The lies we tell ourselves. “I’ve learned more from my failures than my successes”

One of the things I’m fascinated by are the small lies we tell ourselves. They usually take the form of aphorisms that seem to be true. Or more to the point, they have an important subtle message, but they’re perceived as whole truths. And, often they’re so ubiquitous we don’t even give them a second thought. But, these small lies end up having a pretty distorting effect on our behavior or our perceptions.

One example of this is the statement “life is short.” I hear it all the time. I understand why people say it. What they mean is “live life to the fullest.” But we don’t say that. We instead say “life is short.”

Of course, life is not actually short. For most Americans life is actually long (knock on wood). Average male lifespan in the US is 75 and average female lifespan is 80. But, when you internalize, literally, “life is short”, you can lure yourself into behavior that is harmful (especially financially) where you play for the short term when you need to play for the long term. Einstein is famously thought to have said that the most powerful force in the universe is compound interest. I believe that our dual misunderstanding of “life is short” and our inability to appreciate the value of compounding combine to lure people to make very bad investing decisions.

In the world of entrepreneurship I think the most dangerous lie we tell ourselves is “I’ve learned more from my failures than my successes.” It’s simply not true and I want to talk about why.

What I believe IS true is the statement “I’ve developed more CHARACTER from my failures than my successes.” But, I firmly believe we LEARN more from our successes by far.

Let’s look at the data first. In the paper “Performance persistence in entrepreneurship” (PDF), Josh Lerner and his collaborators at Harvard University demonstrate that the success rate of a first-time venture-backed entrepreneur is about 18%. If that entrepreneur fails and tries again with another company, their success rate only improves to 20%. Not much. BUT, if that entrepreneur succeeds in their first company, their success rate for their second venture goes up to 30% — over a 65% improvement in expected outcome.

Why might this be? In my opinion it has to do with how large the information space that gets explored by a company over its lifetime. Let’s imagine an entrepreneur makes 5 decisions per day (some big, many small, and involving all sorts of things from partnerships, product features, marketing, hiring/firing, and how to allocate everyone’s time). Over the course of 3 years, that’s a HUGE decision tree with a massive number of potential paths (roughly 5^750 unique paths assuming a 50 week year and a 5 day workweek). 5^750 is this number, fwiw.

168850850305727091395186825713912447112441058150046927050324723890449107812858660398554055697372954299116776644433651870505231901712461662116793144847950712000881086630220426140201590160287572958546330981647561466586019225296753645395632352672757468805020446337326822341458269676821758973637253679519824654862828260183804589283422795141880659376822043675041721215149214186959669079228162626416267478638199550182946764747764607788135575613004500768632174606656508945368003981851086369760095440284430878818966448307037353515625

If you fail, all you know is that the particular path you took through that decision space didn’t work. But, it really doesn’t tell you much about which of the other paths might work.

But, if you succeed, you’ve created a pattern for success; a guide through that huge information space that can give you a sense of where to go next time. It helps you understand, at an intuitive level, what feels right and what feels wrong. In essence, it gives you what everyone calls a “gut feel” for success. And, it’s why venture capitalists hone in on past successes much more than past failures.

One of the things I tell folks who are early in their careers and who are thinking about joining a startup is “don’t go to a raw startup of 3-4 people. Go to a place that has perhaps 30-50 people and where there is a sense of momentum in the business.” The reason I say this is that I think it’s immensely valuable for people to participate in a pattern of success. That will shape the way you think and make you immensely more valuable to the next startup you go to or start yourself. The most important thing you can develop early in your career is a gut for what success feels like. The only way to do that is to be part of something successful.

So, please don’t tell yourself that you’ve learned more from your failures. We all get character from our scars, but we learn far more from our successes.

44 Comments

  1. Jason Cohen says:

    Yeah, but only like 1/3 of that decision space is internally consistent, so that’s not so much.

    :-)

    Welcome to WP Engine!

    P.S. Good thing we’ve selected one of the few 10^-118-th paths which seems to be working.

