The Risk of Failure

Posted in Startups

Silicon Valley is often derided as a place that non-ironically accepts and celebrates failure. For people who have not bought into this culture, it’s natural to make fun of the notion that people are failing their way to success, and be cynical of the effectiveness of the sheer amount of capital spent. As the vast majority of startups do not end in success, they are destined to be little more than a footnote in history, enshrined in an eulogy in an article on some blog whose own permeance may be questionable.

And if this type of criticism is leveled against startups, the cry is doubly loud for bigger, more established companies. The big guys – Apple, Google, Facebook – all have had to shut down apps and services and admit that experiments didn’t pan out or execution just wasn’t there, but that’s precisely when the commentary turns hyperbolically negative. Journalists seem to enjoy writing about the beginning of a downfall, declaring the end of an era, or dismissing the viability of an entire product category.

The tricky part is that good ideas tend to be initially unintuitive, and sometimes a great idea will appear like a terrible one at first pass. Tolerance for seemingly dumb and stupid ideas[1] stem from the understanding that the obvious and therefore safe work would already be taken, and that questioning assumptions is a valid path towards building something new and disruptive. As with most things worthwhile, investing and working towards the unproven carries a certain amount of risk.

With risk comes the chance for spectacular and glorious failure. This is the startup mode of thinking, where a thousand companies try to find a new business model and only a handful succeed, and periodically produces enough innovation that bigger, more established companies try to replicate internally. Searching for the next big thing™ will incur substantial losses; to some, it’s a sign that the idea is worth pursuing, but to others it’s an opportunity to damn the effort, to contrast it with tried-and-true businesses and diminish the accomplishment of building outside the expected box.

There is a fine balance between encouraging a failed experiment and condemning a silly mistake. Some believe striking this balance is the fuel that drives the valley, but I’d like to think that some of it is simply the reflection of risks worth taking.

Footnotes    (↑ returns to text)

  1. Yo.