HBS Why Startups Fail 5.5.21
AAzfar HaiderMay 5, 2021 at 8:13 pm56min
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00:00Speaker 1
And that was disconcerting because in theory, I was a expert on entrepreneurship. But I was a failure at explaining failure. And if indeed, two thirds of venture capital backed startups fail to earn a positive return, failure is important. So here's one of the most important phenomenon in my field. And I didn't really understand that. So set out on a quest to learn everything I could fail your follow predictable patterns, were there ways to avoid that. And if a founder did fail, despite their best efforts, was there a way that they could fail less painfully, in this particular instance, I saw the pain up close, because I knew these founders very well. But every every time it hurts, it really hurts. Personally hurts the ego hurts financially. And, and so that's set me out to learn everything I could. Lots of case studies. And this is really the spirit of Harvard Business School, and some survey work. And lots of interviews with failed founders and investors. Here we are, essentially, seven, eight years later, with the results.
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01:07Speaker 2
you're mentioning, it's studying failure requires talking to a lot of people. And as we have as a method at the school, you bring them into your classroom, you do case studies, you kind of highlight them. Normally, we put people on a pedestal with the successes that they've had. And now you've had those experiences of those founders. What was that like?
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01:32Speaker 1
Well, so the first few cases I taught about field companies didn't work very well. I think MBAs are great at analyzing, and great. If you didn't my case, on what happened, it's pretty easy to look in the rearview mirror and say, well, kind of obvious why that didn't work. You can undo the response, of course, as the instructor as well, you know, it's a very smart person who launched this business, and the investors who put money in were very smart. And the team members were very smart. So they saw some potential here. You know, I'm glad you think it's such a simple, but eventually, I learned how to how to how to get the stories across in ways that that I think there was more learning value, and eventually launched an entire MBA elective focused on entrepreneurial failure. I was a little worried about this, frankly, you know, so you can imagine class after class after class with with failed founders, I, I frankly, worried that I would scare off a generation of Harvard Business School students from entrepreneurship by just showing them the pain, so close. And, in fact, it was just the opposite effect at the end of profit course twice now. And at the end of the course, I actually surveyed students and ask if, if the experience has changed their view on how likely they are to be an entrepreneur, five within five years of graduation. And in fact, 20% do say, yeah, I'm less likely now I've actually I've seen it, it hurts, I don't think I want to go through that. 40% say they're more likely, they say thank you for showing me up close. What I've learned, I think I understand the stakes, but pain, and I think I can handle it. But most importantly, you've shown me these failed founders granted as a curated set of very thoughtful people. And most of them had terrific success in the wake of their failure. What I've learned in studying failure more generally, that is the pattern. In fact, most people learn something from the failure and can't bounce back and do something very interesting. So these, these students said, 40% of them, that they're more likely to do it and they know what they're getting into. And then the remaining 40% said, I was likely to do it, I'm still likely to do it, I may wait till I have a great idea.
Unknown Speaker
And I may think twice before taking shell and venture capital,
Unknown Speaker
because
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