Most new businesses fail--that means most entrepreneurs and CEOs fail right along with them. What makes one person pack up his desk and go home while another shakes it off and tries again?
It’s all in the mindset, says Megan McArdle, author of The Up Side of Down: Why Failing Well is the Key to Success.
“People with a fixed mindset believe failure is a referendum on them,” she says. “They think they’re not good enough and maybe they should just go mop floors somewhere. Those who have a growth mindset, however, think failure is a roadmap for what not to do next time.”
Most businesses fail, even with good venture capital backing, says McArdle. But successful entrepreneurs have several similar inherent qualities: “They have some measure of overconfidence,” she says. “To be successful, you have to have a certain amount of blindness to the risk.”
Optimistic bias is another common trait, as successful entrepreneurs tend to look on the bright side. They look at failure and find the valuable lesson, bringing it to the next thing.
Here are five growth-minded entrepreneurs who failed at first and then turned it around:
America’s favorite ketchup maker--Henry J. Heinz--actually started out as a horseradish peddler. At the time, horseradish was a popular condiment, especially among English and German immigrant families who used it to flavor meat, potatoes, and cabbage. It was also labor intensive to make. Bottled horseradish was available, but the bottles were opaque and fillers were often used. Heinz felt customers wanted to see what they were buying, so he decided to package his offering in clear bottles. In 1869, he formed Heinz Noble & Co. with his friend L.C. Noble.
For the first five years sales were good due to the company’s reputation for offering high-quality products. But Heinz Noble & Co. would fall victim to the Panic of 1873. The economy was depressed and Heinz couldn’t pay his creditors or employees. In 1875, he and his partner filed for bankruptcy.
A year later, Heinz would form H.J. Heinz Company with his brother John Heinz and cousin Frederick Heinz. One of their first products was ketchup. The company grew rapidly, adding products such as baked beans and pickles. Incorporated in 1905, Heinz served as president until he died in 1919. It seems Heinz learned from his first venture: “To do a common thing uncommonly well brings success,” he was quoted as saying.
In 2013, Berkshire Hathaway and 3G Capital acquired H.J. Heinz Company for $28 billion.
If Vera Wang had made the 1968 U.S. Olympic figure-skating team, she might not have revolutionized the bridal industry. While in high school, she competed at the 1968 U.S. Figure Skating Championships, placing fifth with her partner James Stuart in the junior pairs division.
When her Olympic dreams failed, she decided to pursue fashion. After graduating from college, she worked at Vogue, and says all she did her first year was Xerox. Wang worked her way up to senior fashion editor, but was passed over for the editor-in-chief position. She left Vogue to be a design director for Ralph Lauren.
In 1989, Wang became engaged to Arthur Becker. Frustrated by the selection of bridal wear, she designed her own gown. The following year, she opened her own bridal boutique in the upscale Carlyle Hotel on Madison Avenue in New York City. Today the Vera Wang brand includes bridal, ready-to-wear, publishing, fragrance, beauty, accessories, and home decor.
Wang says in Cosmogirl! Secrets of Success: 38 Leaders Tell You How to Achieve Your Dreams: “For me the idea that I could always do better, learn more, learn faster, is something that came from skating. But I carried that with me for the rest of my life.”
Before Microsoft would change the world of software, there was Traf-O-Data. Classmates at Seattle’s Lakeside High School, Bill Gates and Paul Allen designed a computerized microprocessor that would analyze traffic data from the black rubber traffic counters that are placed on roads, creating reports for Washington state highway department’s traffic engineers. The idea was to optimize traffic and end road congestion. Lofty goal, but the pair’s first demo for local county officials didn’t work. And the idea would later become obsolete when the state of Washington offered to tabulate the tapes for cities for free.
But Gates and Allen didn’t let their lessons go unlearned. They learned how to write software and in 1975, they formed a new startup called "Micro-Soft."
In 2011, Paul Allen told Newsweek: “Since then, I have made my share of business mistakes, but Traf-O-Data remains my favorite mistake because it confirmed to me that every failure contains the seeds of your next success. It bolstered my conviction that micro-processors would soon run the same programs as larger computers, but at a much lower cost.”
Financial guru and best-selling author Dave Ramsey wasn’t always money savvy. In fact, he lost it all before he learned how to become successful. Ramsey worked his way through college and by the age of 25, he acquired more than $4 million worth of properties, and a net worth of about $1 million. That means Ramsey had debt--a lot of it. Ramsey ended up being forced to sell assets until he had nothing left.
Learning from this mistake and vowing to never be slave to a lender, Ramsey worked to get his finances together. He started a radio show, originally called The Money Game, in his hometown of Nashville, and he shared his story to help others.
Today, The Dave Ramsey Show is syndicated to more than 500 radio stations throughout the U.S and Canada. He has written four New York Times bestsellers and his Financial Peace University is taught at locations across the country.
Colonel Harland Sanders was a serial failure, says McArdle, getting fired from several jobs and starting companies, including a gas lamp manufacturing firm, that eventually went out of business.
“At one point his wife left him because he was always trying to get rich quick,” she says. In his 40s, he started café on a major highway and found a good level of success. Ten years later a new highway was built, bypassing his restaurant; his business died.
“Most people would think that life was over, but this guy picks up and takes his chicken on the road,” says McArdle. In 1952, he convinced a restaurant in Utah to sell his chicken and Kentucky Fried Chicken (KFC) was born. In 1964, Sanders sold KFC to a group of investors for $2 million.
McArdle quotes his daughter, Mildred Ruggles, in her book: “He had a lot of hard knocks, but he never seemed to let it get him down. He seemed to try to learn a lesson out of every experience he had, and he would try to look around the corner--‘Well, what can I do now?’”
[Image: Flickr user Guy Nesher]