[Editorial Notes: It’s sexy to glorify failure. And while the ecosystem keeps talking about failure lessons, the outside view is much more articulated and ‘bravofied’. This piece by Pranay Srinivasan, founder of Sourceasy.co brings a practical and No-BS view of the phenomena.]
Stop Glorifying Failure.
There are many Venture Capitalists out there, especially in the Seed Stage, who talk almost nonchalantly about the failure rate among start-ups. It is almost as if they are condoning failure. And they are happy to pony up more money for the founder’s next start-up because they feel the founder has had an opportunity to “learn from his failures”.
While I don’t think failure is the end of life as we know it, I certainly do not like to condone failure. And I certainly will not celebrate it. Not when it happens, Not when I have learnt from it, and Certainly Not when I’m talking about it to a bunch of strangers at a random event I got invited to because my latest start-up is beginning to do well. (read: got funded, got traction, getting press, hiring, earning revenue, …)
As a business owner for many years, I have always been afraid of Failure. Shit Scared. Partly because, in India, a business failure carries a personal liability. Everyone believes in *you*, the Bank lent money to *you*, even as a Director of the company, *you* signed the personal guarantee, and as the founder, it is *you* who is the face of the company.
I have failed countless times, and it has not been heroic, swaggering, and/or miraculous. I recently heard a couple of seasoned entrepreneurs – Rajiv Chilaka, creator of “Chhota Bheem” and Aloke Bajpai of ixigo.com speak about their trysts with failure and neither of them romanticised those times or wanted to repeat them again.
While most stories of failure are personal, here’s a few reasons why people fail at businesses with some personal examples:
They do not have conviction/knowledge:
I started a business to sell mini tractors / power tillers in India with a partner. My larger goal was to study the farming techniques, gather intelligence on crop patterns and learn about the agricultural industry before I went deeper into the food linkages. I found an enthusiastic partner who was also gung-ho about it.
Since we both had relatively successful full time businesses, we felt if we could find people to work for us and use our spare cash to invest into this, we could find a way to set up a new tiller brand to sell direct-to-farmer. 6 months down the road, when we realized the kind of expertise and capital we needed to raise to differentiate from the other Tiller Companies, my partner got cold feet. And in a matter of weeks, the business crumbled. There was promise in the business and we knew where we were going. The conviction and the hands-on knowledge just was not there.
They hire the wrong people:
I set up an apparel manufacturing business in Feb 2010. I was able to grow the business to 3 offices, 2 manufacturing units and a $800,000 revenue in less than 14 months. With Zero Debt. Single-handed. Then I made the mistake of hiring young relatively inexperienced, enthusiastic managers to take care of the manufacturing plants.
I invested in machinery on their say-so, took on debt to expand the business, started spending more time on Business Development instead of in Operations, I truly believed that in time they could grow to manage the entire facility and become a profit sharing partner in my business so I could grow it further. I was idealistic and stupid. I condoned mistakes and took their word on face value. The employees grew greedy and went out of control.
I lost all my investment, they lost a lot of the stock we held, vendors acted funny and sold my goods in process for a song and I ended up with a debt of over $200,000.00 that I had no clue how to repay. The crux of the problem was my error in entrusting relatively new employees with a lot of power and financial clout but with almost no accountability. I paid a bitter price for this error and lost a lot of face with customers, vendors, the bank and my own self-confidence took a dip.
They make bad decisions:
Many times, founders / business owners will make decisions based on faulty information, on tactical pressure, or due to misplaced ambition. This leads to unnecessary pressure on the company, and usually recovering from these bad decisions can lead to failure. While the repercussions of the decisions are usually horrific to deal with, the reasons for these decisions can usually be attributed to one of the following factors:
– Blind Trust / Faith in your team without periodic reviews and checks/balances.
– Preparing in anticipation for Business / Funds that have not hit your bank yet.
– Delays in execution due to a cushy financial position a.k.a. procrastination.
– Problems in Operations that are overlooked due to a Hectic Schedule.
– Not sticking to the basics of cash flow management when making commitments.
– Not managing operational day to day requirements.
– Inability to project business development needs and preparing well in advance.
But mostly, Founders fail because they are dead wrong about the business they are getting into.
With most tech start-ups, they think they are in the programming / coding / website / internet business, but really they are in an offline real-world business that uses the internet to acquire customers, to make a sale and to run customer support. That’s just a sales channel, not your entire business.
So while everyone fails, celebrating failure or condoning it is not cool. And glorifying it by justifying it with your next successes is not really cool either.
For people who face it, Failure is a grim, harsh reality. You face it because you have no other choice. You learn from it because you hate to deal with it. You ensure you protect yourself in the future so you do not end up as a cautionary tale. And you don’t lose faith in yourself;you dust yourself off and try to succeed once more because you’re an entrepreneur. Not because you know better.
[Follow Pranay on twitter @utekkare.]