Feeling the pain
It’s relatively easy to evaluate a repeat entrepreneur whose first company was successful. Although luck is always a contributor to a company’s success, the fact that the entrepreneur built a successful business shows that they also likely have a good feel for market opportunities and are able to build and lead a team to take advantage of these opportunities. You’re more likely to do something well if you’ve already done it well before.
But what about a repeat entrepreneur whose first company failed? On one hand, they have the experience of running a business and the learnings that come from that. On the other hand, the fact that the business failed might suggest that they’re not good at identifying market opportunities and executing. To understand the signal that the fact that they’re a repeat entrepreneur carries for their chances of succeeding with their new venture, you need to understand the reasons why the company failed. Was it the lack of a market, the entrepreneur’s inability to build or lead their team, luck, or something else? Your view on the reasons for the failure will determine whether the fact that they’re a repeat entrepreneur makes them more or less likely to succeed in the future.
While building up to this view, it’s useful to take into account one more variable. And that’s the extent of the entrepreneur’s reaction to the pain resulting from the failure. All failures are painful, and you can argue that some failures are more painful than others. For example, all else equal, a failure where you lose more time or money hurts more than one where you lose less time or money. And a public failure hurts more than a private failure.
However, what’s more important than the objective pain resulting from the failure (if there is such a thing) is the subjective pain that the entrepreneur feels. Depending on your character, you might feel much more pain from a private failure that you worked on for a couple of years than that which someone else feels from a public failure that they worked on for over a decade. Some people have such an aversion to the subjective pain of failure that they will go to tremendous lengths to avoid experiencing the same pain again.
This line of thought also extends beyond business failures. For example, the subjective perception that you have of some personal failures as a child, which is influenced by how those who raise you make you feel about your role in and responsibility for these failures, can also cause you to take action to avoid experiencing the feeling of similar future failures at all costs.
There’s a saying that “the harder you fall, the stronger you rise”. I think it’s actually “the harder you think you’ve fallen, the stronger you rise”.
Many great entrepreneurs think that they’ve fallen to tremendous personal or professional lows in their past. They’ve felt the pain so strongly that they will go to great lengths to avoid feeling it again.
Originally published at Thoughts of a VC.