Check out this article in the New York Times that overturns Silicon Valley conventional wisdom about failure. Per a Harvard Business School working paper, which looked at several thousand venture-capital-backed companies from 1986 to 2003:
- First-time entrepreneurs had a 22% chance of success
- Already-successful entrepreneurs had a 34% chance of success (a 55% relative increase)
- Previously-failed entrepreneurs had a 23% chance of success
That is, the lessons from having tried and failed added up to a 1% overall increase in the success rate. Surprising news for a valley in which failure is often seen as a red badge of courage.
“The data are absolutely clear,” says Paul A. Gompers, a professor of business administration at the school and one of the study’s authors. “Does failure breed new knowledge or experience that can be leveraged into performance the second time around?” he asks. In some cases, yes, but overall, he says, “We found there is no benefit in terms of performance.”