Over the last several years, you've probably heard everyone--experts, authors, entrepreneurs, venture capitalists--throw around the phrase "fail fast." In fact, the idea that your startup should fail quickly hasn't just become a harsh reality in this entrepreneurial environment, but also something of a badge of honor for many. Today, we're hearing startup founders openly discuss their failed startup as if the business actually succeeded. It's as if they're actually proud that their startup failed.
That doesn't mean that the "fail fast" trend doesn't have its detractors. Many people say it's the last thing you want to do. For example, back in 2010, Mark Suster argued in Business Insider that to fail fast for the sake of failing fast "is wrong, irresponsible, unethical, and heartless." More recently, Erika Hall explained in Wired why failing fast is preventing entrepreneurs from innovating to solve a want or need.
While both present a strong case against failing fast, it can still be a crucial stepping stone on the way to eventual success. And here's why.
Learning From Your Mistakes
While some would argue that spending other peoples' money on a product or business that will ultimately fail is just wrong, it is also one of the best ways to figure out what you do well (and not so well) as an entrepreneur. Yes, it's true that you need to do a lot of research beforehand. However, you can't predict what's going to happen when you launch your product or service. "The best practice today is to get a product in the market and learn. You can't do it any other way in my mind, at least not for Internet companies," says entrepreneur Jason Calacanis.
Once your product is on the market, you can then see what's working and what's not so that you can pivot. That's how Instagram found its success. Originally, Kevin Systrom developed Burbn, which was basically an HTML5 version of Foursquare. Systrom and company realized, however, what Burbn really was: a test bed. He has stated that "it was an unintentional experiment that paved the way for what would become a very successful app." In short, without the failure of Burbn, there might not have been an Instagram.
Identify your problem and concerns as early as possible instead of continuing to invest time and money into a failing startup. Sometimes a pivot or slight modification will do the trick. Other times there's nothing else to be done and your startup will fail. Learn from those mistakes so that you won't repeat them the next time around.
The Financial Implications
Sometimes, for financial reasons, it just doesn't make sense to keep the startup going. Think about your first car. You loved that car and had some great times together. But at some point you had to say goodbye. It just doesn't make sense to keep putting in new parts or getting old ones fixed. It's probably more cost effective to purchase a new vehicle.
The same might be said about your startup. While no one enjoys failure or losing money, if you're an investor, drop your ego for a second. Wouldn't it be just a bit easier if the fledgling startup closed before losing any more money? Losing thousands compared to millions of dollars sounds like a better pill to swallow to me. Longtime entrepreneur John Rampton speaks for many when he says, "There's nothing that feels worse than failure. Trust me, I've been there. But I believe you have to get back up and start at it again. You'll miss 100 percent of the shots you don't take. Fail fast and keep trying."
What if you had to put up collateral, get a second mortgage or cash in your savings in order to prop up a failing startup? If you had been able to fail faster, you might have had a better chance of avoiding bankruptcy or losing your home, both of which would haunt you for years.
The Bottom Line
Failing sucks. There's no other way to describe it. And while "fail fast, fail early, fail often" may be a favorite saying in Silicon Valley, it doesn't ease the pain while it happens. But if you are going to fail, make it happen sooner than later. You can learn from all of your mistakes and prevent dumping a ton of time and money into a startup. Besides, you may even get out before getting overly attached to a failing business.