[As featured in MONEY magazine]
Failure is tough. Emotionally, financially and socially. It is often seen as an embarrassment, as though a failed business venture defines your future and your capabilities. In the startup world, we should see things differently. Simon Azzopardi talks about why startup failures are seen in a very different light.
Nine out of ten startups will fail. This is a fact that every entrepreneur in the startup world needs to be fully aware of and comfortable with. This means that not only failure being very likely for an entrepreneur, but also that one should have the emotional and psychological readiness for failure. A lot of this readiness has to do with culture.
First of all though, one must keep in mind that technology based startups have a very different approach to creating businesses than what traditional business school teaches. The eco system of startup founders push for a lean approach of selling before building, and typically the building part involves very little money. Startups try to mitigate the multitude of risks though still the odds of failure are not in the favour of the startup.
With all this said, the cultural differences in how we approach failure is significantly different depending on which ecosystem you are involved in. If one had to compare the US to Europe, failure is treated astronomically differently.
Failure in the US is seen to be celebrated, like a badge of honour of sorts, worn proudly by entrepreneurs. Conferences such as FailCon even exist where entrepreneurs talk about their failures and the lessons learnt from it. Truth is, such conference have gone a long way in pushing the culture of accepting failure even though it is, in my opinion, oversold.
In Europe, failure is seen as the end of the road. Reputation is tarnished and labelling happens. In fact, we see that entrepreneurs that fail in Europe are less likely to try again, or receive the funding required from investors. Comparing this to the US and we see massive cultural differences where several angel investors and venture capital firms look for a previous failure to ensure that lessons have been learnt, and mistakes will not be repeated.
In my opinion, the concept of failure is misunderstood on both sides. The Americans go too far in celebrating failure, overplaying failure as some form of milestone reached. The celebration should be the lessons learnt, and not the failure in itself. And quite frankly, a lesson learnt is only defined or realised to have had a positive effect once success is achieved. Therefore, failure should only be celebrated in hindsight of success.
At the other end of the spectrum, we have us, the conservative Europeans. Europe does not see any positive whatsoever in failure, yet if you look at the mantra of startup thinking, including the mantra “fail fast, fail often”, there is a clear mismatch in how we think versus how tech entrepreneurs should approach such a high risk industry.
The ideal is a culture whereby failure is understood for what it is, nothing more and nothing less. Failure should simply be seen as a path taken that didn’t work, where life lessons are rich and difficulties associated with it need to be overcome as quickly as possible.
So what next? What can Europe do to be better entrepreneurs? The first thing we need to do is talk about failure. Failure is not some taboo though simply a step many entrepreneurs face before success. I am not talking about the celebration of failure, but rather the promotion of its discussion without prejudice.
Secondly, the startup world needs a reality check. Startups and particularly tech entrepreneurs are celebrated today, almost seen as the rock stars of society. Only a few years ago, young people spoke about John Lennon, Jim Morrison and Kurt Cobain. Today we talk about Steve Jobs, Elon Musk and Mark Zuckerberg. Thankfully, such profiles are better celebrated than the Kardashians.
The result of this tech rock star phenomena is that many people want to be like them, yet without being primed of what being an entrepreneur really is about. We talk about the successful entrepreneur but very few talk about the challenging milestones along the way or the failed nine out of ten that never made it on Forbes. We talk about growing a business, but very few understand the legal implications of bankruptcy.
Like with most things in this world, solutions to challenges lies in educated conversations. Failure is not the end of the world, and could be the last failure before success. Lessons should be celebrated when they take a positive impact on how you do things, and if a person talks about his failure, accept it for what it is, a wrong path taken that does not define that person’s abilities, personalities, or future potential. Lastly, we should strive to fail better, in terms of being more educated about both the ups and downs of entrepreneurship, without overselling the startup path, and falling part of an ecosystem that understands the risks entrepreneurs take and can support better decision making.