Last night at FPLive I was chatting with an entrepreneur called Nick who has just closed his startup. He talked impressively about what he’d learnt and has an interesting idea for his next company which I am keen to investigate.
There’s an important point lurking in there. He has just failed with his first company but that isn’t putting us off looking at his second. In fact, the lessons he’s learned help his case.
It doesn’t happen as much as it used to but people still talk about the ‘fear of failure’ as being a much more acute problem here in the UK than it is in America, and how that dissuades people from starting companies and holds our startup ecosystem back. That talk gets my back up a bit, partly because fear of failure is rational (it hurts), but mostly because it becomes a self fulfilling prophecy – would be entrepreneurs hear that fear of failure holds our startup ecosystem back which makes them think that failure is more likely and deters them from starting their company.
Returning to my conversation with Nick. He has been working with a large corporate innovation lab and we were talking about what large companies can do to hold onto the entrepreneurs in their ranks and harness their creative power. Getting the incentives right is a big topic, covering 1) how much money they should be allowed to make, 2) how much control they should have and3) what should happen if they fail.
As an investor who’s worked with lots of entrepreneurs I know that if the aim is to retain the best talent the answer to the first two parts of this have to be 1) they can make an awful lot of money and 2) they need to be given control of their startup.
Prior to last night my view on the third point was that companies should make it easier for their employees to be internal entrepreneurs by guaranteeing their jobs in the event of failure. Now I’m not so sure. Nick pointed out that fear of failing is often highly motivating. When your back is up against the wall you are more likely to be out of bed at 6am fixing things, morel likely to burn the midnight oil, and generally more likely to keep battling when the odds start to look impossible. What he has seen is that when people can walk back to their old jobs they are less afraid of failing, that they work fewer hours, and that they give up on the startup idea more easily.
So my emerging view is that fear of failure is not really the problem here. Rather I think we should be working on the other side of the equation – courage. More specifically – how do we help people muster the courage to start companies, even when they understand that painful failure is a possibility.