  2. While I agree with you about learning more from success than failure, I think one of the reasons this phrase is oft repeated (at least in the way of advice) is to emphasize the importance of failure on the path to success. While succeeding on your first shot is great, most people don’t, and quit right then and there. Accepting failure as a necessary part of success is important for people that are just starting out.

    Just like your first example (‘life is short”), it should probably be said differently.

  3. Darian says:

    I agree with much of Joe’s comments. The only clarification I’d make is that the following statement: ” if you succeed, you’ve created a pattern for success; a guide through that huge information space that can give you a sense of where to go next time.” doesn’t always ring true.

    In some cases the success isn’t a pattern but just drive and luck (with emphasis on the drive). I know plenty of entrepreneurs who are successful the first time, the next effort is a failure, then they hit on another success later. Clearly they are smart driven people but not always able to replicate success. So either their decision tree was faulty, or they chose to ignore the success efforts that made their last venture work…

    Of course, in the end, few things are ever just black or just white. But thanks for the post. It definitely has me thinking about no longer saying how much I learned when things went so wrong. Probably more comfort than anything else.

  4. Nathan Savir says:

    I didn’t read the paper, so maybe they control for this, but I wonder how much the higher success rate for successful entrepreneurs on their second project is due to the entrepreneur learning from their success, and how much is due to the other advantages they gain from their first project being a success. If you have a good track record you can attract better talent, more easily attract investment, etc. I would imagine these factors would have a substantial impact on the chances your second startup has for success.

  5. Jack Dempsey says:

    Is this not a huge example of selection bias?

    Paraphrased: If we fail we only know that the particular path didnt work, but if we succeed we’ve created a pattern for success?!

    That seems to be onesided logic.

    I would argue that in either case, if you pay attention to many things: what decisions you think matter ( and did they ), when you were sure you were right/wrong ( and were you ), whether you succeeded for the right reasons or failed for the wrong (and vice versa), that is what matters.

    I agree that it’s likely better for most first time startup employees to join a company already doing things well. But blanket statement we “learn more from success” is just wrong.

    We learn when we pay attention. Maybe that’s when things are good. . Maybe when bad. Maybe for the best of us, it’s all the time?

  6. Samir Jupta says:

    Don’t agree. The reason the “successful” first timer has better odds the second time is he/she has the capital from the first success to make mistakes and keep going without having to have outside investors.

  7. Peter says:

    This post smacks of the arrogance of someone who has succeeded more than failed. What is your definition of success anyway? Was Tesla successful? There are plenty of counter-examples where failure has created an important learning that led to success. Steve Jobs needed the experience of failure to come back to bring Apple back from the brink. He learned what really mattered by failing.

    What have the founders of Instagram learned? How to play the Silicon Valley game? If the goal is to make a bunch of money, well I guess they have succeeded. As for making an impact on the world, well we’ll see.

  8. Yashpal Maji says:

    Thank you for the post, Joe. The “pattern of success” is the definitive stroke for the genius. We get enough realty stories from teens making the fast lanes in the Valley. Building the non-negotiable art of failures must be the character ‘scars’ we talk about.
    The taste of success is great way for all of us.

  9. I dont’ believe that the HBS paper you quote support your thesis, quite the opposite. The fact that 2nd time entrepreneurs are more likely to succeed if they succeeded the first time does NOT prove they’ve learned more. It proves that a) they may be more skilled and b) success breeds success in a kind of self-fulfilling prophecy.

    On the effect of learning, data in the paper tends to support the opposite of your view: “However, we find a performance differential [from first tier VC firms] only when venture capital firms invest in companies started by first-time entrepreneurs or those who previously failed”

    While the data is not clear, my intuition is to disagree with you. I’ve done 4 start-ups, I can tell you I learned A LOT more from the two that failed than from the two that succeeded. The reason is simple: you explore a lot more paths when you fail, and reflect a lot more – you need to.

    Also, I’ve met many entrepreneurs who succeed in their first venture and fail afterwards, because their first success brought them undue confidence in their ability.

