A few weeks ago, we attended the Hawaii Venture Capital Summit and wrote about the key challenges facing Hawaii’s startups. Over the next few weeks, I’m going to dive into each one individually, beginning with the fear of failure, and more importantly, the stigma of failure.
As a quick recap, Hawaii’s “fear of failure” mindset was mentioned dozens of times by the VCs on the panel and the other speakers. Their message was that failure, and the acceptance of failure, is an important facet of entrepreneurship. A few provided their own past failures as examples, including Chris Stone of Epic Ventures and his story of losing $46.5 million in VC money as he closed his startup, Tilion, in 2002. Another even went so far as to define the venture capital model as “investing in 1,000 startups knowing that 997 will fail.”
Failure = Entrepreneurship
There has been a lot of feedback related to this issue, and every local entrepreneur with whom I’ve spoken has conveyed their own experiences, mostly negative. Personally, in my current entrepreneurial endeavor, I was told by a successful Hawaii businessperson that I’d have “a black mark beside my name for years” if my business wasn’t successful. For a moment after that baffling conversation, I couldn’t decide whether to press forward and ensure success or cut-and-run before too many people knew that my name was attached to my business! Having worked in Silicon Valley’s tech startup space for the past decade, this comment was the polar opposite of that culture, and it was an abrupt “you’re not in Kansas any more” moment for me.
(As an aside, I wonder what advice this person, and others who share that view, would give to the kids participating in Hawaii’s Lemonade Alley? “Sorry kid, if you don’t win this, you’re a failure.”)
It’s exactly this type of thinking that can stop an early entrepreneur in their tracks. It’s a complete disincentive to even begin, let alone persevere. Then again, starting a new business forces you to overcome a daily barrage of disincentives and negativity. Someone once said that entrepreneurs should be getting laughed at and having doors slammed in their face daily, otherwise they’re not trying hard enough. In other words, frequent failure is part of the game and you need to be out there trying, not sitting at your laptop avoiding. And if you think a few doors slammed in your face is “failure,” read this article about Pandora, the music discovery service, who was rejected by over 300 venture capitalists before finally securing funding. Or read some of Brad Feld’s posts on failure. You’ll quickly get the picture that failure and entrepreneurship go hand-in-hand.
But beyond just the daily, run of the mill failures, the big, obvious, public failures are the real learning experiences. Vinod Khosla, the prominent VC, spoke at a recent event about how the willingness to fail is the key ingredient in success. What event? Failcon, where entrepreneurs share and learn from their own and others’ failures.
More broadly, Entrepreneur magazine cited a Harvard study which discovered that previously-failed entrepreneurs are more likely to succeed than first-time entrepreneurs. The magazine also has this short article about failure and how failed entrepreneurs must come to terms with their mistakes in order to learn from them.
But what is really behind our local fear of failure? Or, is it even worth trying to determine the causes? The answer is “No,” and the point is simply that the local startup community needs to know, see, and hear that a business failure not the end of their career, and it has to come from both their peers, local business leaders, and, as VCs outside of Hawaii have shown, it has to come from the local funding community.
Addressing and Accepting Failure
Here are five concepts on failure that every entrepreneur should consider. If we, as Hawaii’s startup community, take these to heart, we can begin to look upon failure as the natural part of entrepreneurship that it is.
- When confronted with failure, fail fast.
This advice was mentioned a few times at the VC Summit, most notably by Kevin Hughes of Sprout. It’s difficult to do, but in hindsight, most entrepreneurs who’ve presided over a failure wished that they would have owned up to it much sooner than they finally did. They wasted time, money, and emotional capital. But failure is inevitably delayed by feelings of ownership, responsibility, and pride. Watch this video of Zynga’s founder, Mark Pincus, talking about his failure at his earlier company, Tribe.
- Recognize your failure, own up to it, then define what you learned from the experience.
Why did you fail? Obviously, it’s not because you didn’t have the confidence, intelligence, and support to leap into the startup world. And, most likely, it’s not something that you can blame on someone or something else. Maybe your partner wasn’t fully committed, maybe a key deal didn’t come through, or maybe your customers just didn’t get it. Ultimately, however, you should have recognized the issues earlier and done something to address them. You should have, but now you know what you would do differently the next time. As both VCs and successful entrepreneurs say, you learn more from failure than success.
- Address your challenges.
Owning your shortcomings or the underlying reasons for failure helps you better prepare as you embark on your next venture. Whether you put another entrepreneurial idea to work, join a small business, or head to the corporate world, you’re already more prepared than most. You’ll know where your expertise ends and where you’ll need help. You’ll better recognize the precursors of failure and, hopefully, jump to quickly address them. And, having already failed, you’ll know the risks before you make decisions. Or, as this author wrote during the first dotcom bust, you’ll fail forward.
- Never stop trying.
Want some motivation? Watch this interview of Brian Wong, the youngest person to ever receive VC funding, talk about his 16 failures before his first success. Even if you return to working for someone else, maintain that entrepreneurial drive. Become the CEO of your domain, own it, and push yourself to make it succeed. Failure teaches you a lot about business, others, and yourself, but also shows you that, as sappy as it sounds, every ending is really a new beginning. Even within larger organizations, treating failure as a learning experience is gaining momentum and can actually help your career.
- Appreciate and respect others’ failures.
New entrepreneurs, angels, VCs, successful businesspeople, corporations, and business-supporting government and non-profit organizations – no one is immune from failure. Look at Friendster’s failure, which propelled its founder into a career as a successful VC, investor, and mentor. Rather than hide from it, use it as a tool to help others succeed. Pass along your story of failure and how you used that experience to get where you are today. More openness from everyone about past failures could begin to remove the perceived stigma.
Learn, Then Move On
There’s a famous quote attributed to Thomas Edison and his hundreds of failed light-bulb designs, where he doesn’t view them as failures but rather hundreds of newly-discovered ways to not make a light-bulb. It’s this attitude that’s truly required for a healthy entrepreneurial spirit to thrive. It’s beyond optimism; it’s a recognition that failure is an acceptable, necessary component of creativity and invention, without which entrepreneurs would rarely succeed.
Ultimately, it’s important to remember that you are not a failure, even if your business was.
What do you think? Do we have a “fear of failure” culture? Have you failed? What do we need to do as a community to address this challenge? Put your fingers on your keyboard and let us know in the comments below!