Tag: failed startups

People go into business because they believe in the power of their ideas. Still, almost 1 in 5 new businesses fail within the first 12 months of launching. The experience can be disheartening, but as a Harvard Business School study showed it is not detrimental to entrepreneurs’ career growth according to the Harvard Business School.

Research by professor Paul Gompers published in 2022 concluded that most entrepreneurs tend to fail up. It showed that failed founders rise to senior positions faster — contradicting the belief that a failed business leads to a crisis in confidence, manifesting itself through lower-paying jobs.

So why does failure seem to propel some entrepreneurs forward rather than holding them back? We tapped Samir Mayekar to explain this phenomenon. Mayekar is the associate vice president and managing director of the Polsky Center for Entrepreneurship and Innovation at the University of Chicago, which supports entrepreneurs. Under his leadership, the center’s startups have raised funding or had exits or exited a total of $2 billion since 2023. He also co-founded and served as CEO of NanoGraf Corporation, a global manufacturer of advanced battery technology that is now valued as much as $390 million, according to dealroom.co.

He says failure, rather than discouraging entrepreneurs, can enhance resilience, creativity and long-term success. Here are three key takeaways.

Urgency fine-tunes a leader’s priorities

Starting and running a company requires understanding the business as a whole, not as a single-job function, so founders must take on a wide range of tasks, some outside their previous experience. Time and money are in short supply, meaning startup founders have to quickly decide where they focus their attention for the highest impact. They build leadership skills such as negotiation, operational management and decision-making as they hustle to build their companies.

“The sense of urgency and ruthless prioritization of what you have to do becomes very evident to you as a founder,” said Mayekar. “When you’re working at a startup, you’re going to be working at a pace that is almost unparalleled anywhere else. You’re working against the clock before money runs out. Time becomes your biggest enemy as a founder. That’s not the case when you’re just an employee.”

Failure is a better teacher than winning

Success can be misleading. A mistake or poor judgement is easy to overlook when things are going right. This can reinforce bad habits that might not show up for years. But when a startup fails, a founder is likely to turn over every decision in their mind, looking for a path that could have led to a different outcome.

Failure triggers reflections that can lead to growth

“Sometimes successful founders can learn the wrong lessons,” said Mayekar. “Luck or good timing can cause people to interpret their success as the result of everything they did. I’ve seen a lot of founders make that mistake. Whereas when you fail, the amount of self-reflection that is required is extreme. Founders who’ve been in failed startups tend to have a lot more emotional resilience.”

Experience beats a perfect record

A failed startup does not erase the lessons learned along the way. The information from the experience can be repurposed and applied to the next endeavor.

“It’s one of the reasons why a lot of venture capitalists want to fund multi, repeat founders, even if they failed once,” said Mayekar. “Because they know that if they’ve taken the right leadership lessons away, then their next venture is going to have a much greater chance of success, versus someone who’s never been in the game.”

Trial and error creates data points entrepreneurs can pull from as they continue on their career. It can help them make better decisions in the future and recognize patterns that signal when to pivot—or when to walk away altogether.

That lesson came too late for Joseph Hawke, founder of Uniflight, a Delaware helicopter maintenance company he founded in 2007. At the company’s peak, it had $24 million in revenue. When it shuttered last year, that figure dropped to less than $2 million.

“I did not do as I preached. I would say ‘fail fast,’ but I failed slowly,” said Hawke. “Have the fortitude to cut bait sooner rather than later.”

Hawke is now a contractor for Fundamental Advisors, an infrastructure fund with approximately $4 billion in assets under management. They are the capital equity sponsor of his new, unnamed-venture in the helicopter industry — proving that failure does not define an entrepreneur’s future, and that new opportunities can bounce back and apply hard-earned lessons to new ventures.

Still, it’s hard to get to that point 

“There’s a certain level of delusion you need as a founder,” said Jordan Wannemacher, co-founder of SaladSprinkles. “You see this vision for a thing that doesn’t exist yet. It’s really hard to realize how something you so strongly believe in is not going to work.”

Her Maryland based company launched in 2024 and raised $200,000. Its promise to consumers was a healthier alternative to croutons through toasted flavored rice. The company is in the process of shuttering. 

As she runs through the list of red flags that led to the decision, it’s clear she’s gained invaluable, hands-on experience in fundraising, marketing, and operations that will serve her well in whatever she tackles next.