Failing With Humility

by Nathaniel Whittemore · 2009-11-19 10:04:00 UTC
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One of the things that is inherent in risky endeavors like venture capital is a tolerance for (or at least familiarity with) failure. Sometimes it's not graceful, but it's a part of the game, and learning to succeed often means learning to fail fast, and fail well.

Yesterday, VC Fred Destin of Atlas Ventures wrote a post on Silicon Alley Insider called "Why I Sent You A One-Sentence VC Rejection." The point of the post was basically to say that most deals get sourced because of trusted connections who introduce investors to new projects. Cold emailing a business plan doesn't create the sort of context that's going to help a potential investor move beyond their gut instincts.

While it seems harsh in some ways, the post is also about a sort of inner serenity with gut checking and the knowledge that you're going to miss sometimes. Destin suggests that everyone in the equation - investors and startups - need to be okay with the inherent volatility of the process, and not let failure or rejection get to their hearts.

The great example he uses is the Bessemer Venture Partners "Anti-Portfolio." Bessemer is one of the oldest venture firms in the country, started in 1911. As they say in their public anti-portfolio: "this long and storied history has afforded our firm an unparalleled number of opportunities to completely screw up."

The Anti-Portfolio is the list of all of the dumb decisions and great deals they passed up on. Some of my favorites include:

  • E-Bay: ""Stamps? Coins? Comic books? You've GOT to be kidding," thought Cowan. "No-brainer pass.""

  • PayPal: "David Cowan passed on the Series A round. Rookie team, regulatory nightmare, and, 4 years later, a $1.5 billion acquisition by eBay."

  • and finally, Google: "Cowan’s college friend rented her garage to Sergey and Larry for their first year. In 1999 and 2000 she tried to introduce Cowan to “these two really smart Stanford students writing a search engine”. Students? A new search engine? In the most important moment ever for Bessemer’s anti-portfolio, Cowan asked her, “How can I get out of this house without going anywhere near your garage?”"

The point of course is that it's okay to screw up, and that success is not about individual instances of triumph or rejection but a trajectory that points steadily upwards. It's a great lesson to persevere, particularly in this tough economy. If you know your idea is great and is going to be transformational, keep plugging.

And maybe apply to the Unreasonable Institute?

(Photo: hans.gerwitz)

Nathaniel Whittemore is the founder of Assetmap. Previously he was the founding director of the Northwestern University Center for Global Engagement.
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