Do failed founders do better next time

Researchers studied the track records of serial entrepreneurs, people who start multiple companies, to see what predicts success the second time around. They sorted founders by how their first venture had gone. Those whose first company had succeeded had about a 30 percent chance of success on their next one. First-time founders, with no track record at all, succeeded about 18 percent of the time. And founders whose first venture had failed? They succeeded about 20 percent of the time, better than first-timers, and not far below the previously successful. Prior failure, in other words, was nearly as valuable as prior success, and clearly better than never having tried. The failed founders had paid tuition in lessons the beginners had not yet learned, and those lessons carried forward.

Failing at something hard is closer to an asset than to the red flag it looks like on paper, because the person has already paid for lessons a beginner has not learned yet. Yet most hiring and most investing treat a failed venture as a mark against someone, filtering out exactly the people who have the scar tissue of real experience. When you see a failure on someone's record, do not just count it against them. Ask what they learned, what they would do differently, whether they can name the specific mistake, because a thoughtful failure often beats an untested success, and it certainly beats never having risked anything.

The Hard Thing About Hard Things

Ben Horowitz, 2014

What building through failure actually teaches, from someone who lived both sides of it.