Musings of a twenty-something entrepreneur.
Jul
16

As Seth Godin brilliantly notes, the key to avoiding big failures is to allow yourself to fail “quietly, and often, in private, in advance, when there’s still time to make things better.” These are the types and frequency of failures and how good or bad they are, according to Seth:

FAIL OFTEN: Ideas that challenge the status quo. Proposals. Brainstorms. Concepts that open doors.

FAIL FREQUENTLY: Prototypes. Spreadsheets. Sample ads and copy.

FAIL OCCASIONALLY: Working mockups. Playtesting sessions. Board meetings.

FAIL RARELY: Interactions with small groups of actual users and customers.

FAIL NEVER: Keeping promises to your constituents.

This great advice. Nay, sage advice. But I want to talk about a different kind of failure: when your company/idea/self runs out of cash and you have to stop operating.

The kinds of failure where the ship is going down, and everyone on it is going to drown: investors, employees, customers that rely on your product.

It seems like everything I read about these big failures, from guys like Gary Vaynerchuck and countless other entrepreneur bloggers tries to say one of three things:

  1. Its OK to fail, it happens and you should
  2. Whether something is a “failure” is up to how you look at it
  3. Don’t be afraid to fail

The intention of these “failure advocates” is good- they don’t want you to let the fear of failure to prevent you from doing something. And I absolutely agree with that: if you let fear of failure prevent you from doing something, then you’ll never experience the flip-side of failure: success.

But the possibility that you will fail at something needs to be taken seriously, because it can have serious financial, relationship, and psychological consequences. I know this from experience, and if you’re in charge of something and the ship goes down, the blame and ownership of the failure is all yours.

And failure sucks. Failing usually means that promises, explicit or not, were not fulfilled, that expecations weren’t met, and you, your employees, investors, and customers lose.

But in a perverse way, that failure sucks so bad is a good thing, because its a strong motivator. They say that entrepreneurs beat big companies because Big Co. employees don’t stay awake at night worrying about their work. I think a large part of this has to do with their passion for what they do, but I also think that there’s also an element of fear inspired by the very real prospect of failure.

But the failure of your idea to “work” or exist in reality is bad enough on its own to be quite a strong motivating force. All the other stuff that comes along just makes it worse. So the question becomes how to mitigate the other negative consequences: relational strain, financial ruin for investors, and psychological stress.

Here are a few tips that I have that can help prevent an already-terrible failure from being a personal, psychological, or financial disaster.
  • Don’t exaggerate. Be honest with your employees, investors, and self. This doesn’t mean to lose that “We’re going to take over the world” can-do attitude, it just means that distorting the truth perverts people’s expectations and leads to frustration and a sense of betrayal when things don’t work out.
  • Don’t take any money that an investor can’t afford to lose. This is especially true when you’re dealing with friends and family as opposed to professional investors. This cannot be conveyed implicitly. It is incumbent on you to say something like: “There is a chance that this will fail and you will not get back a single penny. If that’s too scary a prospect for you, then this isn’t the right match and I completely understand.”
  • Have the right attitude. Failure is a fact of life, especially for startups. That doesn’t mean that you shouldn’t go down fighting, but it means that it is very likely to happen to you. Your own attitude and strength will determine whether it makes you depressed or whether you pick yourself up from the ground and ask for more.

Of course, the best way to avoid the terribleness of failure is to succeed! That is your focus, and anything less than success is unacceptable. But don’t be naive and ignore the possibility of failure. Remember in your mind how bad it sucks, and then give everything you have to avoid it.

What are your thoughts?

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About jesse:

"I move Onward, the only direction. Can't be scared to fail- searching perfection... Loiterers should be arrested!" -Jay Z Find out more about me at www.JesseMaddox.com

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