Failure: The F-Word Silicon Valley Loves And Hates

By NPR Staff

Published June 19, 2012 at 3:31 PM CDT

Tech entrepreneurs gather at the offices of Y Combinator, a company based in Mountain View, Calif., that provides seed money to young startups. Founder Paul Graham predicts half of the startups funded by Y Combinator will ultimately fail.

In Silicon Valley, there's an "F word" that entrepreneurs say in polite company all the time: failure.

For every high-tech business success, there are countless failures in this California cradle of Internet startups. Here failure is accepted, or even welcomed, as a guide for future success.

In fact, failure is dissected in San Francisco at FailCon, an annual one-day conference where tech entrepreneurs and investors spill their guts and share lessons learned.

All Things Considered's Melissa Block spoke with some of Silicon Valley's tech entrepreneurs and investors about their experiences of failure in a place known for its multibillion-dollar successes.

Paul Graham is founder of Y Combinator, an incubator for startups. He says his firm is "failure central," filled with "experts at both avoiding it and living with it."

Paul Graham founded Y Combinator, a company based in Mountain View, Calif., that provides seed money and close consultation to startups before they make their pitch to big investors.

On why failing in the startup world is normal

"In the startup world, 'not working' is normal ... You might wonder why ships have [bilge] pumps [to remove water from below the deck] ... Why don't they just make one that's waterproof, right? And the fact is, one way or another, all ships take on water ... and one way or another, practically all startups internally are disasters. And they just hide this from the outside world."

Janice Fraser, founder and CEO of LUXr, a product design firm for startups, believes failure is glorified in Silicon Valley. But, she says, "there's more talk about failure than there's tolerance for it. It's disappointing when you realize [failure is] much more painful."

Janice Fraser has created several startups. Some flew, but one crashed during the financial meltdown. She is currently the CEO of LUXr, a San Francisco firm that supports startups.

On failing as the worst moment of an entrepreneur's life

"The worst moment is when you have to tell your staff. You have these people who, beyond reason, have put their trust in you. And you have to look them in the eye and say, 'I'm sorry, this isn't going to work.' It's always when the money's running out ... because you keep going until the money runs out. At the end, it's just you and one or two other people, filing papers with the state and packing up the boxes. And that is not fun."

Joe Kraus, an investing partner at Google Ventures, a venture capital fund, says when he meets entrepreneurs, he spends more time discussing their plans for a current business than on lessons learned from their past experiences.

Joe Kraus is an investing partner at Google Ventures, a venture capital fund based in Mountain View, Calif., that plans to invest $1 billion in startups over the next five years.

On the importance of fearing failure

"In my mind, the ones who have no fear of failure are merely the dreamers, and the dreamers don't build great companies. The people that thread the line between vision and being able to execute and having this healthy fear of failing that drives them — not paralyzes them, but drives them — to be more persistent, to work harder than the next person, that's a magic formula."