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Failure IS an option January 24, 2007

Posted by jeremyliew in browsers, Consumer internet, Digital Media, Search, startups, Venture Capital, video, web 2.0, widgets.
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There have been a lot of posts on startups laying people off, losing founders or closing down in the last couple of months, part of the natural cycle in the valley. But what has disturbed me has been some of the mean spirited things that have been left in the comments to some of those postings. Often anonymously. It really bothers me. People can (and do!) reasonably disagree about a company’s business plan and prospects, but some of this stuff is just over the top.

The great thing about Silicon Valley has been the entrepreneurial culture, and the acceptance that working for a failed startup is not necessarily a judgement on your character or your ability. But recently there seems to have been a change in attitudes at least amongst some people (trolls?) who are taking joy in the misfortune of others. When a startup closes down, founder’s dreams die. Employees find themselves looking for work, and at least for a period, worrying about paying their bills and supporting their families. This should never be a cause for celebration.

I don’t personally know the teams at Backfence or Peerflix or FilmLoop, or Bitpass, or Findory, or Browster or many of the other companies that have recently entered Techcrunch’s deadpool recently, but I think that they are to be applauded for their willingness to take a chance on starting a company, not condemned because that particular company wasn’t successful.

Companies die, founders and employees learn from the experience and move on, and hopefully start more companies. I for one would love to see the second acts from the teams that are newly freed up.

Update: Hot or Not founder James Hong has a good related post.

Comments»

1. Clay - January 24, 2007

Fantastic post!

2. Anonymous Coward - January 24, 2007

I couldn’t agree more!
Signed – (anonymous coward)

3. Ted R. - January 24, 2007

Heck, people in Techcrunch have awfully critical things to say when the news is good.

I suspect there are a lot of hater that are not finding the courage to do something on their own (hence the lack of even a blog to link to) and it helps their feelings of inadequacy to laugh at the ones that do.

They should really get the Slashdot moniker of anonymous coward ;>

4. Jim Greer - January 24, 2007

Agreed – a recent John Markoff piece in the times mentioned that the acceptance of failure is one of the things that sets the US apart from Europe.

Frankly I don’t think that attitude is under threat. As you point out, it’s not TechCrunch that’s celebrating failure, it’s a vocal group of readers. Anyone who’s been around startups knows that it’s a low-percentage game.

Here’s the link to the Markoff piece – I think he oversells it, though: http://www.nytimes.com/2007/01/24/technology/24munich.html?ex=157680000&en=d439c9fd09021c0d&ei=5124&partner=permalink&exprod=permalink

5. David Armstrong - January 25, 2007

Jeremy, I too have seen this amongst different blog posts and have just a few thoughts…people doing stuff anonymous eventually get what is coming to them, so I try to ignore it, and so does everyone else, so no worry. At the same time, I sometimes am pretty frustrated with cash burn by some of these dead pool companies. We are not a silicon valley company and I’m glad. Our cash burn is so low, because we have no choice. Every dollar we spend, means less marketing dollars. So we turn down the heat and wear something warm. We’ve been known to wear hats to stay warm. This causes us to be thorough about our research, analytics and the discipline to get it right. We have to have a real business model because we are running a business, not a website with a feature. Our product has to be great for our targeted persona, otherwise it is just hype. I think money limits creativity and creates a lack of discipline.

6. Michael Hoffman - January 25, 2007

I totally agree with you and thank for this post. It is important for the start-up community to hear this kind of thing from funders, and not just our parents ;) Actually, as a refugee from bubble 1.0, I would say I was the hardest person on me, more than anyone else. It wasn’t as much personal failure for me as it was feeling personally responsible for the investors. After a five-year bootstrapping experience, I am back and feeling much smarter and better about it. I am sure a lot of those folks finding themselves out now could bring some clear thinking to a lot of the others just starting out.

7. Ben - January 25, 2007

Back in 1997 to 2001 timeframe while a partner at A.T. Kearney I did a series of pro bono studies for Joint Venture Silicon Valley on the valley and how it works. This lead to the “fortunate” position of providing guidance to places all over the world on “how the valley works and how they could duplicate it” Places like the Multimedia corridor in Malaysia, Taiwan, Korea, Dubai, etc….

As they visited the valley, a number of insights developed from the conversations, but one stood out related to risk.

In the valley, the whole community encourages risk. In order to encourage risk, you have to accept or even reward failure. This does not just mean that VC’s accept it, it means the everyone does–The lawyers, spouses, kids, even the elementary school principal–don’t look at you with distain when you start up does not work….they support you and celebrate the attempt. In alot of places in the world, running a failed startup could not only cost you some money, it could not only hurt your career, it actually might mean your marriage prospects would be well…damaged. No so in the valley, where being in between startups is part of the way of live. In fact we even created a few jobs for it including Entrepreneur in Residence.

