing to keep trying is not an option! Hang in there phil!
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    @Phil - thanks for writing that. It makes me wonder - is there a successful case of a primarily technical company like a SAS that succeeded without any technical co-founder?

    Also - if you liked the article and haven't dugg it yet - do it now - its a good one and ben deserves a bump.
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    Cool to see so many responses.

    @ Stanley- I do agree with what you are saying in terms of networking. It's what my uncle is doing at mailitsafe.com.
    @ Ben- Thanks for the support (but I agree, failure is still failure!)
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    @Stanley - Your "formula" is not a bad one for starting a business: Know your industry, work in it, build relationships, and then find a gap in the market. But it's not the only way of starting and building a successful business.

    @Philippe - I'd say you gained more than most at your stage in the game. And failure isn't a Scarlet Letter - that's precisely what we, as a culture, and a startup community, have to avoid.

    Failure is failure - if we sugarcoat it and pretend it's "all nice and pretty, like dancing through a field of flowers" we don't learn properly from it. You can't whitewash failure. But at the same time, failure doesn't make you a pariah. It doesn't make you an outcast. It doesn't mean you're incapable of success (quite the opposite.)
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    Many people should learn from their failures! Too many of us are so concerned with failing that we don't take the time to enjoy the businesses that we own! There's not one successful business owner who started from the ground up that could tell you that they never had hard times! I love this part of the "game" because it filters out all the weaklings!

    Dwayne
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    As a serial failure, please let me share some insights from the inside. The initial reaction when the books start getting to be in the red is disbelief. Start looking for scapegoats, find all external reasons for the disaster. It is after the dust settling down that one starts accepting that one did wrong things and/or did things wrongly! It is at this time that one needs a lot of TLC, not "I told you so" which is what one gets mostly. I have known guys because they did not get the TLC. I think that is the thrust of Ben's arguement with which I totally agree. If entrepreneurship has to flourish, the failures should be nourished to try again.
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    @Ben I don't agree with your treatment of failure. It's misleading. Would you consider a day-trader who loses all of his money in the market a failure? One who spent months studying charts and graphs and wrote Ajax software he thought would give him an edge? I'd call that person naive. That's not failure. Now, if that same person tries the same foolishness again, now knowing better, then yeah, that's failure.

    In developed economies like the the U.S., in which everything is driven by competing investments seeking profit, you simply can't outsmart the market. Cheating could put you in jail. However, you can find inefficiencies and profit from them. This takes years of practice. Phil is off to a good start. Sounds like his Uncle is leveraging his insider knowledge and relationships with Mailitsafe.com. Perhaps his Uncle worked for a legal firm? Or, maybe he has connections to companies that have sensitive data.

    Yes, there are other ways to start companies. They are called long-shots. They do come in. And their stories are favorites of the press and media. Everyone likes to cheer the winners. It sells papers and it drives traffic to blogs. What they don't share is the cemetery. That is the graveyard of companies during the same period with the exact same formula that went bust. Nassim Taleb calls this "survivorship bias." He explains this common fallacy in his excellent books "The Black Swan" and earlier work "Fooled By Randomness."

    http://www.amazon.com/Fooled-Randomness-Hidden-...

    @Phil I know losing 30K certainly stings (sweat equity is heavily discounted and doesn't count for much.) You made mistakes but I don't consider your experience a failure. Repeating the cliché, mistakes are how we learn. It triggers the brain that this information is important and should be stored.

    In a way, you probably paid _below_ market rate for the type of accelerated education you received while building MyCarpoolStation.com. Trust me, you won't get that same value from a business school. Also consider that people pay thousands to attend bootcamps and come away with less than a 10th of what you have learned.

    When you do attend business school, you'll get more out of it than your fellow students. That's because you have "floating" experience. Floating experience seeks anchor points through instruction. Once coupled with your MBA courses your experience will become knowledge and perspective. (Even more so than you have today as you reflect on what went wrong.) Most of your classmates will receive instruction but have nothing for it to stick to. (Case studies and team projects are poor substitutes.) This highlights the danger of getting an MBA right after an undergrad. Without immediate application ones MBA skills will fade. Phil, I'd say you're on the right track.

    Learn to view opportunities in terms of competitive markets and you'll always know where you stand. Best of luck!
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    Thanks Philippe, for being so candid about your startup experience - there's a lot of great insight in your post.

    Ben : what a great case study for an eventual Montreal StartUp Camp. Giving Philippe the chance to express his new-found wisdom would be to his credit and show angels and VCs present that he's ready to tackle his next project -- and the community would learn a lot from his trials and tribulations.
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    Michelle: there is a Blitzweekend coming up in early 2008. It's going to be very similar.
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    One of the great things about the spirit of silicon valley is how unstigmatized we are when we fail. In so many other places and times, you fail in business once, and you are a pariah for all time. Not here, and not now
    • ^
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    I'm just starting the company on my own and I must say that I was really afraid of failure. But, after reading about some really successful people I’ve realized that, actually, their initial failures were the main reason for their success afterwards. Learning from your mistakes is best way to really learn something because you get to experience it on your own skin. Yet, I’m still afraid of that failure but in less measure.

    Anyhow, pretty good article and thanks for sharing this with us.
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    I remember before that doing business is an easy job but it seems that on start up it was really difficult to succeed. I have undergone failure a lot of times and thought of stopping myself for doing anything anymore. I feel devastated but after all of the things that happen I learn to value what happens to my life and I get up to the mistakes and learn from my failures. Right now I know am a better person because I learn to stand up for the failures that comes my way.
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    @StanleyMiller: That day trader failed. Simple as that. He may also be naive - being naive and failing aren't mutually exclusive.

    I do agree with your point that Phil got a great education at less than what he might have paid otherwise, and he did it in a way that makes sense - put your feet to the fire and give something a try.

    I don't believe the only way to make money is by finding inefficiencies in existing markets either...