Fail Fast, Fail Often

“Fail Fast, Fail Often, Fail Everywhere”. By John Donohue. The New Yorker. May 31, 2015.

“Discussions about failure may come more easily in America in part because our businesspeople are so good at it. The failure rate for startups, using a yardstick in which investors lose everything (i.e., all of the company’s assets are liquidated), is between thirty and forty per cent, according to Shikhar Ghosh, a senior lecturer at Harvard Business School. 

The rate is seventy to eighty per cent if failure is defined as not meeting the projected return on investment, and ninety to ninety-five per cent if it is measured by failing to beat a declared projection.

Despite these statistics, Americans remain remarkably optimistic about the process—last year, venture-capital companies staked forty-eight billion dollars in pursuit of big returns. And the fact that these investments are concentrated in a relatively small number of companies has not seemed to inspire much fear in prospective entrepreneurs. 

According to a study done by the Global Entrepreneurship Monitor, a project run by Babson College and the London Business School, in 2014 among respondents between the ages of eighteen and sixty-four who were not already running their own businesses, just thirty per cent reported that fear of failure would stop them from starting one. 

And more than half of those Americans surveyed believed that there are good opportunities to strike out on one’s own.

“… make a comeback“

The New York Times online. May 3, 2015. An interview with Diane von Fürstenberg, Belgian-born American fashion designer best known for her iconic wrap dress. 

Interviewer:  You’ve had such a roller coaster life of great successes, as well as some pretty dark times. How did you manage through all that?

von Fürstenberg: I’m still managing through it. First of all, let’s talk about success. I lived an American dream. I was very lucky because I was very successful at 25 years old. Now it’s very common for that to happen in Silicon Valley. But at the time, it was not so common, and I was a woman and I was very young.

Now we go to failure. What does failure mean? You didn’t make it? So you didn’t make it. But by not making it, maybe you learned something else. America is a society where you always have a chance and where you can always make a comeback. So I would say that failure sometimes could be your biggest asset.

Ockham’s Razor

Isolate: To cause a person or place to be or remain alone or apart from others; to identify something and examine or deal with it separately.

Simplicity: The quality or condition of being easy to understand or do; the quality or condition of being plain or natural; a thing that is plain, natural, or easy to understand. Late Middle English. From Old French simplicite or Latin simplicitas, from simplex.

Sophistication: The quality of being sophisticated; development to a high degree of complexity; the quality of being aware or and able to interpret complex issues; the characteristic of having, revealing, or proceeding from a great deal or worldly experience and knowledge of fashion and culture. From medieval Latin sophisticatus, “tampered with”.

Elegance: The quality of being graceful and stylish in appearance or manner; the quality of being pleasingly ingenious and simple; neatness.

KISS: The acronym for “keep it simple, stupid” is attributed to Kelly Johnson, an engineer at the U.S. weapons company Lockheed. Although there are several other variations, the principle states that systems work best if they are kept simple. Complexity should be avoided. Johnson had given a team of design engineers a set of tools, then challenged them to design a jet aircraft which can be repaired by an average mechanic under war conditions with these tools only.

There is nothing original about KISS, however. To Leonardo da Vinci is attributed “simplicity is the ultimate sophistication”. Mies van der Rohe, widely regarded as one of the masters of modern architecture, stated time and again that “less is more”. Antoine de Saint Exupéry, the French aristocrat, poet, writer (The Little Prince) and pioneering aviator has been quoted: “It seems that perfection is reached not when there is nothing left to add, but when there is nothing left to take away.”

William of Ockham (1288-1348), an English Franciscan friar and one of the major figures of Medieval thought, wrote that “among competing hypotheses, the one that makes the fewest assumptions should be selected”.

Margins of Error

The United States has enjoyed the most favorable margins of error. Risk-taking could flourish under such circumstances.

It is protected by two natural barriers, the Atlantic and Pacific Oceans. Its neighbor to the north – Canada – is culturally a cousin and has never been a threat. Its neighbor to the south – Mexico – was defeated in wars and lost large pieces of territory to the U.S. It, too, has never posed a threat to the security and stability of the U.S.

The indigenous population – the American Indians – were driven from their territorial homelands, killed in wars, placed on reservations. The nation has access to immense natural resources, chief among them land.

Margin of error: An amount (usually small) that is allowed for in case of miscalculation or change of circumstances.

Risk (noun): A situation involving exposure to danger, the possibility that something unpleasant or unwelcome will happen, a person or thing regarded as likely to turn out well or badly, as specified, in a particular context or respect; a person or thing regarded as a threat or likely source of danger; a possibility of harm or damage against which something is insured; the possibility of financial loss.

risk (verb): Expose (something or something valued) to danger, harm, or loss; act or fail to act in such a way as to bring about the possibility of (an unpleasant or unwelcome event); incur the chance of unfortunate consequences by engaging in (an action).

Immigrant experience

All Americans are descendants of immigrants. And the immigrant experience begins with risk-taking. All immigrants risk, to one degree or another, what they own and know. Taking that one great risk, that leap of faith, makes small most later decisions in life. Immigrants are, or have become, by their very nature risk-takers. Americans are risk-takers.