It order to protect the innovation that happens here and drives so much value around the world, we have to continue to not only accept failure but reward the willingness to take risk and learn from it.

Some of the most spectacular successes in the valley have come from people who took risk and failed. Consider the guy who has made a bundle and brought us the camera phone….what would we all do if Phillipe Kahn had given up after the trouble at Borland instead of bringing us the ability for the world to take phone pictures of Britney Spears antics and get them posted on the web..

8. Liz Gannes - January 25, 2007

Nice post, Jeremy. Also wanted to say, yours is the best demonstration of Snap Preview I have seen yet!

9. damon billian - January 26, 2007

Hi Jeremy,

Nice post. Makes me think of a quote by Thomas Edison:

“I was glad I found 9000 ways not to invent the light bulb!”

“But recently there seems to have been a change in attitudes at least amongst some people (trolls?) who are taking joy in the misfortune of others.”

My immediate guess is that most folks commenting never have even had a chance at working at a startup – largely because the true startup centers in the USA are not that numerous.

The simple fact of the matter is that most businesses, startup or not, tend to fail the first time out (holds true for small business, restaurants, etc.). I’ve seen very few folks that have been succesful in every endeavor that they’ve been in…even Trump had to go through a bankruptcy.

10. Michaela - January 26, 2007

I think we should ban those that are complaining to work in a culture that doesn’t tolerate risk. I’ve worked for companies like that (not long) and it can be sheer torture. The way not to have a mistake is to do nothing (which ironically is usually a mistake in itself…but that’s lost on some).

11. brad - January 26, 2007

I agree. I believe one of the key strengths of American capitalism (particularly post WW II) is that failure has been viewed increasingly as a badge of courage as opposed to a stain of dishonor. One way to undermine the beauty of creative destruction and the valley’s advantage as the cradel of entrepreneurialism is to increase the perceived perils of failure – which it seems some want to do. So keep up the good fight.

12. Steve Morsa - January 26, 2007

Bravo! Far, far better to keep swinging the bat . . . in full view for all to see . . . than to be an anonymous coward . . . standing on the sidelines attacking those brave enough to do so . . .

13. Post Your Purpose » On the Power of Failure - January 26, 2007

[...] interesting posts popped up today about the importance of failure on the path to entrepreneurial success.  I [...]

14. Arvind Kumar - January 26, 2007

you are totally right when you say “it is ok to fail”. Because reaching at the top require a lot of sacrifices and a complex learning curve. If it has been so easy today we would have problem in finding salaried person. As everyone would have been working for their own.

But few guys who stand up and deliver come the hell, I salute them.

15. Gina - January 26, 2007

If we’re throwing quotes around (which I love to do!), my favorite is the one by Theodore Roosevelt:

“It’s not the critic who counts, not the man who points out how the strong man stumbled, or when the doer of deeds could have done better.

The credit belongs to the man who is actually in the arena; whose face is marred by dust and sweat and blood; who strives valiantly; who errs and comes short again and again; who knows the great enthusiasms, the great devotions and spends himself in a worth cause; who at the best, knows in the end the triumph of high achievement; and who at the worst if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who know neither victory or defeat.”

This quote reminds me to keep going when people who have never built anything in their lives try to bring you down.

16. nomadishere - January 26, 2007

I remember a naive time when I was young and browsing the web in hopes to meet like minded people… looking to band together and learn, create and succeed. It felt like a tribe of people all trying to make life better.

It still feels like that for me. It still feels like that for a lot of people. But just like the “non-virtual” world (reality?) there are mean people who just like to make fun of others short-comings, usually to avoid thinking about their own.

Stay positive my friend, there are lots of people like us.

17. Brendan Macmillan - January 26, 2007

when we stop making mistakes, we start dying.

18. Jeff Clavier - January 26, 2007

The beauty, but also the curse, of Web 2.0 services is that the cost to initial failure is very low: anywhere from $25K to $100K will allow a lot of ideas to be tested, prototyped and even put in front of real users. It means that you can try things “for free” (as opposed to the cost of failure 6 years ago). This is why I expect a lot of company implosion, because it is worth taking a shot.
The curse is the fact that a low barrier to development creates an oversupply of services in hot markets (why am I thinking video sharing/hosting, etc.). The final judge is user adoption and usage, and whoever does not make the cut will join the deadpool. Expect a lot of that this year.

