Silicon Insider: Making a Smart Exit
How you handle failure in business says a lot.
March 29, 2007 — -- I'm an optimistic guy, and this column usually reflects it. But today I want to write about failing and quitting.
In an optimistic way, of course.
There's a new book out by Charles Koch, CEO of Koch Industries, entitled, appropriately enough, "The Science of Success: How Market-Based Management Built the World's Largest Company." The book was brought to my attention by Nick Schulz, who wrote a fine little essay on it at the Web site Tech Central Station.
While Schulz likes the whole book, his attention is particularly drawn to the section where Koch discusses not the businesses in which his company was successful, but where it failed and bailed out.
As Koch writes: "Progress, whether in business, an economy or science, comes through experimentation and failure. Given that a market economy is an experimental discovery process, business failures are inevitable, and any attempt to eliminate them only ensures overall failure."
That's a profound thought -- you can't succeed in the big stuff unless you occasionally fail in the small -- and it got me thinking once again about failure and the power of a smart exit.
Tom Peters, in one of his books, credits me with saying, "People think Silicon Valley is all about success, but it is really all about failure." In fact, I was paraphrasing, a bit too facilely, the great marketer (National Semiconductor, Intel, Apple) Regis McKenna.
What Regis always said was that when you are looking to work with, or invest in, a new company, always look for people who have known failure, who have lost their fear of it, and thus are willing to take the kinds of business risks that might court failure again.
I heard that again a decade later from the Valley's most famous venture capitalist, John Doerr. I was interviewing him for an article on what he looked for in an entrepreneurial team that made it worth investing in. Crucial among the factors, he said, was a "good" failure in their past -- that is, a company that failed for any one of a number of right reasons, including being ahead of the market, being unable to create a successful follow-up product, getting crushed by a giant competitor, etc.
I find it telling that this little interview, written for Fast Company magazine in 1997, is, among the thousands of newspaper and magazine articles and columns I've written over the years, the single most linked and downloaded (and presumably, read) piece of my career.
Whenever I run into Doerr, he always gives me a hard time about it, as it is still regularly the No. 1 Google search result for his name -- and the source of endless letters and pitches to his office. Just last week I got an e-mail from a college student from somewhere on the other side of the world congratulating me on the article -- which he assumed was new, having recently read it in class -- and asking advice on starting a new company.
Mind you, this is 10 years after I wrote the thing.
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