The American economic system encourages entrepreneurship. It pays in the U.S. to establish your own business. Businesses owners who enjoy high success do very well financially. Owners who enjoy medium success do well financially. Those, however, who enjoy low success do very poorly financially. “No risk, no reward.”

Small businesses – firms with fewer than 500 employees – drive the American economy by providing jobs for over half of the nation’s private sector workforce. Small businesses are job creators, representing 99.7% of all firms. They make up the following: 64% of net new private-sector jobs, 49.2% of private-sector employment, 46% of private-sector output, 43% of high-tech employment, 98% of firms exporting goods and 33% of exporting value.

Small businesses create more than half of the private non-farm gross domestic product and create 60-80% of net new jobs. 19.6 million Americans work for companies employing fewer than 20 workers, 18.4 million work for firms employing between 20 and 99 workers, and 14.6 million work for firms with 100 to 499 workers. 47.7 million Americans work for firms with 500 or more employees.

According to the Bureau of Labor Statistics small firms accounted for 64% of the net new jobs created or 11.8 million of the 18.5 million net new jobs between 1993 and 2011. Since the latest recession, from mid-2009 to 2011, small firms, led by the larger ones in the category (20-499) employees, accounted for 67% of the net new jobs.

American Entrepreneurs

Scottish-American Andrew Carnegie led the expansion of the American steel industry in the late 19th century with the Carnegie Steel Company. Carnegie established public libraries throughout the United States, the United Kingdom, and other English-speaking counties.

He funded approximately 3,000 libraries in 47 states in the United States, Canada, the United Kingdom, Ireland, Australia, New Zealand, the West Indies and Fiji. He donated 50,000 British pounds to help establish the University of Birmingham in 1899.

British- and Irish-American Henry Ford founded the Ford Motor Company and was sponsor of the development of the assembly line technique of mass production. His development of the assembly line allowed many middle class Americans to afford and buy automobiles. Ford left most of his wealth to the Ford Foundation.

William “Bill” Gates is the former chief executive and current chairman of Microsoft, the world’s largest personal-computer software company. He co-founded Microsoft with colleague, Paul Allen. He is one of the best-known entrepreneurs of the personal computer revolution. After studying the work of Andrew Carnegie and John D. Rockefeller, Gates sold some of his Microsoft stock in 1994 to create the William H. Gates Foundation.

In 2000, Gates and his wife combined three family foundations and founded the Bill & Melinda Gates Foundation, which is currently the largest transparently operated charitable foundation in the world.

The American culture admires risk-takers. They are considered to be courageous, ingenious, hard-working, forward thinking. The American experience is one of trial and error. It begins with how parents raise their children to try things, to attempt more than before, to experiment. A mistake is only one when one doesn‘t learn from it. Trial and error is moving forward, is getting better at something. It is synonymous with learning by doing.

A Form of Risk Management

Breaking down complexity into its component parts, a common theme in American thinking, is also at play in American decision making. Individual decisions are always a part of larger decisions. They can be either grouped or isolated. Because Americans value focus and execution, they tend towards isolating decisions.

The more clearly defined the decision to be made, the more limited its scope, the greater the chances that it will be made intelligently and implemented effectively. Limited scope decisions are also a form of risk management. Their results can be evaluated quickly. They allow for flexibility and rapid reaction to changing parameters.

And if human action influences the very context in which one is operating, there is a point beyond which grouping decisions increases risk. From the American perspective systems are inherently risky. For if just a few key elements of a system are wrong, the entire system is wrong.

Sweaty Palms

There has been a lot of research on the benefits of trusting intuition.

In a study conducted in 1997, researchers asked subjects to play a card game in which the goal was to win the most money. The subjects chose cards from two piles, one of which was rigged to provide big wins followed by big losses, while the other deck provided small wins but almost no losses.

On average it took about 80 cards before the subjects could identify which deck was which. However, after about 50 cards they claimed that they “had a hunch about which deck was safer” and after only 10 cards the sweat glands on the subjects’ palms would open every time that they reached for the big wins/losses deck.

Thumbs Up or Down

In the American movie Interstellar, when earth begins to become uninhabitable, 10 astronauts are sent through a wormhole to a group of planets orbiting a supermassive black hole. These astronauts are supposed to explore the planets to see if they are inhabitable or not.

However, when communicating their findings back to earth, they don’t transmit long lists of data. Instead, if the area they’ve explored could sustain human life, they simply activate the “thumbs up beacon.”

Evernote’s Context

This is how Evernote – evernote(dot)com – describes their new service called Context:

„As you use Evernote, our Context algorithms try to find other information that is likely to be useful and relevant to whatever you’re working on. Our goal is to show you information that will help you improve the quality of your work, without you having to think about searching for it. It’s like having a super smart research assistant always by your side.

Currently, Context can display three types of information when it finds something relevant to what you’re working on: your prior notes, shared notes from your coworkers if you’re an Evernote Business user, related news and articles from Dow Jones and our other partners, and relevant people from LinkedIn. In the future, we’ll add other sources that we think would be helpful to Evernote users.“