What Entrepreneurs Have to Know About Failure & Why It’s Overrated

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Failure is good for you, right? The world of startups is full of catchy quotes about failure. “Fail fast and fail often.” What if failure is not as beneficial as it seems? What if failure is actually quite expensive and overrated? This is all and more will be the subject of this article. We will start with the idea that failure is a prerequisite to success. Then, we will discuss why failure is overrated and why it is not worth it. Finally, we will take a look at the fear of failure and how to overcome it.

Failure is not a cool thing

In the past decade or so, failure has become a cool thing. Many entrepreneurs praise themselves for how many times they failed in their ventures. What if you didn’t fail? What if this is your first startup? Then, you are not cool. Well, at least this is the story they want you to believe. It is safe to say that Silicon Valley has been fetishizing the pursuit of failure for some time. If you want to be cool, you have to fail often and fail fast. Well, at least this is the mantra some people like to use.

My question is, why? What is so magical about starting a company and going bankrupt? My conviction is that failure will not necessarily make you a better entrepreneur. If you want to succeed as an entrepreneur, failure is not a prerequisite. It is also not something you should be bragging about. I fucked it up and took two companies from zero to bankruptcy. How cool is that? I will answer this question for you. It is not cool at all.

There is nothing cool about failure. Failure is just failure. It doesn’t matter how do you want to call it. You can call it a pivot if you want, but that doesn’t change anything. Sure, it sounds better, but it is still failure. Don’t pat yourself for that. There is a short quote by Marc Andreessen I like: “The pivot. It used to be called, ‘the fuck-up.’” Accept failure, learn from it and move on. However, don’t celebrate it and use it as a medal. Or, do you also brag about how many times did you fail in bed??

The misconception of lean startup

Part of this newfound interest in failure is also one misconception of lean startup methodology. A lot of people think that lean startup is about failing fast and iterating. That’s nonsense. People who say this know close to nothing about lean startup. They probably read one or two short blog posts and think they understand it. Otherwise, they could never say such a crap. Again, lean startup, the real one, is not about failing as fast as you can and iterating. That would be quite masochistic.

Lean startup is about using continuous feedback loop to test your ideas, or hypothesis, and see what works. Imagine you have an idea for new product and service and you think there is a need for it. Well, the problem is that it is just your assumption that someone will use it and pay for it. And, no, freemium is not the best option. Lean startup gives you framework to take your hypothesis and test it without the need to spend fortune on building something nobody wants.

The continuous feedback loop I mentioned is based on three parts – build, measure and learn. Between these parts are ideas, code and data. Every time you test some assumption you are going through this loop. Start with idea you want to test. Then, build minimum viable product. Then, measure the response you get from people. Finally, learn from the data. If people want it, build the product, if not, move on. This is a very simplified version, but it captures the general idea.

As you can see, lean startup is not about chasing failure. It is about doing an experiment. You want to know if your idea has potential. And, you want to know it without spending a fortune. Stop calling lean startup what it is not.

Learning from failure is overrated

Another quite popular reason why many people praise failure is they think it is good for learning. I have nothing against learning from failure. If you do fail, you should learn from it so you will not get into the same situation again. However, if you could choose whether to learn from failure or success, I will choose the later. In the world of startups, failure is overrated. In some cases, there is the idea that you can’t really learn unless you failed. That’s such a crap.

When you were at school, how many times did you have to fail on test to learn from it? Did you really have to fail on every test to understand the lesson? Probably not. When you were learning to ride a bike, how many times did you HAVE to fall? Not even once! You could nail the test or learn to ride a bike without experiencing any failure. Some people say that this in not possible in the world of business. They think you have to fail at least once in order to succeed. Nonsense.

I believe that you can build successful company without getting crushed by failure. In addition, I believe that it is much better to learn from failures of other than your own. This is less painful and usually also cheaper. Finally, I believe that learning from successes is better as well. There could be dozens of reasons why some company failed. Nothing guarantees you that you will find all of them. If you want to copy someone’s success, isn’t it better to look for what worked instead?

Let’s now crush one strong argument for failure. Entrepreneurs who failed are more likely to succeed with their next venture. This study says that this is not true. To summarize it, entrepreneurs whose companies had been liquidated or gone bankrupt had almost the same follow-on success rate as the first-timers. For the average entrepreneur who failed, no learning happened. Simply said, failure doesn’t guarantee you learning how to succeed.

Learning will never come automatically. You have to find out where you made the mistake(s) first. The problem is that you may never know about all the things that went wrong. It is often easier to find one or two things that worked and double-down on that.

Failure is not worth it

Another problem with learning from failure is that it is too expensive. Every time you fail at something, you are wasting your resources. This can be your time, money, energy, etc. Whatever it is, failure is not for free. When you start a company, you have to invest some resources into it. Then, if this venture fails, you will not get these resources back. And, you also can’t go back in time to tell yourself the lesson you’ve learned from that failure without having to go through it.

When you bring on other people, the balance sheet will get even worse. Not only you failed and ruined your company. In addition, you promised a number of people job and you now have to tell them that you can’t keep that promise. Sure, you can always make the situation easier by talking about all the things you’ve learned. However, many of those people will not give a shit about that. They have to think about how to make money so they can pay their bills.

