Recently, I came upon a report in a newspaper that argued that we should celebrate failure. Quoting an entrepreneur, it lamented that we are obsessed with just a few popular startups. We should pay attention to failures too. “How about instituting a ‘Failure of the Year Award’, just like ‘Entrepreneur of the Year Award’?” it asked.
The article made me think: should we celebrate failure? And, what is failure in the first place?
Let me take you to the world of sports, where success and failure are easily measurable. Imagine a race at a huge stadium. There is raw energy in the air. Suddenly, one of the runners skips and falls. But that’s only for a couple of seconds. She picks herself up, and runs as if life depends on it, manages to place second. The entire auditorium gives a standing ovation — because she picked herself up.
Did she fail? Are we celebrating her fall ? No. We are cheering the comeback spirit.
Off the track, this process — the failure, the recovery, and the ultimate prize — is never quite as fast. It takes time. It involves learning. Such learning depends on brutal honesty; the kind of honesty that Andre Agassi demonstrated in his fantastic autobiography “Open”. Even in the eighties, Agassi was an icon. People first started noticing him for his earrings, the color of his hair, and the style of his clothes. But soon, they were consumed by his tennis — the power of his shots, and the grace of his movements on the court. Like every human being, he had his failures, his moments of self-doubt, loss of confidence, physical degradation, and pain. His book recounts these days with amazing clarity and a rare honesty. His comeback in 1999, when he swept tennis fans off their feet by winning the French Open, was no accident. It was a result of that rare mix of introspection, honesty, humility, courage, planning, and hard work.
The world of sports offers innumerable examples of heroes such as Agassi. But such heroes are in the world of business too. One obvious example is Steve Jobs. His story is well known. We celebrate Jobs because he picked himself up and made a comeback. That didn’t happen by accident either. Becoming Steve Jobs, a book by two business journalists, shows how between his disastrous first innings and fabulous second innings, there was a period of learning.
I am happy to see such honesty among Indian entrepreneurs too. They don’t live in denial, and they take an honest view of failures. For example, Peppertap CEO recently gave a perspective on failure from his own experience of running the startup. Similarly, another entrepreneur Sahil Kini wrote a heartfelt piece about what it felt like when his start up failed — the raw emotion of it is almost palpable. In an insightful article, Fab founder Jason Goldberg wrote about how it took him two years to talk candidly about his failure.
In a way, it ought to be plain common sense. You evaluate the viability of an idea or business, and if it doesn’t work, accept failure. Unfortunately, common sense is not quite so common when our emotions are part of the picture.
Some years ago we invested in a firm that was in an exciting space. The market opportunity was huge, and the macro trends were favorable. However, the firm had accumulated debt by not paying several suppliers, and were at the brink of shutting down. We agreed to invest, close the debt, and clean up the balance sheet. We then moved on to fix the operations. What we needed was fast execution, and then on to market dominance. Straightforward enough. Or so we thought. To that end, we had long discussions with the founder and the management. We analysed the strengths and weaknesses, and collectively decided on the organizational changes that the company needed. With concurrence from the founder, we agreed that we needed to bring an external CEO on board, to complement the team. The plan looked great, on paper.
I wish the reality were that simple. For in the following weeks and months, we found the start-up repeating the same mistakes that had brought it to the brink of disaster the last time. The integrity needed to deliver on promises and sticking to commitment was lacking. Liabilities began to mount again, and there were issues related to compliance.
Very few founders, much like teenagers, are willing to listen to advice — even when they ought to. No amount of discussion and advice post-investment seemed to have any meaningful impact. We offered to sell our share at cost and move on, since we no longer had any confidence in the founder and his advisors. When that failed, we suggested selling the company, albeit nobody would have made much money at that point. At a time when real decisions needed to be made, we were talking to a wall. In the end we resigned from the board, using the only option we had to signal our dismay at the fiscal mismanagement of the company. Predictably, things became worse. They were unable to pay suppliers, employees, even the dues owed to the government, while destroying investors’ value and their own credibility in the process. At every step, we were giving sound advice to deaf ears. Most often tough advice is not forthcoming in most companies. Even when offered, few choose to act upon it. Emotions cloud reality. Fantasy replaces practicality. Procrastination replaces action.
What are the lessons we can learn from these anecdotes?
Spot the signs of failures early: Failure doesn’t happen suddenly. Take the instance of one of the earliest recorded volcano eruptions, which occurred in 79AD, in Pompeii in ancient Rome. Eyewitness accounts from that time tell us that people in the city were taken utterly by surprise when Mt. Vesuvius erupted. Very few events are quite as cataclysmic like that. Anyone who has studied history will know that the decay of a civilization is visible long before its fall. Paul Kennedy’s “Rise and Fall of the Great Powers” documents how the fall is a slow and visible process, in case after case. It happened to the Ottoman Empire. It happened to the Roman Empire. It happened to the modern British Empire, and the East India Company. It has happened to a number of Fortune 500 companies over the years. And it is true for start-ups too. So, watch for the early tell-tale signs.
