3 Examples of Why You CAN Afford to Fail
#nomorefear
The original form of this article appeared on Linked IN here
Some of the world’s most significant problems, such as the unprecedented challenge of meeting surging electricity deman, largely from AI, now require breakthrough innovation.
- Global data center energy use alone could more than double to nearly 1,500 terawatt-hours by 2030, matching the annual consumption of entire nations and straining power grids worldwide.
- By 2030, global demand for fresh water is projected to outstrip supply by 40%, putting billions at risk of severe water scarcity and threatening food security, economic stability, and public health worldwide.
Should we expect to tackle these problems and get it right the first time? If not, how can we encourage learning from failure as opposed to burying it?
was born out of trying to help entrepreneurs learn from the mistakes I made as an entrepreneur. And as I reflect on working with thousands of entrepreneurs, the theme of converting failures into learning experiences is one entrepreneurs really need to take seriously.
Being able to talk about failure – and learn from each other’s experiences – is a good first step. I’ll start the ball rolling by sharing three of my biggest mistakes and learnings as an entrepreneur and CEO for the first twenty-one years of my career.
1. Too Much Emphasis on Fundraising
Many entrepreneurs think that approach me ask with help fundraising. I get it. As an entrepreneur, I was sometimes tempted by the availability of capital and found I was good at raising money, so sometimes it came easily.
Easy money isn’t always good money. It can be a mirage.
At one point in the ‘90s I used to be proud of the fact I’d raised over $100m. (A paltry figure in today’s terms, but meaningful at the time.) I now think at least some part of that was a mistake. Because at times, fundraising both consumed my time and the money sidetracked our business. It was a mirage.
In the end, the only money that really matters is the money that comes to you from repeatable customers.
VC’s have no job if they can’t invest and their motivation may take you off track by convincing you to take more money than you may need. Instead, as an entrepreneur, think carefully before you embark on fundraising. Do you really need the money and for what and when? Or are you just being tempted by the Money Mirage ( see related article published here )?
And even if funding can be easily attained, do you have the discipline to prevent spending ahead of the understanding of what problem you are solving for whom? Or the actual market need? Or hiring too far ahead of the opportunity? Of course, funding can be a critical resource to build your business. See our Harvard i-Lab workshop on 
Funding strategies to go the distance . This includes an interesting case example of Steve Papa’s learnings from fundraising at Endeca - that became a billion dollar outcome.
2. Misguided Hiring Focus
With a lot of cash in the bank and a big opportunity to go after, it was exciting to think of hiring the best and the brightest. But one of the greatest mistakes I made was to think about only hiring people who were incredibly talented. I was certainly lucky enough to do that and have gone on to see many of my early hires become great entrepreneurs, CEOs and huge contributors in the industry. But I’m sure they had that in them anyway and the question is how many people does one actually add any value to versus sidetrack, or worse still, burn out along the way?
While many people do this, hiring based specifically on skills doesn’t translate into happy or productive employees. Instead, I’ve learned to ask prospective employees questions like, “What are you passionate about?” It’s important to hire people who will not only be able to do the job but love and be passionate about their jobs for their reasons. This is critical to enduring motivation and organizational success.
Furthermore, if you can create a clear and consistent culture that not only attracts but retains and binds the type of individuals to a common purpose, everyone can work in a harmonious environment to turn your venture into a successful company. Some hiring techniques and considerations that have helped me can be found in the following presentation:
3. Fear of Focus. Lacking a Clear Market Segment Focus
I love painting a big vision. But in the end, it’s meaningless without strong execution. And one of my first mistakes in that regard was jumping in to building a product without first thinking about the very specific group of users the product was going to address. Even with the new lean startup methodology of MVP, if you address the entire marketplace, you will likely find that customers have a spectrum of very different needs.
The key is to find an initial segment where there are an identical set of needs that you can address in a repeatable way. This is what I like to refer to as the 
MVS - Minimum Viable Segment
Like me, many entrepreneurs fear losing their bigger vision if they focus. However, it often plays a critical role in any venture’s success as you translate ideas into execution.
