What if things don’t work out for you?

By Francisco Dao , written on June 13, 2013

From The News Desk

Have you ever considered the possibility that things might not work out? I don’t mean your current startup or your five-year plan, but what if your lucky numbers never hit? What if your startup fails, and then the next one, and the next one after that? How many times can you “celebrate failure” before you give up?

Even if you tell yourself you’ll never stop trying, you might still be struggling when you hit 40 or 50 or 60. Then what do you do?

I know we’re not supposed to talk about such things in the Valley, but it’s a very real possibility. Contrary to the pep talks, persistence doesn’t always pay off, and no matter how many times we tell ourselves that everything will work out in the end, it might not. Part of the problem is that we only hear from the winners. Even Failcon only features people who came back from failure, not people who ended up broke and homeless. The real losers, the ones who never bounced back, get swept under the rug.

If you’re an engineer, you’ll probably still be able to find work, although with the tech industry’s bias towards youth that’s not a guarantee. For the young startup founders reading this, would you hire a 50-something engineer with a resume full of failed startups? If you’re the business guy, the “hustler” in the equation, your prospects are even dimmer. All the other hustler types who went the corporate route have 15+ years of sales and business development experience. Your main accomplishment is burning through all your VC funding 4 or 5 times.

Some of you will end up leaving the startup ecosystem. After the original dot-com bust, people fled back to consulting, banking, real estate, and various other industries. I see this in LA all the time with people who couldn’t make it in entertainment. Most failed actors give up and move away after a few years to live normal 9-5 lives somewhere in middle America. It often happens when they get married or have children.

It’s one thing to be a struggling actor, or entrepreneur, when you only have yourself to feed. It’s another thing to keep fighting for your big break when you have a baby. Will you still be able to risk being an entrepreneur if you have a child at home counting on you? Are you willing to put off having a family until you hit a big score that might never come? I know you don’t want to think about it, but the odds are what they are. Not everyone will hit it big.

Part of the reason nobody in the Valley talks about this is that it’s bad for business. The Valley needs to perpetuate the fantasy that everyone will hit it big, because the industry thrives on convincing you to take risks. In the same way Vegas would fold if nobody gambled, Silicon Valley would collapse if entrepreneurs stopped taking chances. It’s not a bad game and obviously people win big with some regularity. But you should be clear that the system doesn’t care about you personally. It doesn’t have to pick up the pieces of your life if things don’t work out.

This total blindness to the possibility of ultimate failure is what bothers me. Take for example Dave McClure’s advice that you shouldn’t buy a house, because it’s too risky. Instead he suggests you invest any money you have in startups. There are many good arguments both for and against buying a house, but telling people that early stage angel investing with limited funds and no experience is a smart money move is akin to telling people that playing the lottery is a sound retirement plan. Needless to say, playing the lottery, whether with scratchers or with Web 2.0 startups, is not a smart retirement plan.

I’m sure Dave has the best intentions, but he also has a $30 million dollar fund and the ability to make many bets. Should your two or three angel investments fail -- and the odds are not in your favor -- it’s you who has to figure out where you’re going to live.

I’m not trying to discourage anyone from pursuing their dreams, but these are practical matters to think about. Do you put a time limit on your efforts and quit chasing the dream when you reach 30 or 35? Do you take the safe route and get a job when, or rather if, you get married and have a family to support? How will you know when it’s time to walk away? Most of all, what will you do if things don’t work out?

These are real questions to consider because, despite what Silicon Valley tells you, not every pirate finds the buried treasure. Most of them end up drowned, marooned, or killed in a sword fight.

[Illustration by Hallie Bateman]