You think you've had bad days?
HomeAway co-founder Brian Sharples once lost seven figures worth of funding in three hours.
Today, he's a successful CEO who made a boatload of cash in 2011 when his vacation rental marketplace HomeAway went public. But back at the start of his career, Sharples was a relatively inexperienced entrepreneur with a business plan to produce weekend car shows where those selling and buying used vehicles could meet up. He raised $1 million from well known VCs, and bet a hefty chunk of it on the company's first event in San Francisco's Candlestick Park.
The only trouble was, that weekend a freak storm blew in with 70-mile-per-hour winds. "It ended up being quite a disaster. Big tents were blowing down and giant poles were crashing down on cars. It became very quickly more of a task of trying to make sure nobody got killed than running the event," Sharples told Inc.
He managed to salvage something from the business, but the VC money was gone and the failure was seared into his brain. It's affected how he looks at risk ever since.
"As I've grown up and done a bunch of other things you learn that as an entrepreneur you still want to take great risks, but there are fantastic ways to manage downside and be paranoid about downside," Sharples says.
But paranoia and healthy fear of failure isn't just a quality he's learned to love in himself. It's also a character trait he looks for in his team.
"With HomeAway we had a lot of people on the founding team who had been through the first dotcom bust," Sharples says. "I loved that because it made those people highly educated, highly paranoid, highly worried about ever getting in a situation again where they were working for a company that was burning too much cash or investing too much in the long-term and not really being disciplined."
Sharples started his business with failures and worriers and to this day he continues to quiz potential hires on their missteps, looking not just for their failures but also for a cluster of character traits he associates with a healthy attitude to setbacks.
"I don't want to create the impression that I spend an entire interview focused on negative stuff. Obviously, the majority of it is about what they've succeeded at and how appropriate their experience is for the job at hand, but I always do come back to talking about the things that haven't gone right in their lives," he says. Why this obsession within hiring failures? Sharples offers three reasons.
"When I think about even my most successful friends, there's really nobody that's gone through life without some kind of failure, whether it's personal failure or business failure," he says. "So first of all, if somebody just stares at me blankly and says, 'No, actually everything I've done in my life has been a complete success.' It does make me worry, because one of the things I try to weed out of our company are people who have very strong egos, who believe they're always right, who can't be introspective and admit they're not perfect."
Failure, in Sharples' opinion, shouldn't just make you humbler. It should also make you smarter. If it doesn't, that indicates a worrying lack of curiosity on your part.
"I'll ask [potential hires] about something that hasn't gone so well in their life and then ask them what they've learned from it because the next thing I look for in people is curiosity," he says, "I'm interested in people who take those negative experiences in their lives and are really curious about what happened and can talk intelligently about what they learned and what they might do differently."
Handled intelligently, failure not only tempers egos and indicates curiosity, it also instructs entrepreneurs in the benefits of the bitter-but-healthful medicine that is pessimism.
"I meet with so many entrepreneurs who come to me with business plans--and I was this way too when I was younger--and everything's rosy and everything's going up and to the right," says Sharples. "I'm much more intrigued when someone comes in and says, 'Look, I'm super excited about this business. Here are all the reasons it's going to go well, but now let me tell you about the five things that I really worry about…'"
Should you spend more time in interviews delving into candidates' failures?