Researchers have tested this many times, in different places, over many years, and they keep finding the same result. This one is safe to trust.
Paul Gompers, Anna Kovner, Josh Lerner and David Scharfstein looked at serial entrepreneurs, people who start more than one company, across thousands of venture-backed firms between 1986 and 2003, to see what predicts success the second time around. Founders whose previous company had gone public had about a 30 percent chance of doing it again. First-time founders managed about 18 percent. Founders whose previous company had failed managed about 22 percent, a little better than first-timers and well below the previously successful. The authors read this as success breeding success: partly skill, especially in choosing the right industry at the right moment, and partly the way suppliers, customers and investors commit more readily to someone with a success behind them. The popular idea that failed founders come back much stronger because of what they learned found little support.
A failure on someone's record tells you less than it seems, in either direction. The data does not support treating it as a mark against them, since failed founders did about as well as first-timers. It does not support the comfortable story that failure is as good as success either. What predicted success was a previous success, and even that is partly self-fulfilling, because people back someone who has already succeeded. When you see a failure on a CV, ask the specific questions: what went wrong, what the person would do differently, and whether their account sounds like learning or like a story they have polished. On judging decisions by how they turned out, see outcome bias.
Source: Gompers, Kovner, Lerner and Scharfstein, Performance persistence in entrepreneurship, Journal of Financial Economics, 2010. Success means the company went public or filed to. An earlier working version reported 20 percent for previously failed founders; the version linked here gives 22 percent.
The Hard Thing About Hard Things
Ben Horowitz, 2014
Horowitz on running a company through crises that could have sunk it. Read it for how decisions get made under that kind of pressure, rather than as proof that failing makes you better at the next attempt.
Every Saturday, one idea worth your time, with an honest account of how far the evidence really goes and where it stops. Free, a few minutes to read, and it leaves you with questions rather than instructions.
Draw your own card. It does not take long, and it rewards taking your time.