Why tech start-ups don't fear failure

With rising costs and economic pressures continually battering away at the bottom line, it's no surprise that Australian companies are becoming less and less inclined towards taking risk.

The fear of failure haunts every business because when companies are constantly looking to cut employees, nobody wants to have to justify lost time or revenue - even if it is for the sake of learning a valuable business lesson.

Yet, in the tech start-up space ‘failure' is not a dirty word. It's an accepted reality, perhaps even a necessity on the road to success. That was certainly the message at this year's Microsoft Bizspark Asia Pacific summit.

In a testament to how crucial this ethos is to start-ups, the message of ‘failure as a path to success' was on display from the word go at the conference.

The first speaker in the conference was Sebastien Eskersley-Maslin from startup incubator Blue Chilli. Maslin talked about his latest start-up Club Kidpreneur, an eight week course which teaches basic business skills to school children, incorporating fun ways to achieve curriculum outcomes with the aim of encouraging them to become “kidpreneurs”.

With 500 kids having gone through the program in the last two and a half years, Eskersley-Maslin explained that at the end of eight weeks the children get to sell their product/service at a real weekend market place.

Positive outcomes include the children becoming emboldened to experiment, learning from failures to do better next time and often succeeding by taking the initiative to change their plans partway through market day.

Another BizSpark speaker, Ian Gardiner reinforced this message. Gardiner, the co-founder of streaming video success story Viocorp said that he is a big believer in the “you have to fail in order to succeed” motto.

“You won't get even looked at by some VC's in the USA if you haven't stuffed up or failed before. If you're not making enough mistakes then you're not taking risks or trying hard enough."

Finding success in the long run

Perhaps the strongest example of this fail before you succeed motto is the journey of Ned Moorfield and his app goCatch, which took out the top crown at this year's BizSpark. 

The app, founded in 2011 by Ned Moorfield and Andrew Campbell , bypasses the traditional phone booking taxi service and connects passengers directly with the nearest available taxi. BizSpark is the latest accolade for goCatch, which also won the top prize at last year's Tech23 summit.

But Moorfield is quick to point out, that the success didn't come overnight, nor was goCatch his first idea.

"After walking away from finance I spent six months trying to get a business off the ground building mobile apps for other businesses, essentially a software vendor model. It was a model which I ultimately realised my heart wasn't in,” Moorfield says.

“Services based businesses like this are exposed to economic downturns, very difficult to scale without hiring a lot of people and take a very long time to build into high value businesses. After burning through a lot of my savings I decided to pivot and that's when my focus turned to product based businesses and ultimately to goCatch."

Melbourne based entrepreneur Steve Sammartino, founder of online hire & rental market Rentoid, sums the issue down by saying that human fear of failure is a quirk of our DNA:

“This quirk was vital for survival in a pre-civilised world because failure could mean being killed while gathering food. The problem with the fear instinct is that it gets in the way of us doing our best work in a modern world. It can stop us from proposing amazing ideas, and disrupting old out-dated methods. The fear we have is not of death, but these days usually only of embarrassment or financial loss, neither of which will kill us”.

Introducing the chief hindsight officer

Having learnt a lot from past failures can be a big advantage later in life, according to start-up investor and adviser Alan Jones, who has been involved in the sector since 1995.

Jones says that he often introduces himself to clients as their chief hindsight officer.

“All the advice I give now is derived from mistakes I've made in the past,” Jones says.

However, Jones adds that Australia is a lot less forgiving of failure than our US counterparts.

He says it's because Australia is a tighter marketplace. While in the US there may be around five to eight super successful companies in the market, the Australian market usually only supports around two or three. A cursory glance of our telco and supermarket industry certainly reinforces that view.

David Jones, the founder and VP of product services at the start-up incubator StreetHawk, agrees that how we respond to failure is closely tied to our culture.

According to Jones, we have inherited a British mindset of looking down on failure as a permanent black mark. “In the USA guys are celebrated for failing, the Brits taught us that you're persona non grata if you fail,” he says.

A darkside to the motto

For all the benefits of learning from your mistakes there is a darkside to consider. Jones warns that that the approach of fail fast, fail cheap has become very fashionable, to the extent that some entrepreneurs are deciding to fail too quickly or pivot too early.

Jones says that sometimes if you have the time to analyse organisational data in depth and use intuition, problems that seem insurmountable, prove to be solvable.

These lessons around failure aren't at all limited to the Australian start-up scene. In an interview with the American Academy of Achievement, Amazon.com boss Jeff Bezos said that he used regret as a motivation to counter the fear of failure.

He coined his approach to business as a “regret minimisation framework”

“I knew that when I was 80 I was not going to regret having tried this. I was not going to regret trying to participate in this thing called the Internet that I thought was going to be a really big deal.

“I knew that that would haunt me every day, and so, when I thought about it that way it was an incredibly easy decision … if you think about the long-term then you can really make good life decisions that you won't regret later”.

Bezos embraced failure, and look where it has taken him