“A person who never made a mistake, never tried anything new.” — Albert Einstein
My son’s third grade teacher recommended to all of the classroom parents that we read The Gift of Failure by Jessica Lahey. The author is a middle school teacher and mother of three, that writes about the importance of failure in a child’s education and upbringing. And while the book was definitely a great read and gave me many good parenting tips, I could not get entrepreneurship out of my mind! It’s was as if Lahey was talking to me about the importance of failure for starting a company.
Failure has been a very hot topic in entrepreneurship and venture capital for many years now: ranging from the positive “Fail fast and fail often” to the negative “you don’t want people to be intentionally encouraged to fail”, said by Mark Andreesen. On one hand we have institutions that pride themselves on failure such as FuckUp Nights fuckupnights.com, a project started by a group of Mexicans that are now a worldwide institution in more than 200 cities or FailCon thefailcon.com, a conference for startups founders to study their own and each other’s failures and learn from their mistakes. And on the other hand we have many investors saying that by encouraging failures, we are educating the next generation of entrepreneurs to do things the wrong way.
So, should we embrace failures?
The book teaches us the positive effects of failure: we need to let our kids fail so that they can learn from their mistakes and gain autonomy, competence and motivation. The entire book speaks of failing and the skills needed to gain confidence after the fact. This led me to think about how we, as investors, look at failure and tackle failing in our investments. It led me to dig deep into how I perceive failure and what we look for in entrepreneurs, with regards to failure in DILA Capital.
Failure has been, specially in Latin America, frowned upon for many years. This had led Latin Americans to be more risk-averse than their peers in other countries and therefore start fewer technology companies. But, as Lahey clearly states in her book, failure (if handled correctly) allows us to learn from struggles, be creative in problem solving, be diligent and learn self control and perseverance. Why have we forgotten this? Why have we given failure such a negative connotation when we have all failed and will keep failing, and these failures have been such a great source of knowledge and enlightenment? I am a true believer that if you are not willing to risk failure, you will never create anything great. The book teaches parents to think of children’s long term development and emotional needs before short term happiness. Isn't this exactly what we seek in start-ups?
It is important to note two things, first is that in the startup world, failure does not necessarily mean tanking your company to zero and second that I am not encouraging people to fail, I am saying it is inevitable. So, when you fail (not if, but when) embrace the failure and learn from it. Remember that failing at a certain project or a certain goal does not make you a failure. I’d rather you try something that doesn’t work and learn from it than to never have tried before. However, failing does mean you did something wrong, which is why its important to learn what you did wrong when you failed and make sure you never do it again. Learn from what worked and learned from what didn't. Keep your long term success in mind at all times, keep learning, keep getting up.
In the book, Lahey quotes Carol Dweck who divides people into two mindsets: fixed and growth. Fixed mindset people believe intelligence, talent, or ability are fixed through life. Growth people believe more is always possible through effort and personal development. “The hallmark of successful individuals is that they love learning, seek challenges, value effort and persist in the face of obstacles.” In DILA, we are true believers that education never really ends, we look for people that have growth mindsets and that have learned from past mistakes. In DILA Capital we invest in Growth Minded people.
My greatest takeaway from The Gift of Failure is that while educating kids to embrace failure, we are educating future entrepreneurs! When kids are afraid of failing, they start to take fewer intellectual risks. When we give more praise to the result than the road, we are sacrificing natural curiosity and love of learning. But if we educate our children that failure and rejection are part of the learning process and encourage them to try new things and step out of their comfort zone, amazing things can happen. If we teach our kids that mistakes are opportunities to grow, that failures or unsuccessful attempts are the same, then they will live through those experiences with more openness and develop a toolbox of coping mechanisms to lift them up and move forward in tough times.
According to Lahey, giving our children the “gift of failure”, provides children with the following characteristics:
- Meta cognitive
- Self efficacy
Aren’t these the exact characteristics we look for in founders?
Of course we are afraid to fail. We have been taught since we were young that failing is to shatter dreams and happiness. But, we must maintain that learning for learning sake far outweighs the negative impact of a failure. How we approach those failures can mean the difference between soul-crushing despair and the impetus to step up our game. The greatest entrepreneurs who failed in the past did not identify themselves as failures: they faced their failures head on, looked for lessons in those mistakes and emerged triumphant. Face failure and accept its valuable feedback.
It is obvious we do not want our portfolio companies to fail: we want to invest in the founders least likely to fail! Who are those entrepreneurs least likely to fail? Most probably those with the most experience! Experience from repeated effort. It would be ideal to back a founding team that has only been successful in the past: if you find them, please let me know. In the meantime, it’s important to understand that we all fail at some point in our lives and our careers. Those who fail, learn and get back up are the founders with true passion, real drive and genuine ambition. Those are the entrepreneurs we want to back, those are the people we want to partner with. Hopefully for us, those founders will have failed on someone else’s dollar in the past and we can capitalize on those past learnings.
I will leave you with a great Oscar Wilde quote: “Experience is the name everyone gives to their mistakes.” I hope you have amazing experiences, learn from them and then come to DILA Capital, so we can fund your new venture.