19. GigaOM » Bankruptcy: The Opportunity to Fail - January 26, 2007

[...] mention this because I believe Jeremy Liew, venture capitalist at Lightspeed and subsequently, James Hong of Hotornot.com, posted some [...]

20. John Furrier - January 27, 2007

This post is so relevant to entrepreneurs. Jeff Clavier makes a good comment here. It’s easier to be an entrepreneur on the Internet than it was 10 years ago.

21. dave alberga - January 27, 2007

Nice post Jeremy…I couldn’t agree more with your assessment of the value of failure. I’m currently 2 and 1 for start ups, and I think I learned more in the one failure than I did in the two wins put together. When hiring I like to see some struggles on a resume. Tough to say how someone with a perfect win record will behave when things get really hard…as they do with most start-ups. I generally view a lack of any failure in someone’s past as either a matter of chance, or spin. Neither adds much value to a core startup leadership team. Although I suppose I’d personally rather be 3 and 0, in the end.

22. Paul LaFontaine - January 27, 2007

Another nicely written post, Jeremy.

It is in our nature to be fascinated by train wrecks. Dead Pools and mean anon comments are a guilty pleasure and unavoidable when by design the pyramid of startups has some that rise, many that fall. The comments and flameout rubbernecking are the waste byproducts of a healthier creative process. So simply flush and move on!

Keep up the great posting!

23. Artie Isaac - January 27, 2007

I’m always grateful to read comments on ethical speech. Anonymous messages should be discounted to nearly worthless.

24. John Edwards - January 27, 2007

As an angel investor here in the Midwest, I always applauded places like Silicon Valley and Austin for their willingness to look upon past entrepreneurial failure as an asset and not a liability. A learning experience that made the person a “better risk” the next time around. In the Midwest, too many people still approach early stage investing with the kind of safety and security you’d look for in a collateralized bank loan. And that extends to whether someone ever had a failure.

So if Silicon Valley is really headed towards a “bring me just the winners mentality”, then all the worse for Silicon Valley IMHO. You are right to sound the alarm.

25. Bob Eisenbach - January 27, 2007

As a business bankruptcy attorney, when a company’s primary business has not succeeded as planned, if a restructuring isn’t possible other options often include a sale of the business or its assets (in or out of a bankruptcy), a formal dissolution, or other form of shut down. Sometimes, after getting good legal advice, a board may decide that winding up the company’s business is the course of action that provides the best outcome for creditors, shareholders, customers, and other stakeholders. While never pleasant, having the ability to close down an unsuccessful business enables investors and entrepreneurs the opportunity to move on to more promising investments.

26. Robin Wolaner - January 27, 2007

Jeremy, I loved your post. Whether someone has nothing to lose except their blood/sweat/tears in a startup, or is risking their own money, or putting their great-batting-average on the line, or all three, it should be honored not ridiculed. I am reminded of f”d company (does it still exist?)during the 90s. The losers — even those with great educations/jobs that cause them to overanalyze every opportunity — stand on the sidelines and mock. The winners do, even when it doesn’t work out.

27. Anonymous Coward - January 29, 2007

The average entrepreneur succeeds after 3.5 failures. The oeople who hit home runs on their 1st or 2nd try get a lot of press, but on the other end of the bell curve people grind it out until they succeed.

28. Anonymous - January 29, 2007

Failure IS an option

There have been a lot of posts on startups laying people off, losing founders or closing down in the last couple of months, part of the natural cycle in the valley. But what has disturbed me has been some of the mean spirited things that have been left…

29. broadstuff - January 29, 2007

The Entrepreneurs Dilemma – Founders Discount vs Fun Fun Fun

Seems to be a surfeit of posts on the Joys of Failure in Entrepreneurship….first GigaOm, commenting on posts by a US VC and a successful Website owner (HotorNot). Vecosys asked about attitude to failure in the UK, and here in Germany.

Well, might as

30. john - January 29, 2007

Good posts. Everyone one in the start-up game understands that speed and traction and what it is about. The faster one can run, the more mistakes happen, BUT the more hits happen, too. The valley is special in that people like folks that have neat ideas. I’m currently a founder and chief engineer of a Boulder CO start-up. The valley is such a great place to do a strat-up cause of all of the neat folks and ideas. john cook

31. Josh - January 30, 2007

I think some of the people that spew venom are a bit looney.

However, I think some of their disgust comes from companies who fail to innovate and get funded with millions of dollars. Maybe there is some jealousy involved, but I think people generally look down on companies like FilmLoop that ride the coattails of someone else’s success and yet are funded with tons of cash to produce a product already over saturated in the marketplace. Just my take.