    The feeling of invincibility from “the gut feel for success” proved short lived…

  10. Omar Farooq says:

    Absolutely right

    I had a 6 years stint as head of business unit and head of HR with a Citigroup invested firm- some of them good , some of them bad- but the firm after inital success- coasted and didnt really succeed
    Now when I have my own venture- this is a battle of will to change- some set pattern of thoughts, habits , and ways to approach business which I think will not work
    I have had some intiial successes and am building on them- and yes learnt more from 12 months here on how to succeed than in my last firm

  11. Chip Wilkes says:

    Generally I never fail but rather loose passion.. and choose to pivot. It about understanding what’s working and what’s not usually ” if its not working” that doesn’t mean I failed, it just means it is not working. Knowing yourself and knowing when to pivot is success. I prefer to say “Try, try, try again” vs “I learn from my mistakes”

  12. [...] 本篇译自 Joe Kraus 的博文,所有权及观点归原作者所有,本人仅做翻译。 [...]

  13. David Beyer says:

    Joe,

    I read through a bit of the paper and somewhat disagree with your claim. Overall, the authors seem to indicate that first-time venture success creates a kind of “Matthew Effect” (http://en.wikipedia.org/wiki/Matthew_effect_(sociology)). That is, good market timing, which increases the odds of venture success, will bestow upon that entrepreneur the aura of above-average competence both in market timing and managerial talent, which then attracts key resources for the next venture.

    But you present a somewhat different explanation for the increased likelihood of second-time success, which has to do with the “information space” explored during a startup’s lifetime. It’s definitely interesting. Basically, the more decisions we make, the better we get at making decisions. Sadly, this isn’t completely true (a quick look at the annals of cognitive science and decision-making paints a pretty bleak picture). I also think that founders tend to usually be surrounded by such a bulwark of expert and varied advice as the startup gains momentum, that it’s hard to impute too much to them alone. It just occurred to me to ask, are second-term presidents (presumably the first term was successful) better than first-termers? I don’t know. But it seems like a potentially decent comparison.

    I think what you’re alluding to is the idea that practice is necessary for acquiring and improving a skill in the general sense (i.e., make more decisions over more time and you will get better at it). But in this case, we’re talking about two separate skills (the study did not find a correlation between them). The first is market timing and the second is managerial talent. I’m not sure that spending 3 years running a startup is likely to improve the entrepreneur’s knack for market timing. Quite the contrary, I believe being a VC and seeing thousands of deals over a multi-year period is likely to better correlate with that ability.

    As for managerial talent, that surely is a skill honed over time. But it’s unclear whether a successful startup trains for that (versus a failed one) except insofar as it allows you to step through each phase of growth (albeit once). I’d say the more likely scenario is that success attracts smart people to the table. As a startup continues to grow, experienced industry insiders will flock to it either as executives or board members, providing invaluable guidance (which of course serves to make that leader a better decision maker). If the exit’s a big one, then those insiders are a great resource to draw on for the next company (esp. with regard to market timing as they’re quite in the loop).

    I personally believe that we tend to bestow upon highly successful entrepreneurs an air of invincibility, which doesn’t always match their actual, true skills (unless you count cultivating that air a skill in itself :)

  14. Rohan says:

    Agree 100%.

    It’s healthy to look at a failure as a learning experience. There’s no other way to keep ourselves sane.

    But, if we have to built, we’d rather build from our successes. No doubt about that.

    We don’t go into a new situation and think ‘oh.. how did I do it that time I fail’.

    More of ‘oh.. how did I do it that time I kicked ass’ helps..

  15. Andrew Tschesnok says:

    As some have pointed out about selective bias. We only know that people who succeeded twice are better at being successful entrepreneurs when compared to ones that failed twice. If someone succeeds at their first chance, perhaps they are just better at it and will succeed again. Who actually learned more is very hard to say.

  16. Joe, you can’t discount the halo effect of success which makes it easier to hire, fundraise, get press, spend money and motivate your team. The halo effect is applied regardless of whether anything was learned and can have a material impact on the success of a second startup.

