Failure: Can fearing it impede professional greatness?

I was having dinner recently with a good friend who gave up a mid seven-figure job with great security to pursue his dream of being a novelist.  The impetus for his decision wasn't a mid-life crisis as some expect [he's 32 years old like me, not quite ripe enough to be categorized as mid-lifers] but rather seeing two other college friends give up cushy jobs of their own at a big law firm to start up their dream technology venture.

Our conversation turned to a broader discussion of the fear of failure and its role in professional success. Is it possible to create a truly great business without embracing the possibility of failure? And what about the inverse? If you have an unyielding fear of failure, can you achieve optimum success?

For an entrepreneur, it's difficult to argue against the crippling nature of a fear of failure. To build something from the ground up, one has to make bold decisions and take risks. It's seemingly impossible to imagine creating a truly exceptional business without tasting some failure or adversity along the way.

• Would a serial entrepreneur with a successful IPO under his wing be less inclined to fear failure than a first-time founder with every penny of his life savings poured into his business?

But what of a venture capitalist? On one hand, VCs have to live with the reality of failure. History dictates that for even the best venture capitalists, a significant portion of their portfolio companies are going to generate a negative return. As Paul Kedrosky is fond of saying, VC is a hits driven business. If you make 10 investments, ultimately you make you and your LPs money on one or two big winners. On the other hand, venture capitalists have generally achieved some measure of financial success prior to becoming a VC; so while each failure may sting, it's not crippling.

• Would a first-year principal looking for his first successful exit make the same decisions as an established venture partner?

How does the fear of failure translate into public-equity investing? Risk aversion is a term of art that's often embraced within our industry. Is risk aversion synonymous with fearing failure? Mathematically, one has to accept increasing risk for increasing rates of return. While great investors tend to find a way to generate marginally better returns for each incremental unit of risk; it's a truism that with no risk come no reward. 

Ultimately, there are lots of factors at play here. The very definition of failure varies from person to person. While some of us may view my friend's decision to leave his job as "risking it all", knowing him as well as I do led me to a different conclusion. Having never taken a chance on his dream of being a writer would ultimately have been his life's greatest failure.

Nothing ventured, nothing gained? You decide.

90in30 failure entrepreneurship VC investing greatness greatness enterprise irregulars

Comments

[Mark Swanson]

While this sounds paradoxical, I believe that your degree of success is proportional to your ability to accept failure. Once you reconcile with yourself the consequences of failure, you let go of that fear and can focus your energy on being successful, which dramatically increases your chances of success.

[Jason Wood]

Don, I've come to appreciate that you're always good for a timely quote or two. Don "Bartlett" Dodge as it were. :)

I often tell people that the best thing the ever happened to me was the technology bubble bursting. To have experience arguably the most bullish AND bearish technology markets in history at the early part of my career gives me a perspective that I never would've gotten otherwise.

Best,

J

[DonDodge]

Jason, Great post. I am reminded of two of my favorite sayings. "Success is a terrible teacher". In fact, success deludes you into thinking that everything you did was right. The more likely case is that one or two things were right and the rest was luck.

Second, "Risk and reward are driven by fear and greed. Fear can scare us into inaction.. But, fear is temporary...greed is permanent."

Most successful entrepreneurs have experienced failure. That failure has driven them to try again and succeed. Failure is a great motivator...while success lulls us into complacency.

[David Terrar]

Jason,
Synonymous. In my own case, with hindsight, I wish the worry of not being able to pay the mortgage hadn't stopped me take a particular opportunity with a couple of my friends back in '86. Life can be full of those Y points when you wonder what would have happened if you'd turned down that particular road.

[Jason Wood]

David,

Sounds like very interesting work. How synonymous would you characterize "having the balls to do it" and "not fearing failure?"

J

[David Terrar]

I think you've opened up a huge and important topic. Kid's start out life willing to take a chance and make mistakes, but our whole school system stifles that ability. We train them to be afraid of getting things wrong, and then we extend that in to the way we run our companies. We stigmatize mistakes. The fear of failure not only stops people from achieving their potential, but it stifles creativity itself. We're educating people out of their creative capacities. There's a great quote from Picasso on this: "All children are born artists. The problem is to remain an artist as we grow up". I agree with you that it would be a failure if you friend didn't give up the steady job and take the chance. Personally, I waited way too long before I took the step to try my own thing.

In the early 80s I did an analysis of a dozen software entrepreneurs who'd started businesses in my sector to see if there was any common ground. They were all very different, with very different approaches, and the only common thread was that they'd had the balls to do it.

Actually I'm involved in writing a book that relates to this, so I'm glad you brought this up.