The anatomy of failure

In the ecosystem of lavishly funded start-ups, the sting of failure seems to have lost some of its stigma


Failure today is accepted as necessary in business. Photo: iStockphoto
Failure today is accepted as necessary in business. Photo: iStockphoto

Through the second half of 2012, guilt was a constant companion for this Delhi-based entrepreneur. Two years after she had co-founded a higher education venture, disagreements with her partners over equity stake were threatening to derail the business.  

She had a 25% equity in the venture that was founded to meet the demand for talented analysts and accounting professionals in the financial services sector. The full-time, one-year programme was essentially a combination of the chartered financial analyst and certified financial planner courses.

The institute had managed to get 19 students in the first year and ensure their placements in firms like HDFC Life and ICICI Bank . Thanks to a strong buzz, the student intake for the second batch had increased rapidly. Fifty students signed up for the Rs.2.4 lakh course. But troubles were round the corner. The entrepreneur recalls that some of the key mistakes of the co-founders, including herself, were losing sight of the monthly expenses and the heavy toll the year’s marketing budget (Rs.45 lakh) took. By then, she had invested  Rs.12 lakh, a part of which had come from her husband and in-laws, in the venture. Her partners, who used to run another educational institute in Mumbai, refused to increase their stake. Together, they couldn’t agree on a third partner who could infuse the capital needed.

In June 2012, the founding team decided to call it quits, after investing about Rs.1 crore in the venture. Fortunately, the second batch had cleared the programme by then. “When you run an educational institution, the most guilt is towards the students. It’s not great to have the name of an institute that doesn’t exist any more on your CV,” says the entrepreneur. 

Failed ventures can come swift and strong in the world of entrepreneurship. As the conversation around several prominent and “hyper-valued” start-ups, especially in segments such as food technology, real estate and e-commerce, has turned—with fewer stories of growth and more stories of layoffs, big-bang implosions seem more real than ever.

Last month, for example, I happened to visit the building in Noida, adjoining Delhi, that used to house the headquarters of AskMe, a consumer Internet search platform. Four thousand people had lost their jobs in August alone. Earlier, the building would have been abuzz with young people swarming the lobby area and spilling out on to the pavements for cigarette breaks. This time, there was an eerie silence. 

Ironically, in the ecosystem of lavishly funded start-ups, the sting of failure seems to have lost some of its stigma. Earlier, the fear of failure stopped people from becoming entrepreneurs. Today, however, failure is accepted as being necessary on the route to success in business. In a culture like ours, which is averse to risks, it is probably even useful. Contemporary business literature is full of inspiring quotes about failure. Yet the business utility of failure conceals the personal cost. No quote on failure really justifies the experience, founders have told me.

What do failure’s scabs and wounds look like? Are they like that forgotten hairline fracture that tingles with pain at the onset of winter? Or more like an open wound, infected with painful memories? Guilt—towards one’s family, employees who get left in the lurch, and early supporters who backed the venture—is often the most vicious monster. “In the end, though, it doesn’t kill you,” says a Mumbai-based entrepreneur, with more than a hint of irony. He’s on to his third entrepreneurial venture now—the earlier two folded up. “There is an intense need to cry and lock yourself in for some time. Friends and family, though they mean well, can’t really help. It’s lonely.”

Surviving Start-ups focuses on the stories of the people (parents, siblings, spouses and friends) who make up an entrepreneur’s world. The columnist is the spouse of a start-up entrepreneur and draws from real-life experience.

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