From this point of view, failure is not a win-win situation. You may gain some knowledge, but there are other people who lost a lot. Don’t be selfish, think about them as well. So, is the experience of failure really worth the consequences? Wouldn’t be better to prevent it somehow? Please, note that we are talking about failure in the terms of company going bankrupt. We are not talking about small failures on the road. These are parts of the game. Entrepreneurs need to cope with that.

The fear of failure

The last thing I want to talk about is the fear of failure. This is the opposite of praising the failure. It is basically about going from one extreme to another. In other words, you no longer welcome failure and you are definitely not chasing it. Also, you are not bragging about it. Instead, you are trying to do whatever you can to avoid it. You see failure as a catastrophe, something that would crush you. As a result, you may never find enough courage to start your own company.

This is a serious problem for everyone who wants to become an entrepreneur. Trust me. I know a lot about this. I was afraid of failure for a very long time. This was one of the consequences of me being bullied in elementary school. And, it took me a while to get rid of this fear. If you know about yourself that you have this fear of failure, you have to deal with it before you do anything else. Don’t start a company until you deal with this issue. Otherwise, it will be 10 times harder.

The illusion of knowing the unknown

When you are about to start a company, or any venture, it is similar to jumping into unknown. Sure, maybe you read a couple of books about entrepreneurship and startups. Maybe you even attended some classes on University to learn more about this subject. Who knows, maybe you even have a degree. However, none of this can really prepare you on what’s coming. Even if you read about every company in the history, understand this. Every company is different!

I am not talking about difference in the terms of what type of company you are building. What I mean is that every company evolves in slightly different speed and direction. Let’s assume that you have built new Instagram following the exact steps of the original company. Still, you would get different result. You would hire a different people and establish your company in a different place. Also, you are a different person than Kevin Systrom. You think differently. And, the time is different.

This is what I meant when I said that every company is different and reading about other companies can’t prepare you completely. Still, a lot of people want to believe this illusion that knowing the unknown is possible. As a result, they are usually unpleasantly surprised when they meet with reality. A lot of these people get crushed and give up. Understand that part of being an entrepreneur is about dealing with unique obstacles and small failures you will find on your way.

John D. Rockefeller once said that if you want to succeed you should strike out on new paths. When you decide to build your own company, this is inevitable as every company has its unique trajectory. You can’t build perfect copy of existing company. There will always be some unknowns.

Learning to cope with fear of failure

I think that we should finish this article with talking about some tips that will help you cope with fear of failure. Let’s make one thing clear. You can’t learn to cope with fear of failure without getting uncomfortable. There is no way around it. You will have to get your hands dirty. It is like learning to ride a bike. You can spend hours watching videos on YouTube and reading about it. However, you will have to put ass on the bike at some point.

So, if you are not comfortable with getting uncomfortable, get used to it quickly. By the way, building a company, and entrepreneurship itself, is filled with uncomfortable situations. So, if you are not willing to go through this, you should reconsider your goals. Anyway, what is the best way to get comfortable with failure? It is similar to getting comfortable with anything else. You need to start exposing yourself to the thing you are afraid of.

This doesn’t mean that you should take the biggest risk available and try a shock therapy. Although this works in some cases and for some people. However, there is a bit more pleasant way. Start with something small. For example, let’s say you are afraid of spiders. Then, you don’t have to start playing with tarantula. Instead, you can visit a pet store and watch some spider from smaller and smaller distance. When you get comfortable with that, then you might think about touching it.

Exposure to failure works in similar fashion. Gradually expose yourself to the possibility of failing. Remember, your goal is not to fail. Your goal is to take some risk. And, gradually increase that risk. This way, you can slowly increase your risk tolerance. Again, start small. You can start with smiling on strangers. Then, you can greet them. Finally, you can talk with them. This is what I did to get as a part of my “therapy”. Now, I can talk with anyone about anything.

One of the best things on this is that it translates into other areas of your life. When you get comfortable with talking with strangers, you will find out that you are comfortable doing other things. It may not be in the same degree, but your newfound courage will show itself. This also means that in order to increase your risk tolerance in business, taking risks in business is not necessary. However, I think it is a good idea.

So, find some small thing you are afraid of doing and do it. Start with small steps, but start. Are you afraid of starting your own business? Start some side project. Are you afraid of talking with strangers? Again, smile and say hi. Do the things your are afraid of and soon you will slowly strengthen your courage, just like a muscle. And, if you are still unsure, think about the worst thing that can happen, prepare for it and then do it anyway.

Closing thoughts on failure

How should I finish this article? Let’s try this. Remember that starting a business is hard and very demanding. You have to make sacrifices in other parts of your life and the result is still not guaranteed. This is the truth. There is still some possibility that you can fail. If you think that failure is not an option, life will soon give you a tough lesson. I don’t want you to believe that neither of these illusions. Failure is not a prerequisite. However, it can happen.

What I want you to remember is that you can lower the probability of failure. There are steps you can take to improve the odds and succeed. Have a clear vision and commit to that vision with your whole heart. You have to go all-in. Also, hire great people smarter than you. Next, test your ideas and develop great products. Remember that successful companies are built on great products, not the other way around. Listen to your customers. And, finally, believe that you can succeed.

Thank you very much for your time. And, until next time, have a great day!

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