  17. Waqas Ali says:

    I agree that success is much better experience as compared to the failure, also reaches you to the reward. And yes, we are continuously fooled by such wrong advices.

    There should be a tool to ‘Report as Spam’ to such ‘small and big lies’ which are everywhere on the web. I also think ‘Do What You Love Is Another Plain Wrong Advice.’ I actually wrote about that.

  18. Dom Camus says:

    Have you read Tim Harford’s book “Adapt”? It’s mostly about the dynamics of failures (and trying again). His conclusions don’t quite contradict yours in that he focusses more on the idea of failure as a necessary side effect of experimentation. Nonetheless, in this context I think I’m not yet fully convinced that learning more from failure than success is wrong.

    Possibly the real lesson is that we should beware of the oversimplification of complex issues that pithy one-liners generate?

  19. David Kuchar says:

    Some degree of start up failure is simply founder incompetence. The numbers could just indicate that there was some signal in those failures. IE: some people succeed despite incompetence, probably more people fail because of incompetence.

  20. Lindsey says:

    I like this post, particularly because it challenges my strong belief in learning from failure, rejection and criticism. I have spent a lot of time honing my ability to learn from all three.

    But I love your argument, and the challenge to a repeated adage that has become trite.

    The key is learning from a pattern of successes and failures, and using that knowledge to guide the next move — if you don’t take time to learn why you failed or why you succeeded, there is no progress.

    Thanks for the food for thought!

  21. Mark Chapsis says:

    disagree. Success leeds to more contacts and financial capital, so it’s easy to repeat the success.

  22. [...] Written by Joe Kraus of Google Ventures. Kraus cofounded Excite.com and JotSpot, the latter of which was acquired by Google. This was originally posted on May 10, 2012 at his blog.  [...]

  23. “Not much. BUT, if that entrepreneur succeeds in their first company, their success rate for their second venture goes up to 30% — over a 65% improvement in expected outcome.”

    Don’t you think a big part of this is a self-fulfilling prophecy too? Investors are more likely to invest in you, people more likely to support you, easier to hire, more attention from the press and so on.

    You can’t just attribute all of this to the lessons learned from success.

    Also, I feel you are ignoring important other side effects that come out of failure (or rather out of persistence and out of trying): connections, network of people, knowledge of the domain, small things that did go well even if ultimately you failed.

  24. SeedStager says:

    Failure makes you think of alternative route which might be taken in the future to avoid the same mistake again as opposed to 1st time success. However “failure” as a word in startuposhphere became to much of a cliche…

  25. Or is it that succesfull people are damn fast and good learners ?

    Or that they learn differently from other people ?

    I believe that large number of people do not have righ learning abilities to succeed in business. And that succesfull people are extremely fast learners, can understand the bigger context of failure in their own doings perspective and can reflect their learning in their future doing with somekind of “fizzylogic or pattern recognition”.

    As this is part of personality, interesting question is that can we teach this to other persons to enable them to be more succesfull ?

  26. I would like to agree with your argument, but this statistical argument – presented as premise in your argument – doesn’t seem accurate to me, since the paper defined ” ‘success’ as going public or filing to go public by December 2007″. I consider it a really poor criteria to define success.

  27. ivan ion ovidiu says:

    hello! I have a great ideea for a program for Android and for Google. I am sure that this is a great project but i don’t know with who I must to negociate. I don’t have the knowledge tot make this and this is the reason that I contact you. it is a project wich can bring hundreds of milions of $ if you use all of my details. I hope you will contact me soon as possible.

  28. Javier Pumarino says:

    Some research says that when we have bad emotions, we are more available to think about things, we are in that mood.

    When we think about things, we realize, what we had done and learn about it.

    The challenge is to keep thinking about things even we are success, but i agree with the post.

  29. Gil says:

    When you succeed, you lie to yourself to think that bad decisions you made along the way were eventually good because they led you to success.

