When failure is just the first step to great business success

IT’S almost a cliché nowadays that failure in a hi-tech business is the best training ground for building a successful one. Yet the media and the public alike tend to sneer at these misfires with new ventures or products.

In fact, Silicon Valley is littered with failures that turned out to be the precursors of spectacular success.

It is the stuff of legend that WhatsApp co-founder Brian Acton was turned down for jobs at Twitter and Facebook in 2009, the year he and partner Jan Koum launched their startup. A mere five years later, the pair sold their business to Facebook for $19-billion.

Acton’s tweet after his second rejection could well have been about his disappointment, but instead communicates an optimism that will go down in business history:

“Facebook turned me down. It was a great opportunity to connect with some fantastic people. Looking forward to life’s next adventure.”

This story came to mind when I read The Five Year Mark by South African entrepreneur Mike Saunders, founder of digital media agency DigitLab. One of the essential lessons learnt while chasing his dream is about the power of failure.

He pinpoints the fundamental core of learning from failure: “All of my failures in business have made me less concerned about failing. Failure just means that we’re trying, that we’re pushing the boundaries, that we’re not happy with the current state of things, and that we believe that we can do more. Each time we fail, we learn.”

This principle is at the heart of the spectacular success of Israel’s hi-tech economy, chronicled in the book, Start-up Nation by Dan Senor and Saul Singer.

They note: “Most local investors believe that, without tolerating a large number of . . . failures, it is impossible to achieve true innovation.”

They quote a 2006 Harvard University study which showed that entrepreneurs who have failed in their previous start-up have an almost one-in-five chance of success in their next. This is far higher than for firsttime entrepreneurs, and similar to those with a previous success.

It applies equally within a business. One of the great role models in this context is South African-born Elon Musk, who has brought Tesla Motors and Space X back from the brink of disaster. After the failure of his Falcon 1 rocket during a launch in 2008, he urged his despondent staff not to give up. He added: “For my part, I will never give up, and I mean never.”

Less than two months later, a new Falcon 1 became the world’s first privately built rocket to enter Earth’s orbit.

As Saunders puts it in his book: “Failure in business doesn’t mean you’re a failure — you are only a failure when you stop trying.”

His first two businesses had both been “failures”, but each taught him essential lessons for any start-up in South Africa.

“My first failed business taught me that marketing and sales are essential for business success . . . My second failed business taught me that industry solutions must be affordable for the market.”

His third start-up succeeded, and he sold it as a result of learning yet another essential lesson: “I only have a certain number of hours in the day and I needed to put my energy into what mattered most.”

Saunders’s book is not just about failure. It offers advice to start-ups: in particular, having a willingness to change as a new digital world emerges.

Arthur Goldstuck is founder of World Wide Worx and editorin-chief of Gadget.co.za. Follow him on Twitter on @art2gee