A Closer Look at the “F-Word” – How Failure is Perceived in the Startup World
Merriam-Webster defines failure as “lack of success” or “a failing in business”. But do you think Bill Gates or Elon Musk would define failure the same way? For a startup life cycle, it is considered part of the journey to try new things, learn, and adapt to make your idea or product succeed. As such, failing along the way is part of the nature of a startup. Still, there seem to be differences when it comes to different nations and different cultures, so we asked our alumni and mentors to chime in on how they define and view “failure”, as well as their experiences and lessons learned from different markets.
Practice Makes Perfect
During the innovation process, failures are inevitable. However, in Germany and Singapore, the word “failure” in the context of startups seems to have something inherently negative and finite associated with it. Having participated in our Silicon Valley program in 2017, Dirk Schart, Co-Founder, CMO and President U.S. of RE’FLEKT, noted: “Despite us Germans using the saying ‘Übung macht den Meister – practice makes perfect’ we do seem to still look at failure as something very negative.” In contrast, U.S. startups who “fail” are looked at as simply having made a mistake in one aspect which requires tweaking and repetition in order to ultimately succeed.
Instead of focusing on potential failure Marc Filerman, Program CEO of German Accelerator Life Sciences, thinks it is more important to focus on validation and de-risking: “You need to de-risk through searching. Searching is a scientific process. You must validate your problem, your customers, your solution, and your business model.” There are plenty of examples of how successful entrepreneurs and business owners who’ve failed or almost failed before they made it big. Among the notable examples are Jack Ma, whose now giant Alibaba couldn’t make revenue during its early days, or business magnate Richard Branson, who once attempted and failed to compete with soft drink giants. He says “do not be embarrassed by your failures, learn from them and start again.”
Sharing Is Caring
When examining failure in the startup context, an important aspect of learning from failures is the act of sharing with others in a meaningful way. Having a supportive network to openly discuss learnings along the way can be helpful and an important outlet for founders so they may be able to avoid the pitfalls of others. In fact,students at MIT are encouraged to share their failures in order to destigmatize it and build resilience for future endeavors.
What can really be helpful for entrepreneurs is to have an active network as well as mentors and coaches, as one can benefit from learning valuable lessons from every new connection. German Accelerator mentor Lisa Neuhaus, Director of Business Ops & Sales Strategy at LinkedIn, goes a step further and names three types of network individuals: mentor, coach, and sponsor. She views the differences as “mentors can be approached with specific questions, conversations about pricing for example. Coaches are people that a startup continuously and more closely works with. A sponsor is someone who knows the founder and the startup, who will and can put in a good word for you.”
Transparency Within the Team
It’s not only about the external network but also about the team within a startup. Open communication and analysis of “failures” is something that many stress as being important, especially when operating in a new market. Neuhaus believes “mistakes happen but then it’s important to communicate them openly in a team.” She recommends analyzing data and process learnings by conducting a post mortem after a “failure” in order for it to become a positive educational experience. Neuhaus suggests startups “have some humility and understand that they are starting from scratch.” German Accelerator alumni Aleksander Ciszek, CEO of 3YOURMIND, adds “in the startup world we have to learn fast and build minimally viable products, test assumptions, and see what works.”
The Acceptance of Failure
German Accelerator mentor Daniela Caserotto-Leibert, Head of Business Development U.S. at Speedinvest, observes the following cultural difference: “As Germans, it is seen as unforgivable to make mistakes and for Americans, it’s a pat on the back or the shoulder when failures happen. Americans just tend to move on from their mistakes.” Timothy Toh, German Accelerator mentor and General Manager (APAC) at Perma Pure, who has worked in both Europe and Asia adds “I have American friends who failed five times but are still going on. For them it’s accepted. There’s no stigma.” He compares this track record to colleagues in Singapore for whom “failing tends to give the idea that you may not succeed again and not very many people will be willing to take that risk (again).”
Every culture has a different perception of failure and some countries with younger startup ecosystems seem to struggle with adapting the U.S. view of failure. Germany does not seem to be the only nation to possess a cautious view on failure in a business context. Singapore-based mentor Timothy Toh explains that “Singapore is not a good place to fail” as the startup ecosystem is a relatively young one, and the culture of failure as it is accepted in the U.S. is still new in an Asian context. This kind of mindset takes time to be accepted socially.
Failure vs. Learning
If failure is viewed as a process, then it becomes easier to accept the notion that “failure means to learn continuously,” as defined by Lisa Neuhaus. She further explains how startup founders must consistently check to make sure that the business model or product-market fit is still working – and if it’s not, it should not be considered a failure, but a reason to reorient itself. One method to foster continuous learning is the importance of communication and motivating teams. Founders should encourage their teams not to be afraid of making mistakes, as this would mean they are denying themselves the opportunity for growth.
This perception of learning is also something that tends to be viewed as a process that can be or should be completed at some point. Schart states “in Germany, it seems that learning is only allowed to take place until we’ve reached a certain age. At a certain age, or if you have a certain senior status at work, as a manager, for example, it seems to be frowned upon to admit to not knowing something. It is assumed that one knows ‘everything.’ This is completely opposite from the American entrepreneur’s mindset, where they strive to continue learning over the course of their lifetime. Especially in the startup world, it would help to be open to learning because there is not just one method or way of becoming successful.” Filerman strongly confirms this: “Failure is part of being an entrepreneur. It’s okay to fail, just be ready to move on. Failure offers opportunities to learn so use it to succeed.”
Remind Yourself of the Lessons Learned
As a method to learn from past mistakes, Schart “started to write down my learnings and track them. I look at them from time to time, when things are not going smoothly, to remind myself of the learnings. And these experiences and learnings are, in my opinion at least, as much worth as an MBA and you only have to pay for it with your nerves.”
It’s Time for Change
Looking at Germany and Asia, it seems change is needed in the startup world, and Schart hopes to “instill this kind of culture and thinking also in Germany, so in the future, failure should not be viewed as final, but rather as a trial and error approach.” As one of German Accelerator’s alumni Mostafa “Mo” Akbari, President and Founding CEO of HoloBuilder, puts it: “There is never a reason to give up: Either it works, or it doesn’t work, but there’s no giving up. We were close to dying as a company multiple times. But we were like zombies, and we always came back.”