Entrepreneurship@Cornell Celebration 2012
Failure: Necessary for Success?
Failure is often referred to as a necessary evil in the world of startups. Venture capitalists and entrepreneurs debated the validity of that statement in a back-and-forth panel discussion titled “Failure: Necessary for Success?”
Sponsored by the Cornell Entrepreneur network, Cornell Silicon Valley, and Cornell Wall Street, the event was held at Sage Hall April 20 as part of Entrepreneurship@Cornell Celebration 2012. Rhett Weiss, executive director of Johnson’s Entrepreneurship and Innovation Institute, moderated the panel, which included two venture capitalists: Josh Wolfe ’99, co-founder and managing partner of Lux Capital, and Bill McAleer ’73, MBA ’75, co-founder and managing director of Voyager Capital; and two entrepreneurs: Meredith Rosenberg ’92, senior vice president of Fullbridge, Inc., and Vijay Nathan, MBA ’11, founder and CEO of MyReci.
While the entrepreneurs and the venture capitalists had different perspectives on what constitutes “failure,” the panelists agreed that there are three major processes: informational, analytical, and behavioral (with the latter being the most important). In their experience, failure is a cycle of building, learning and readjusting that happens within these processes.
This led to the question: “How do you know if you are failing?” McAleer responded by outlining three questions to ask yourself when looking for signs of failure from the point of view of the venture capitalist:
- Does the entrepreneur have a clear focus or is he/she drowning in opportunities?
- Where does the market stand?
- What is the team dynamic?
If the entrepreneur is overwhelmed with ideas, the market isn’t ready, and if the team doesn’t seem to be on the same page, you could be looking at a failing startup.
The panelists all agreed that in order to have success, you need a CEO who is able to quickly react to changes in the market, team, and technology. And you need to remember that failure does not mean the game is over. Wolfe added that leaders “need to recognize other people’s leadership strengths and know when to step back.”
The panelists gave more general advice during the talk, including this tip on financial engineering: Get a good lawyer; most of their financial lessons came through legal fees. They also stressed that failure is often a product of not being true to yourself. Therefore, you need to surround yourself with both cheerleaders and people who will always be honest with you.
In the end, it was clear that having failed is not a liability if you assess your failure and learn from it. In fact, in many cases, failure is seen as an asset in the world of startups.
Nichole Grossman is the institute coordinator for Johnson’s Entrepreneurship and Innovation Institute, and program specialist for Johnson’s Emerging Markets Institute.