Published in the San Diego Union-Tribune, January 13, 2020
“If at first, you don’t succeed, try, try again” is famously attributed to Thomas Palmer, a schoolteacher, circa 1820. It was an amalgam for his students of “don’t give up” coupled with “you will do better the next time.”
However, research from Francis Greene, professor at Edinburgh University Business School, suggests just the opposite. You can certainly try again, but if you don’t succeed the first time, he says it is actually more likely that you will also fail the second time as well.
Are you telling me that my life is one and done? What happened to the mantra of passion, persistence and second chances? Greene’s research “shows that entrepreneurs don’t actually learn from their mistakes.” This must be heresy. We all know that a venture capitalist wants to bet on the entrepreneur who just came off a failed company. The assumption is that he won’t do the same stupid things again. Unfortunately, Greene’s research along with basic psychology begs to differ.
According to Greene, “Learning is a complex process” and learning from our mistakes is not something that comes easily. What Greene finds is that “there is precious little evidence that failure helps people learn to be successful.”
Greene studied 4,800 German startups to see if the companies started by failed entrepreneurs did better than the first-timers. “They didn’t. In fact, they had poorer outcomes.” His study echoes a previous study done at Harvard Business School which confirmed the same statistic. Greene makes his point with a sharp knife, “There is no indication that business failure triggers a reflection process in which entrepreneurs look back on mistakes they have made and adapt their behavior accordingly.” Wow, we entrepreneurs seem to be a pretty stubborn bunch.
But as usual, there is a key to this puzzle. We know the famous 10,000 hours needed to become a chess master or ski racing champion, but that is because the board is the same and the mountain doesn’t move. In contrast, in a startup, the challenges are constantly changing. The second company is different than the first company — different customer, different technology, different market. What was a fun house with mirrors turns into a haunted house with ghosts.
Still, I would like to take modest umbrage with Greene. Some learning from the previous failure can and does occur. Yes, some impetuous stupid behavior can be avoided, but the unfortunate truth is that most of our psychic core thinking is relatively immutable. It is easy to listen and hard to hear. Remember 2000 after the Internet meltdown and crash, when every entrepreneur said to god, give me one more chance and I promise I won’t louse it up? But they did it again (financial crisis of 2008). Greed and stupidity always triumph over hindsight.
Greene goes on, “There is a tendency to simplify the stories we tell ourselves, which combines nicely with another common human frailty — blaming past failures on external events.” My dog ate my homework, my partner was an idiot, the venture firm was evil, the customer didn’t understand the product, the bank pulled our line, the cost of goods was too high, etc.
Still, there is hope and salvation, but it requires the long look into the mirror and the painful self-examination. When you see the persistent wart that cannot be easily removed, find a partner who can compensate for that feature. If you can’t reach the shelf, get a ladder.
Greene’s best advice is for the entrepreneur to hold a “pre-mortem” — a dissection of what can go wrong with the project, before you launch it. He also argues persuasively for needing domain expertise — “not only the know-how, but also the know-who.”
Notwithstanding, the research and the historical imperative that supports the data, I still believe in the human spirit and the ability to change and learn. Sure, I will still make mistakes, but not the same stupid, dumb ones I made on the last project. And since I still can’t find anyone who will hire me, if I don’t start the next company, then someone else will. It might as well be me.
Consider this: Spielberg was rejected from USC film school, Oprah was fired as a television anchor, Disney was fired because “he lacked imagination.” The entrepreneur gene is relentless.
Rule No. 642
Fail first, succeed later.