Why failure matters

By Francisco Dao , written on October 9, 2012

From The News Desk

If you've never seen the 2001 documentary "," it is a fascinating study of the arrogance and collapse of a Web 1.0 era company. Kaleil Isaza Tuzman, the CEO of the startup chronicled in this film, stands out as the perfect archetype of everything that was wrong with the original Internet boom. And yet when I met him in 2008, he was remarkably humble.

I asked him how he recovered from being not just the poster boy of Dot Bomb, but from having a whole movie made about his fall from grace, and he told me how he spent days curled up on the floor of his New York apartment feeling like a broken man. Only after some time was he able to come to terms with everything that had transpired and literally pick himself up off the floor.

Recently, I saw one of Bill Gates’ most famous quotes, “Success is a lousy teacher. It seduces smart people into thinking they can't lose." It made me think about the inverse corollary. If success is a lousy teacher, then failure must be a good teacher, or at least a better one. But in order for failure to provide us with valuable lessons, it has to have an effect on us. It has to matter. In some form or fashion it should leave us, as it did Kaleil, temporarily curled up on the floor wondering what went wrong.

This is where I fear the tech community has gone off the rails with the “embrace failure” movement. Telling people to embrace failure devalues the lessons to be learned in defeat, in the same way giving every kid a medal just for participating devalues true accomplishments. It makes everything “okay," but everything is not okay.

Tolerating failure as a necessary byproduct of pushing the limit is a very different thing than believing failure is a good thing. Even worse, many entrepreneurs now celebrate their failures as if they were an indicator of their skill. This is as ridiculous as a race car driver saying his numerous crashes are what make him a good driver. While everyone understands that a racer running at the limit of his abilities will inevitably suffer some crashes, no driver would ever say, "Crashing is great! Crashing is proof that I'm a top driver!" Equating crashes with skill is clearly absurd, and yet the tech community’s embrace of failure borders on a similar line of illogical reasoning.

Perhaps even more troubling than the movement to embrace failure is the current trend of hiding failure in the disguise of acquisitions for “undisclosed amounts.” This farce is nothing more than a giant public relations scam that allows losers to parade around the tech community, as if they were winners. I often see these salvage exit entrepreneurs giving talks about how they found success. Success at what? At manipulating the tech blogs into misreporting on the failure of your company? Much worse than embracing it or celebrating it, these entrepreneurs choose to mask their failures in order to protect their egos.

Failure should neither be embraced nor concealed, for when we do, we strip it of its power as a motivator and a teacher. As entrepreneurs, we should be willing to endure the pain that comes from facing failure head on. When we hide it to maintain our public image, or celebrate it as some bizarre badge of honor, we deprive ourselves of the powerful lessons that it can teach us. To return to the Bill Gates quote, when we strip failure of its significance, it also becomes a lousy teacher. It seduces smart people into thinking that losing doesn’t matter.

If you’re wondering what became of Kaleil, moving on from the failure of, he realized that after the bubble burst many companies were in the same boat. Using what he learned, he founded a firm that helped failing Internet companies salvage their remaining assets. Eventually he would become CEO and Chairman of KIT Capital and KIT Digital.

I don’t know all the details of Kaleil’s return to success, but having failed so publicly, I doubt those days he spent curled up on the floor of his apartment were taken lightly or disguised as some kind of win.

[Illustration by Hallie Bateman]