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I have been reading what Fred wrote over at AVC on failure, and how failure tends to redefine the things we do as long as we learn from those failures.
Some people do learn from failure and successfully work out ways to mitigate or minimize similar failures. Others unfortunately do not learn from failure and continue to engage in many of the same behaviors that lead to failure in the first place.
When I look at companies that people I know are starting out, and the energy that they go at them, the risk of failure is always there. It was my first five failed startups that have lead to a moderately successful startup on my sixth attempt. Some of those startups never got past the business plan stage; two of them opened their doors and had started doing work when I realized that I am not suited to be a direct sales person.
Even as my own startup now struggles in the aftermath of near death in July, there are still things that I have learned to help work through the failures. While I am not happy with some of the solutions, in the longer run the doors are still open and August ended up being ok, we didn’t close our doors. September is normally a down month, and that is ok, we need a breather after the wild summer that the company had.
Failure is difficult, and it is nearly impossible not to take it personally. Sure we can pull back and look at things clinically, but the key part of failure is to learn from those failures and work out better paths to make the goals that you have set forth. Failure sometimes means that your company will not close, but will need life support for a while. Failure sometimes means minor issues and concerns that if caught quickly enough can be stopped, fixed, and learned from. We look at learning from failure as something personal, what can I do better, why did this happen, how can I keep it from happening again. Failure is one of those things that we have to learn from; otherwise we are doomed to repeat the same steps over and over again. People who understand this cycle often work out ways that they can learn from failure, people who do not understand the cycle and think that time is linear often fail to learn from their mistakes.
As I advise four companies now on how to do some things better, or learn from failures that they will encounter I am starting to see how the company’s management thinks. Some think linearly and believe that all events are discreet, while others are taking lessons from their past and applying those lessons in their companies now. My bet is on the people who think circularly, who see the past lessons, understand them, and have worked out a mitigation plan if they crop up again. This is where this gets interesting, if people who run companies cannot learn from past failures, or will not learn from past failures are they worth investing in? Are they worth spending time on; are they worth the effort to help them get from early ideas on paper to standing up their own company? I tend to like circular thinkers better and will give them more of my time (when I have time to give), because I believe in them more. They tend not to shy away from concerns and will try to mitigate failures early on because they see them coming. Maybe this is one key to investing in new companies, find out how mangers and leaders have worked their way through previous failures, and how they will address them in the future.
