Magazine

Online Extra: Failure as a Badge of Honor


Lost your job? Lost your company? Lost somebody else's millions? You're not a failure -- you're a marketing opportunity, a member of a hip new club, a streetwise graduate of the Net school of not-so-hard knocks. If a dot-com was the right place to be a year or two ago, dot-gone is perfectly O.K. now. If layoffs can hit Priceline, and if bankruptcy can close eToys, it can happen to anyone.

In the New Economy, failure isn't the cause for shame that it once was. Instead, it's a sign of courage, a badge that says you've completed a business rite of passage. Now, it's not only acceptable to bring up your own layoff or your company's bankruptcy at a social gathering, it's often the point of the get-together. At pink-slip parties and high-tech happy hours, the laid-off share war stories and network with headhunters over free drinks.

No need to blame yourself -- chances are good your next employer or next investor won't. But although there's no sense moping, some rules for how and when to fail, New Economy-style, still hold. Here are a few of the most important:

There's safety in numbers: A good time to go under is when companies like yours are dying all around you. That way, the problem isn't that you were a bad manager or had a faulty business plan. Failure was an act of the economic gods, a no-fault dissolution. Even though they might have seen the handwriting on the wall, few dot-com execs were eager to be the first to go under, says Irving Leveson, president of ForecastCenter.com, which makes economic forecasts, in Marlboro, N.J. But once they realized they were in good company -- and lots of it -- the stigma was gone. "It's better to go down with everybody else and blame it on the downturn," Leveson says.

Wear failure proudly: "It's not a shameful thing. It's happening everywhere," says Carlotta Stankiewicz of Austin, Tex., who was laid off earlier this year by an ad agency. Her reaction was to go right out and found PlanetPinkSlip.com, a site that features "unemployment humor" and a job board. Bankruptcy lawyer Deborah Crabbe of Seattle has also noticed the lack of shame. Usually, a company that has filed for bankruptcy will keep a low profile. But some of her colleagues who represent dot-coms in Chapter 11 "couldn't get the CEOs to stop talking to the press," she says.

If you've failed, after all, it means that you aren't a boring, stodgy, Old Economy drone who played it safe. You're a risk-taker, a go-getter. In a pitch to potential advertisers, Failure magazine describes the psychographic profile of its readers: "educated, ambitious, adventuresome, self-starters, affluent, or affluent-minded." When you're talking about people like that, what's a little failure now and then?

Failure has become so fashionable that it's all over the Web. Startupfailures.com is "the place for bouncing back," and Duty-free.com offers an invitation to get on Bernardo's List, which sponsors networking parties for venture capitalists, entrepreneurs, and "talent for hire." If the talent wants to replace the coffee mug or backpack that now contains a dead company's logo, she has many options, including goods that say "Failed" in bright red letters. Students of dot-com death can visit historical monuments, such as The Museum of E-Failure from Netslaves.com, and read their own daily trade journals, including F---edcompany.com.

Be sure to fail with class: Net entrepreneurs whose companies have tanked, those whose companies have survived, and the VCs who have backed both kinds all say they wouldn't hold failure against a founder whose company goes under. In fact, they say they'd probably consider the person more qualified when it comes to knowing what -- and what not -- to do.

One caveat, though: The founder has to have behaved well on the way out. "I think there's something charming about somebody who has tried and failed, especially if they failed with integrity," says Matt Harris, CEO of Village Ventures in Williamstown, Mass., which has established venture funds in about a dozen U.S. cities. "It's very stressful to have a company go down, so it doesn't bring out the best in [an entrepreneur's] nature. If they failed because of factors outside their control and they acted with grace and integrity and tried to make people whole, that's great. They've shown their mettle."

Matt Bergheiser has a similar view of former CEOs whose companies died -- except that he argues that there's no such thing as factors outside their control. "Having failed might be something in their favor rather than a strike against them. It depends on whether they learned from it," says Bergheiser, vice-president of The Enterprise Center, a business incubator in Philadelphia. "If they're making excuses for why it didn't work, they haven't learned. Even if the whole economy is going south, they still have to look within for reasons why the company failed. What if the economy goes south again? What would they do differently?"

It's good to be rich: Perhaps the biggest reason that failure is less ego-bruising than in past downturns is the relative affluence of the victims. In the New

Economy, the captain usually doesn't go down with the ship. Many of those who lost a company or a job in the Net wreck have healthy bank accounts, severance checks, and college degrees to see them through. Their company stock may be worthless, but they still have plenty of options. And that can make failure a whole lot easier to take. By Theresa Forsman in New York


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