Failure in Silicon Valley

Posted by Glenn Gow on 06/05/07 at 12:37 AM under "Opportunity Analysis"

John Caddel writes about failure on the Marketing & Strategy Innovation Blog. He talks about how in many companies, failure means you’ll be packing your bags soon.

We see this issue in spades in Silicon Valley. The big companies have a harder time failing, as their culture doesn’t enable it. For example, Wall Street will kill you if you have a single down quarter.

However, Venture Capitalists live in a failure culture. A very large percentage of their portfolio companies fail. Furthermore, an executive who fails attempting to start a company is viewed as an excellent choice to run a new venture. Granted, that executive isn’t as esteemed as the one who took a company public, but the exec who failed is more like the baseball player who struck out. They get to get up to bat again and again.

Now, the bigger companies use that culture of “acceptable failure” to their advantage by letting the VCs take the risk, and then, if the company succeeds, the big companies buy them.

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