Success has many fathers, while failure is an orphan, the saying goes. But if you watched or listened to the media commentary surrounding the recent collapse of Unfiltered, the business founded by Jake Millar, whose backers included some notable figures with triumphs and disasters of their own, you’d be forgiven for thinking that failure was a prime source of entertainment among those who should know better.
Most everyone who has had any success in any sphere of public life, if they are honest and possess even an iota of humility, will tell you that failure has been their greatest teacher; a necessary ingredient in their ultimate success.
What if Richie McCaw had come off that Cardiff pitch in 2007, the graveyard of his dreams and a nation’s expectations, and taken all the criticism – which was relentless for weeks, if not four entire years – to heart? What if he’d quit? To his credit, he had enough faith in himself to lead his team to back-to-back World Cup victories, confirm his place as the GOAT, and shut his detractors up forever – but our young entrepreneurs, facing the same kind of opprobrium and vitriol, may not be able to summon the same resilience, and we will all be poorer for it.
The business world is no different. Take Y Combinator, one of the most prestigious incubators in the United States. Thousands of entrepreneurs compete to get into the programme, which has a staggeringly low acceptance rate of about 1.5% (even Harvard’s rate is three times higher). You could be forgiven for thinking that having been subject to such intensive evaluation, accepted businesses would have a strong chance of success, but evidence shows the failure rate of businesses in the programme is above 90%. Think about that: Of 10,000 start-ups applying, only 150 get accepted, and of those just 10 become successful. Creating a business from scratch is harder than it looks. Even conventional businesses have failure rates of over 90 per cent.
Business itself has changed to a remarkable degree since the pre-digital age. Historically, a successful business was judged by its profitability and balance sheet, yet today many businesses are not profitable (Uber) or even tangible (Bitcoin), yet are still viewed as successful enterprises or sound prospects for investment. A mere tweet by Elon Musk about cryptocurrency Dogecoin sent the share price up by nearly 25 per cent – but what true value was added? In terms of how we evaluate a given business, often hope and expectation are now equal to whatever ‘real’ value the business may possess.
All of this illustrates a couple of things: our culture and economy is often placing the wrong value on businesses – ranking noise, hype, brand presentation and influencer status above measurable output, productivity and profit – and we are too quick to blame punish entrepreneurs for this larger cultural failing. If a business like Tesla (sometimes valued higher than all the other major car companies combined) ultimately doesn’t work because it can’t justify a share price that was heavily influenced by Elon Musk (himself one of the most confounding figures of the digital era), is that the fault of Tesla’s founder, or of all the people who rushed to invest based on tweets or FOMO?
What are we doing to our young entrepreneurs by compounding their setbacks with ridicule and cruel hot takes? Why would any up-and-coming business person or founder have a go if the price of failure is this high? What does it do to their mental health? And if they do come up short, why would they ever get out of bed and try again? Evidence suggests that entrepreneurs with at least one failure behind them are more likely to build a successful business in the future. Certainly, founder worship of the kind we’ve seen in Silicon Valley may be going too far in one direction, but if every bright, ambitious Kiwi is intimidated into playing follow-the-leader in their career, we’ve relinquished the particular advantage we have in our market.
If our attitude in New Zealand business and media culture is that failure is unacceptable and will be mocked and punished brutally, we will make Kiwi entrepreneurship extinct, and fast. We will not have innovation in New Zealand, we will not grow, the new brain drain will accelerate, and you can forget opportunities for start-up investment, new industry development and any kind of pace in economic recovery.
As Churchill said, success is not final; failure is not fatal. It is the courage to continue that counts.
– Andrew Barnes is the founder of Perpertual Guardian and a major proponent of the four-day week.
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