The Price of Failure


What’s the price of failure? This week, about ten billion dollars.

Or more correctly, that’s the value of success, after plenty of failures.

In many ways I’ve wanted to write this post for a long time. In part it’s about Dropbox, and I couldn’t live my life or run my business without Dropbox.

The wheel is good: electricity is useful – but they’re not Dropbox.

The other week Dropbox (it’s an online storage company if you’ve been living in a cave) secured some additional funding – just the $250m of petty cash. That funding put a value of $10bn on Dropbox and opened the door of the billionaire’s club to the company’s 31 year old co-founder, Drew Houston.

Let me quote from a recent BBC article on Dropbox and Drew Houston.

While studying computer science at MIT he happened on the idea of an automated gambling bot for playing poker. But it kept malfunctioning. “It kept folding my hand. It was an automated way of losing money.” Three years of work on [his next project] also proved fruitless. Then:

“I was on the bus from Boston to New York. I fished around in my pocket and found I’d forgotten my thumb drive. I never wanted that to happen again.”

So with four hours to kill and no USB flash drive Drew Houston started to write some code…

Initially potential investors were lukewarm – and after the money-losing bot and the three loss-making years on the previous project it would have been easy to give up. After all, why should investors want to back someone who’s already failed at least twice?

I’ve written about failure before on the blog. Failure isn’t failure it’s just another step closer to success. Failure isn’t failure, it’s just a learning experience. Every time you fail you’re one step closer to succeeding.

It’s very easy to trot out the well-worn business clichés, most of them written by people who have never been anywhere near running a business in the real world.

Everyone reading this blog will have failed at some point. Something they thought was an absolute certainty – the business idea that would catapult them to fame and fortune – will have gone hideously, painfully, expensively wrong.

It’s probably gone publicly wrong as well. And there’ll be no shortage of wise-after-the-event experts lining up to tell you where you went wrong. Plus an equal number celebrating that well known German defender Schadenfreude…

So coming back from failure is tough. It’s not just another step on the road to success, it’s a real blow – emotionally, financially and quite possibly physically. When you’re running your own business and you have so much capital – emotional and financial – tied up in it, failure can’t be anything else.

But we’re entrepreneurs: sooner or later we bounce back – and come up with the Next Great Idea that will catapult us etc etc.

Sometimes, though, it’s a good idea to subject the NGI to a little outside scrutiny – and this, I think, is one of the key strengths of the Alternative Board.

It was an absolute winner. It would transform my business. Move my retirement ten years closer. And add at least another nought to the value I’d get when I sold out. But by the time it had been round the TAB table I could see all the flaws in my idea. That Board meeting saved me tens of thousands of pounds and I will be eternally grateful.

I’ll obviously keep the identity of that Board member to myself – but it’s far from the only time I’ve had that said to me in a 1:1 conversation.

But just as importantly I’ve seen several boards have a ‘Dropbox moment’ when a member has put his Next Great Idea to them and as one they’ve said, ‘Yes. That’s obvious. And simple. And it’ll work.’

At that point there’s only one piece of advice the Board needs to give. Three words. The old Nike advert. Just do it…

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One comment

  1. simonjhudson · July 4, 2014

    that’s a damn good idea. I have a cracking NGI, but it sits outside Cloud2. I might bring that. Or get you all to help with Project 24 buy in…

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