If you let yourself be surprised by a failure, more often that not, it is because you stopped listening.
Don’t expect drastic change after a deal: Business deals are like marriages. In a marriage, if you pick a partner who is not right for you in the hope that he/she will dramatically change after marriage, it’s doomed to fail. You can take cotton and make fabric, wood and make furniture. You can’t turn steel into rubber, or wood into cotton. Change in form is possible, but not in core properties. The same holds true in business as well. People don’t change much. In our case, despite several discussions, promises and commitment from the entrepreneur, we watched him revert to the same patterns of behavior that had pushed them to failure in the first place. And our mistake was not recognizing that pattern at the outset.
No one holds a monopoly over such mistakes. In research, scientists who are supposed to be far more rational fall into a similar pattern. They persist with the same methodology despite evidence showing that it doesn’t work and there’s a need to consider a fresh approach. That’s one reason why it takes a new generation of researchers to come up with something revolutionary. It’s so common in science, that Einstein once defined insanity as ‘doing the same thing over and over again, and expecting different results’. It’s true in the world of sports. Coaches tell us how difficult it is to change the fundamental mistakes marathon runners or swimmers make. They continue to do what they do because they are comfortable doing that. It’s a habit.
It’s near impossible to pull people out of prisons of habit. Don’t expect a Founder (or an investor) to change core characteristics.
Don’t be delusional: Face the facts. Sometimes, people use catchy labels and wrong metrics to avoid confronting the hard truth. In our earlier example of running a race, it wouldn’t have mattered if the runner were the first to leave the block. What mattered was whether she got up after falling down, and if she ran till the finishing line. The tag, “first off the blocks”, would have taken her nowhere. In business too, such labels are meaningless. Steve Jobs didn’t call himself the father of smartphones. He focused on bringing out better and better iPhones. Jeff Bezos didn’t call himself the father of e-commerce. He focused on providing better service to more customers. Last I checked, Bezos was the world’s third richest man.
Measurable impact is far more meaningful than self-adopted labels. I get weary when people start dropping names, or promise to be different after funding.
Resist the temptation to blame others: The easiest thing to do when something goes wrong is to place the blame on others. Some entrepreneurs like to blame the VCs for their failures. It’s like adults blaming their parents for their failures. It’s also the least useful tactic, and might stand in the way of picking ourselves up and finishing the game. Don’t get me wrong — Finding the root cause of any problem is important. It takes persistence, intelligence, and courage to look into what went wrong. There was something inspiring about Richard Feynman explaining what went wrong with Challenger.
This is an example of objective analysis.
It’s important to know the difference between dispassionate analyses and the blame game.
Identify the source of failure: Find out what caused the failure. Sometimes as in Pompeii, it could be forces beyond our control. For example, some of my investments will fail because the market is not ready yet. There, I would take pride that we at least pioneered. But in some cases, failures happen because of individuals, because of wrong judgement about their capabilities. In those cases, I am personally hard on myself. I brood till I understand where I went wrong and I work hard to learn from each failure.
In the end the question is, ‘should we celebrate failure?’ Not in my book. However, I do draw enormous inspiration from people who triumph by picking themselves up and rising above their failures.
There are many such stories of dedication — Soichiro Honda began his career as an bicycle mechanic at the age of 15. Creating a technology that he believed would change the evolution of the automobile, Honda’s idea was shot down by Toyota and several other auto makers. Undeterred, Honda would go on to start this small auto maker we know now as Honda Motor Company, whose revenues are over 100 Billion annually! His invention was the piston/rings, which almost every vehicle has used in the last 70 years — including Toyota.
And it isn’t just inventors. Artists are perhaps among the most familiar with struggle and failure, oftentimes simply because they’re ahead of their time. Vincent Van Gogh sold only one piece during his lifetime, and even that was to a friend for a pittance. Lucky for the art world, Van Gogh soldiered on, and went on to paint over 800 works. Today his work sells for millions of dollars. Similar circumstances nearly prevented the world from ever knowing the wondrous world of Harry Potter. JK Rowling’s typewritten manuscript was rejected by over a dozen publishing houses before her big break.
More recently, we saw Dipa Karmakar narrowly miss her shot at an Olympic medal in Rio. Disappointed as she was, she later spoke on how this would fuel her to ensure she brings home a medal at the next Olympics. While coming 4th at the Olympics is no mean feat in itself, she has taken what was considered a failure and channeled it to push herself to do better.
These inspirational juggernauts show us that while failure isn’t exactly something to be celebrated, it certainly isn’t something to be feared either. The secret lies in embracing the lessons that failure teaches us, while keeping our chin up and ensuring we emerge from the tunnel wiser.
To sign off, I’d like to quote basketball great Michael Jordan, who himself battled multiple failures before being recognized as the legend that he is today — “I have missed more than 9,000 shots in my career. I have lost almost 300 games. On 26 occasions I have been entrusted to take the game winning shot, and I missed. I have failed over and over and over again in my life. And that is why I succeed.”