32. Texas Startup Blog: Web 2.0 and Social Media » Blog Archive » Bankruptcy = Success? - January 30, 2007

[...] Having been ‘there’ and ‘done’ that I would have to agree.  Of course failure is no fun and bankruptcy is the ultimate and final form of failure in business.  I recommend avoiding it at all costs in your personal life, but in the venture capital space you NEED to take risks that could result in huge returns or massive losses.  Singles and Doubles don’t cut it when your term sheet requires you to return 5x the investment before your team sees a dime.  Read more from Lightspeed here.  [...]

33. OURTHOUGHTS » Blog Archive » Smart Entrepreneurs Know When to Downsize - January 30, 2007

[...] Robert Young  (gigaom) posted a “must-read” article with links to posts by Jeremy Liew  (Lightspeed VC) and James Hong (hotornot.com) about how failures are good lessons in Silicon [...]

34. Jean-carl - January 31, 2007

Totally agree…..the worth thing for european entrepreneurs especially in France is that people see Business Failure as a Personal failure and do not want to give a new change to start again.

Bear in mind :
We learn more from our mistakes than our successes.
C’est la vie.

35. Venture Failure « Washington Capitalist - February 4, 2007

[...] 2007 Uncategorized Lightspeed Venture Partners Blog has an interesting post entitled “Failure IS an option,” which addresses the “mean spirited” comments made by some people with regard to [...]

36. Digital Goggles » Blog Archive » Startups & Failure - February 17, 2007

[...] Failure Is an Option by Jeremy Liew of Lightspeed Ventures [...]

37. Ram - March 1, 2007

“I think that they are to be applauded for their willingness to take a chance on starting a company…”

Well said…

38. digital thoughts » Blog Archive » Failure IS an option - March 2, 2007

[...] You can read Jeremy Liew’s article here. [...]

39. Jeffrey Eisenberg - March 19, 2007

I have nothing to add but felt like this post was worthy of a THANK YOU. I just discovered this blog today but we’ve added it to the 2,200 we monitor on a daily basis.

40. Texas Startup Blog: Web 2.0 and Social Media by Alexander Muse » Blog Archive » The Costanza Principle Applied to Business - May 16, 2007

[...] Bankruptcy is a great opportunity for a founder to learn.  She points to Robert’s post, Jeremy’s post and James’ post as examples of this concept.  She explains: Simply put, we live in [...]

41. Ford Harding - June 1, 2007

The recognition that failure is a sign of striving and that those who never fail are only trying the easy stuff is important in many fields. The is an entry on this subject as it pertains to selling professional services on my blog. It’s called “It Feels So Good to Be a Loser” The blog can be found at http://www.hardingco.com/blog/

42. Fred333 - December 6, 2007

Great post. I love to see what comes out of these failures.

43. Lessons From a Failed Startup: The Overview - June 1, 2008

[...] Failure for an entrepreneur is like a badge of honor. You will start another company and now you have the benefit of a whole host of prior mistakes than can hopefully be avoided. Very few successful entrepreneurs have had success without failures (usually large ones) along the way. [...]

44. Vijay - October 22, 2008

I think looking down upon a failed startup comes from the lack of knowledge as to what a startup is really up against. Crunched on resources, capability, market share – the war between a startup and the market is really one of an underdog becoming the alpha dog. It is intense, and doesnt succeed all the time – actually fails most of the time. But the credit goes for trying… getting up… and trying again.

http://vijaysblog.wordpress.com/2008/02/23/startups-do-fail-whats-new/

45. Startups do fail. What’s New? « Vijay Anand | The Startup Guy. - October 22, 2008

[...] This issue of looking at failed initiatives in a bad light, doesnt end in India alone.It seems quite universal – even in the US Possibly related posts: (automatically generated)Dare To Be Great‘Nuff Said « Green [...]

46. There are no Failures, Its just Feedback - (Failure IS an option) | Annkur - October 22, 2008

[...] The great thing about Silicon Valley has been the entrepreneurial culture, and the acceptance that working for a failed startup is not necessarily a judgement on your character or your ability. But recently there seems to have been a change in attitudes at least amongst some people (trolls?) who are taking joy in the misfortune of others. When a startup closes down, founder’s dreams die. Employees find themselves looking for work, and at least for a period, worrying about paying their bills and supporting their families. This should never be a cause for celebration. [Read Full] [...]

47. Anupam - November 4, 2008

Either you can plunge into the ocean and conquer or die a martyr.

And then there are some people who sit on the shore and clap or ridicule.

Its a universal phenomenon.. I think people who do that in the valley are not really entrepreneurs or they would know that each failure gets you only nearer to success as put by einstein.


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