Thursday, July 18, 2024

What entrepreneurs should know about failure

One of the truisms of being an entrepreneur is eternal optimism.

It is a necessary ingredient for anyone going into a high-risk venture. Even though the chances of failure are high, entrepreneurs believe they will be successful. This is what makes entrepreneurs so captivating– they are willing to take chances the rest of us would not entertain.

The reality, however, is most startups don’t make it. It could be an unwanted or poor product, a lack of execution, the wrong people, too much competition, or not enough money. It is often not for a lack of effort.

According Statistics Brain, only half of startups are still operating after four years. Among venture-backed startups, three in four fail, according to this media report.

throwtowelThe question is how do entrepreneurs know when their startup is not going to make it? At what point, do they realize it is time to throw in the towel? Is there a defining moment when failure stares them in the face? Or is it death by a thousand cuts?

Accepting defeat is difficult for many entrepreneurs because it goes against the grain. It is not something they can easily accept, even though it should be obvious.

A startup entrepreneur, who asked to be anonymous, said most entrepreneurs have a difficult time with failure because they are stubborn and determined to fault.

“You will try things that people don’t try because you are blinded to the reality,” he said. “You are so focused on the way the market will go or how you can shape the market. I think many entrepreneurs figure out failure after other people do.”

The entrepreneur said persistence and a willingness to try new things when the end game is not necessarily clear reflects the enthusiastic nature of being an entrepreneur. It is all about being achieving success, not the possibility of failure.

After his last startup failed, the entrepreneur said his new startup has a different vibe. “We are onto something really and phenomenal,” he said. “People are approaching us to help. That wasn’t happening to the same degree before.”

Truth be told, it is difficult, if not impossible, for entrepreneurs to know when failure is around the corner. There is always a sense that something good will happen. Hope can come in the form of new customers and partnerships to drive revenue, media coverage for brand awareness, or financing to keep the lights on.

Entrepreneurs refuse to accept defeat, even when it is staring them in the face.

I have learned this lesson first-hand. A startup that I co-founded hung around for five years, even though it was pretty obvious after a couple of years that success was going to be elusive. I stepped aside mid-stream, but my co-founders continued to fight the good fight. They really believed good things were on the horizon.

There are lots of examples where entrepreneurs could have easily given up but could not bring themselves to do it. Perhaps the most recent example is Slack, a messaging app founded by Stewart Butterfield that has become a huge success (aka a Unicorn).

Many people forget that Slack evolved out of Glitch, a video game that raised $17-million in venture capital but failed to resonate with consumers.

Rather than surrender, Butterfield decided to use what was left of the money in the bank to focus on developing messaging technology that was being internally used to create Glitch. The rest, as they say, is history.

Slack’s story illustrates why it is so difficult for entrepreneurs to accept defeat. It is simply not part of their DNA.


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Mark Evans
Mark Evans
Mark Evans help startups and fast-growing companies tell better stories (aka marketing). His strength is delivering “foundational” strategic and tactical services, specifically core messaging, brand positioning, marketing strategies and content creation. Find him via his blog


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