In Conclusion
I’ve made and continue to make so many mistakes, there are hundreds more I could share with you. However, I don’t fear them and see them all as learning opportunities upon which to share and build. So one of my favorite Startup Secret is that fear of failure, while natural, simply needs inverting.
Imho, there’s needs to be room for this, as we want to make a difference in meaningful ways to solve big problems. If there’s room for this learning in your world encourage others, and share your mistakes and learning in the comments. Together we can make an even bigger difference.
🎙 Hear how Michael taught it the lecture, cleaned & woven in
▶ Watch the original lecture
3 Examples of Why You CAN Afford to Fail
One of the most important, and least discussed, truths of entrepreneurship is the relationship between failure and success, and why you can afford to fail. Three perspectives from the founders and from my own experience make the case.
1. Failure Is the Neighbor of Success (John Hirschtick)
When John Hirschtick weighed whether to start his company, everyone talked about the risks of doing it, but he also points to the less obvious risks of not doing it. People say you might be too early, the world might not be ready; there’s also a risk you’re too late.
The risks of doing it: you lose income, maybe you quit your job, you risk your professional career and reputation, and there’s failure itself, which some people can’t handle. “My career is on the line again in my new startup. I could have retired in the CAD industry and gone out with a trophy, but I’m trying it again, laying it out there.” The risks of not doing it: if you have this great idea, maybe the best you’ll have in a decade or two, and you don’t do it, you have a missed opportunity. You watch someone else do it, a lost professional opportunity to advance your career, a lost opportunity for fun, and lost money. You have to look at both: risk of action and risk of inaction.
And John’s philosophy on failure itself: failure is the neighbor of success. “Failure and success are neighbors. They both live in a different place than mediocrity. Success and failure are metastable; they’re right next to each other out there, and the biggest successes have the most in common with the biggest failures.” So the choice to try, and possibly fail, lives in the same neighborhood as the biggest wins; only mediocrity lives somewhere else. And a great thing to look for in your investors are people who think that way too, who are used to that kind of journey and aren’t surprised by it.
2. Failure Lowers the Real Risk (Gail Goodman)
Gail took what looked like a huge career risk joining a tiny company. But when asked what led her to believe she could be a founder who would scale, her honest answer was: “I got fired, so it wasn’t as big a risk as it might have seemed.” She’d been at an e-commerce startup that imploded, and she was the third executive off the plank as they lined them up every quarter they missed. The failure of that prior company, and being unemployed, is precisely what freed her to take the leap into Constant Contact at the right time in her life, with the confidence, the window of opportunity, and the right team and idea. Sometimes what looks like failure is what removes the risk of trying the next thing.
You also learn as much from the companies that don’t go well, in some ways more. As John says, the best entrepreneurs and salespeople are those who have seen both. In his first company they built a product everyone loved; people gave great feedback, but very few bought it, and that informed his thinking for building SolidWorks. Some customers can be worse than zero: with zero you know you’re completely wrong, but with a few you’re always thinking, “I’m just one little twist away from gold,” and it wasn’t there.
3. There Is No Failure, Only Learning (Michael Skok)
Startup Secret: There is no such thing as failure; there is only learning. This is the number one thing I tell entrepreneurs as a mentor. I want to give you the confidence to try even if you fail, because I have learned more from all my failures than from any of my successes. In your moments of greatest darkness, ask somebody to turn on the light and tell you what you missed. Some of the best mentorship I’ve ever gotten is when I was in trouble, failing, or really missing the point, and I went to somebody and said, “I clearly screwed up; can you tell me why?” Those are the best learning moments.
So look for a mentor, and be an entrepreneur, who gives you the confidence to act and the comfort that it’s okay to learn. What’s the worst that can happen if you approach someone or try something and it doesn’t work? You might fail, and then you’ll learn it was the wrong person or the wrong thing, and you try again. If you carry that comfort, that failure is just learning and lives right next door to your biggest successes, then you can afford to take the shots it takes to build something great.