    When you fail, you go back and rethink 100 times every big action you took and get a sense of whether it got you closer to winning or closer to losing.

    When you fail a test – you go through all the wrong answers, study again and take it – this time you’re significantly smarter.

    When you win a test – you smile, enjoy the fame and walk home as a winner.

    As a side note – sometimes calculated, long term risks are not enough and you really have to take a big leap of faith or go with the spur of the moment. For those situations- small, conventional lies are a gem.

    –Gil

  30. Ultimately any startups eventual “failure” or “success” is a long series of events and decisions. Each one of which might be considered a small failure or success in itself. In practice these decisions are usually about picking the slightly better option amongst alternatives, pick enough on the slightly kind and you tend to be heading in the right direction.

    In terms of joining a startup, yes being in a successful environment is great, and you’ll be certain to pick up habits from the environments you put yourself into. Choosing a earlier stage startup simply changes the risk / reward profile, as you can still make an assessment of the founders based on their previous track record.

  31. Gus says:

    Don’t neglect the human condition. Failure leads to doubt; Success leads to ego (and for certain people, acquired situational narcissism). I think the data available in either case is of similar utility, but it’s a lot easier to avoid the meaningful introspection about your startup’s outcome when, say, you just rang the bell.

  32. perry huang says:

    Does it matter, really? You can cite compelling examples for either case.

    The most important thing is to actually DO something, then learn from both successes and failures. There are things in startups that you can control, and there are plenty that are outside your control. The only thing you can control is your own attitude toward success and failure. You make the best out of whatever hands you are dealt–the rest is irrelevant.

  33. [...] on joekraus.com Share this: This entry was posted in Uncategorized. Bookmark the permalink. ← [...]

  34. [...] The most important thing you can develop early in your career is a gut for what success feels like. The only way to do that is to be part of something successful: http://joekraus.com/the-lies-we-tell-ourselves [...]

  35. Krishna Cole says:

    I believe success can breed more success since it instills confidence in oneself and others. If one can approach a venture with enough self confidence they can attract others to help build the success snow ball.

  36. nara says:

    I believe if you fail than you learn ‘what not to do’ but if you never success than you’ll never know what to do. So people must experience both success and failure. Many people can’t change their life because they only know about their failure but never see/experience new method to succeed their job. Then they lost in the way.

    I myself need to see how other successful people do their work, then improve it. Trying to learn only from own experience is hard, I don’t have the picture. Some are lucky they found their way in the dark, some are not

  37. Shirsh says:

    Hey Joe,
    The phrase ‘life is short’ may also mean the uncertainties we face in life, it probably does not always talk in terms of length. We, currently, do not have any guarantee that we will live for 70+ yrs.
    Also when referring to failures and successes, isn’t it that people/ businesses also learn more from others mistakes (failures) and so have a higher success rate.

  38. Shirsh says:

    Came across this article yesterday, where Gabriel Shaoolian, founder and CEO of Blue Fountain Medi, talks about- “Why It’s Important for Entrepreneurs To Fail” Thought of sharing.

  39. [...] and rather than point to my own life to start this post from Joe Kraus of Google Venture explains why success is more valuable than failure better than I ever [...]

  40. Vladan says:

    As each ride. It can only be operated successfully, especially on two wheels. The difference between falling, getting up then moving on, and fall down can learn on the sport or martial arts.

    Thanks for sites/google.com.

  41. cyp says:

    The reason why I believe this saying has to dies is this:
    in most of our decision areas (work,war,love) there are an inumerable ways in which to fail, but a very limited number of ways you can succeed. As such it is more useful to learn from decisions paterns of people that have succeeded than those of people that failed. For each of type of failure you think of there are at least 100 more you do not. But for each type of success there are no more than 5 hidden.

  42. TrailCamGuy says:

    People do tend to learn more from mistakes than from successes. With mistakes, you spend more analyzing what went wrong instead reveling in success.

  43. […] read an article from Joe Kraus of Google Ventures.  It’s premise was to reject the commonly held notion that […]

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>