Magazine article Foreign Policy

Crash and Burn: Why Silicon Valley's Notion That Failure Leads to Success Won't Work for the Rest of the World

Magazine article Foreign Policy

Crash and Burn: Why Silicon Valley's Notion That Failure Leads to Success Won't Work for the Rest of the World

Article excerpt

FailCon is a winning endeavor. Billed as a one-day conference for entrepreneurs, investors, developers, and designers, it unabashedly celebrates failure, urging its attendees to "start exchanging stories of what didn't work" and promising to provide "guidance or safe spaces for failure." Launched in 2009 in San Francisco, FailCon had grown by this summer to include events in 21 cities around the world--including Dubai, Tokyo, and Tehran--each inviting attendees to pay a small entrance fee to reaffirm that "it's okay to fail." [paragraph] FailCon is hardly alone. Similar mantras echo across the business space, clustering in particular around high-technology ventures and would-be entrepreneurs. The Harvard Business Review published a "failure issue" in 2011. Fail Forward, a consultancy, offers a range of tools for advancing the "practice of intelligent failure," including instructions for creating "failure reports"--studies that help organizations learn from their disappointments--and a guide to sharing accounts of missteps. ("Include emotions, character motivations, hopes, dreams, and fears," it instructs.) In 2014, a Fast Company columnist suggested provocatively that "the most successful people are the ones who take big risks, which often means spectacular flameouts."

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In the frenzied hills of Silicon Valley, going bust is common. Research attests that close to half of start-ups supported by venture capital chew through most or all of their backers' money and that the majority never achieve their projected returns on investment. But failure, the now trendy argument holds, is the key to long-term triumph; if you fail fast and frequently, you gain a sense of what really works.

To a certain extent, this equation rings true. Some of the tech industry's most promising stars dimmed quickly or were rendered irrelevant by subsequent waves of innovation--yet founders and funders swiftly rebounded. Netscape's co-founder, Marc Andreessen, now runs Andreessen Horowitz, one of Silicon Valley's most prosperous venture-capital firms. Napster's Sean Parker became the founding president of Facebook and an early investor in Spotify. America Online's Steve Case founded Revolution, an investment company. It is their stories, along with those of dozens of less famous but still very affluent founders of businesses, that inspire the failure-as-success narrative.

The problem is that such stories remain both relatively rare and distinctly American. There is nothing inherently wrong with sites and services that have cropped up around the celebration of failure. There is a real danger, though, in assuming that business practices that work in one part of the world will translate seamlessly to others, and in separating a specific aspect of one business culture from the legal and social environments that support it. Failure may not be a sin. Yet it's hardly a virtue either, and learning from it is a far cry from applauding its merits.

Silicon Valley is an idiosyncratic place, boasting a combination of specific factors that cannot be easily replicated or reproduced. It has one of the world's greatest universities in its backyard and eager pools of local capital. Because it has been a hotbed of innovation since Dave Packard and Bill Hewlett invented the audio oscillator in a Palo Alto garage, it also has developed deep and overlapping networks of entrepreneurial support services--law firms and marketing specialists and rental spaces that cater to start-ups. …

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