Failure ain’t what it used to be, my friends. From FuckUp Nights to Start-up Wakes, the tongue-in-cheek cult of celebrating failure has rapidly gained popular traction and not only in the closed-off start-up world. This so-called “failure mentality” is being encouraged across a host of industries as a gateway to innovation. The theory behind this movement is that meaningful change requires trial and error, it requires thinking differently and it requires courage. To enable this, companies need to make people feel like it’s okay to fail. Start-ups daily tread the thin line between success and failure and therefore are faster to innovate and quicker to bounce back when things go wrong.
In practise however, no matter how trendy it is, the reality of failing despite your best efforts is no walk in the park. Arthur Tolsma knows first-hand how difficult this reality can be. In 2007, he decided to play the innovation game and by 2010, it was clear that he and his fellow founders had lost. His company Greeting BV, a personalised voicemail greeting service, had garnered a small, enthusiastic customer-base but unfortunately that was not enough to sustain the company in the long-term. They were forced to let eight people go and Tolsma lost the €100,000 he had personally invested. Against all the odds however, they managed to keep the company alive until 2012 when they sold it to a small telecoms company and so out of failure grew a small success. But when you put your heart and soul into a company that fails, the experience deeply affects you.
“After we failed it was very difficult for me to share the story”, he says. “There wasn’t really a culture of sharing. Now, people are more open to that than a few years ago, and that’s very good. When I started sharing my story people were like “wow, that’s interesting!” and asked me to share lessons as well. That helped me to understand that it’s not only a failure story but it’s also about lessons learned, insights that are valuable to share.”
He began to realise the power of these lessons when a researcher at his alma mater “asked me to share my story with some entrepreneurial students and I said “who wants to listen to a failed entrepreneur?” As it turned out, a lot of people did! He was surprised at how excited the students were to hear about failure as it’s a harsh reality that many start-up founders will eventually face. Bolstered by these positive reactions, Tolsma decided to write a book on the subject and eventually produced the marvellously-titled Start-ups and Downs in January 2014. Now based in Utrecht, he has been sharing his story internationally for years and it’s clear that there’s an appetite for honesty about failure. This hunger for authenticity fits into a wider, growing trend that can be seen not only within companies, but also across social media.
“Yeah, I think there are two things: that people realise the value of a failure story and react as part of a contra-movement to the Facebook and Instagram happiness. On social media there’s always a trend of showing only the good in your life, partly showing off but also partly being afraid to share failures. People really value the real stories of people that fucked up because you don’t hear those stories often. They realise that there’s the same amount of lessons to be learned from failed people as from the successful ones.”
Following the success of the book, he now works as a freelance innovation consultant where he coaches start-up and corporate teams to be comfortable with vulnerability and failure as a means of helping them to find their best product-market strategy. Together, they analyse the company’s customer needs, what the market trends are, how they fit in with the competition, and how to find their own USP. Start-ups of course are a lot more innovative than corporates by nature, but Tolsma believes that there’s a lot that corporate innovation teams can learn from their younger counterparts.
“Flexibility is the biggest thing. Innovation teams are usually searching for a business model and they need flexibility. That’s difficult for corporates because they often have to align with the other business units, with management, or the board-level. That’s one of the main challenges, to have that flexibility, but sometimes also the freedom to think broadly.”
By sharing his insights with corporate innovation teams, Tolsma hopes to lessen their chances of making the same mistakes. That’s the funny thing about failure: people often repeat the same mistakes over and over so it’s easy to pick them out. Success on the other hand, is far harder to quantify. He believes that by allowing teams to be vulnerable to failure, they’re likely to discover their greatest strength. But if a big company wants to encourage innovation, there needs to be an internal commitment.
“I do believe that there needs to be the will in the first place. If you don’t understand that innovation is a risky business, then you shouldn’t start. However, I do see a lot of corporates in the Netherlands focus on innovation and on working as a start-up because they see the start-ups that succeeded in bringing innovation to the market. If you learn from those ways you create more support from the company, i.e. if we do it this way then we can take small steps and still reach a certain success point, without investing too much money.”
Having spent so much time analysing his failure, Tolsma has had time to reflect on the things he did right, too. Looking back on his company, he allows that while he would do many things dierently, there’s also a lot that he wouldn’t change. “I’m really happy with the way we communicated to the team and the investors. I still have good relationships with my co-founders and the investors from then. We are still in contact and so often, especially with a failure, people get angry, there are fights and they don’t speak to each other at all.” He has been a coach since the sale of the company, but as any serial entrepreneur will tell you, innovation becomes addictive. As time goes on, the temptation is growing to get back in the game himself.
“I’m just waiting for the right team and the right moment, the right idea, just whenever that comes together, but I think I’ll definitely do a start-up once again.” When that day comes, no doubt the experience of running his own company and of working with hosts of different innovation teams will have stood him in good stead. Over the years, he has become wise to all the potential problems and pitfalls a start-up might face. “I think the most important one is that people say a good product sells itself. That’s bullshit. I mean, a good product really helps but it’s not enough. You have to understand the market needs, you have to understand how people are paying, how the business model works, because we had a nice product but it was by far not good enough. With a very good product you can make some money, but with a bad market strategy you can definitely kill the product. I mean if you have a bad product it’s also very difficult with a very good market strategy to make it successful but a good product is by far not enough.”
And so Tolsma is holding out for a balance between the right product and the right product-market fit. The nature of the tech industry though is that it changes rapidly, and what may have been true six months ago, may not still be true today. “Sometimes, you think they must have thought of all or most things by now, but every time there’s something new it’s a case of “Oh! Yeah! Of course, why not!? It’s so di£cult to predict but that’s good to know.
Corporates too are getting smart about the rapidly changing trends and realising that they simply don’t have the agility to keep up the start-up pace. “At one of the banks where I did a project they are working in a start-up cooperation programme where they don’t incubate start-ups but they see that start-ups are innovative and that corporates don’t have the creativity to invent that. They want to work with them together to see if they can implement new technology in their company. And that’s also what I think is really valuable if you look at the qualities of a start-up and the qualities of a corporate, to combine those two.”
That collaboration between large corporates and smaller start-ups is a healthy way to fund innovation, to avoid stagnation and to allow both start-ups and corporates to play to their strengths. The majority of start-ups however, will operate outside of special cases like this. Founders will continue to take leaps into the unknown as they attempt to find the next big tech. So, does he have any advice for founders just starting out? “Watch your customer. Analyse your customer and not from your office! The customer always acts differently to how you think. When you start a company, you have to start talking to customers and analysing customers and seeing how they react and how they work and learn from that so you have to learn these really valuable lessons, too.”
In many ways, teaching corporates how to be more like start-ups is a reversal of the usual order, where the beginners learn from the more experienced. However, when it comes to tech, the new tends to win out over the long-established and by paying attention to how start-ups succeed and fail, corporates can take educated risks to help them stay at the cutting-edge. Arthur Tolsma learned the hard way, so you don’t have to.