Whose advice should you take?

“The experience, knowledge, and personal baggage we gain throughout our experiences are invaluable,” Shaul Olmert writes, stressing a success story is not only defined by money or fame

Shaul Olmert 13:4220.12.21

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A few weeks ago someone tweeted that an entrepreneur whose venture had failed offered his services as a consultant to other entrepreneurs. The person writing the tweet expressed ridicule and protest towards the entrepreneur who thought he had something to contribute or could advise other entrepreneurs after his personal entrepreneurial experience ended in a failed venture. But what is a failed venture exactly?

Most of us are likely to accept the assumption that Apple, Google, and Amazon, for example, are successful ventures, and it is likely that if one of the entrepreneurs behind these ventures had offered his services as a consultant, he would not have aroused resentment or contempt. One can also go to the other extreme and assume that if a venture failed to deliver the product its employees worked on, did not raise capital, and closed down after several months, we probably would not accept the claim that it was an incredible success. However, most ventures do not fall into one of these distinct categories, and life is usually not black and white. So what, after all, defines the success of a venture?

"Our path in life is a single continuous one, including the bumps along the road that are a part of a successful journey." Photo: Shutterstock

One common perception is that an enterprise is considered a success if it succeeds in yielding a positive return to its investors (assuming the venture has raised capital, a reasonable assumption for the purpose of our discussion). If it is an astronomical return, there will probably be a consensus regarding its success. But most ventures return to their investors some capital, perhaps double, triple, and in some cases four or five times the original investment amount. For the investors, success can be measured in relation to the performance model by which they manage the fund. This calculation is related to long-term return (IRR), a calculation of the return in relation to the interest rates in the market or in relation to inflation, as well as other financial calculations that define whether the investment paid off or if they would have received a higher return had they invested in another route. But all of these can measure the success of an investment from the investor’s perspective and not the success of the entire venture.

Better Place, an electric car venture headed by Israeli entrepreneur Shai Agassi, went bankrupt after spending nearly $1 billion and putting less than fifteen hundred cars on the road in Israel. This project is likely to be treated as a failure according to any accepted parameter: financial loss, a vision that did not reach realization, a large gap between the resources invested and the expectation created compared to the actual result, and more.

A few years later, the vision of electric cars became an existing fact, changing the world of mobility and transport, and causing a widespread social and economic change. The fruits of success are reaped by the entrepreneurs, employees, and investors of other ventures, led by Tesla, but their success did not come out of thin air. It relied to some extent on the work, research, development, and knowledge accumulated by engineers and operational staff, and some of which, came from previous ventures, even though, in the end, they were crowned as a failure. So is Better Place, for example, really just a failure?

Borrowing from other fields, many of the couples married in the world in recent decades have eventually divorced. At the time of their wedding, it is likely that a couple hoped that the marriage would last till death do them part, but such hopes were ruined. Does that mean the marriage was a failure? And what if it lasted for decades, led to building a family and many happy moments before ending? During my school years, I had very close and meaningful relationships with various friends. To this day if I get to hear from any of them or think of them, they have a big place in my heart, but the connection between us has been severed and we do not have an active relationship for several decades. Does this mean that these friendships have failed? Is Charles Barkley's career a failure because he never won an NBA Championship? Have great authors, like Franz Kafka, who died without gaining any recognition or fame for their work, failed, especially since their books continue to shape the perception of millions of people around the world for years after their deaths? By what do we define failure or success and at what point in time is it right to make that judgment?

More than a decade ago, I met an entrepreneur and CEO of a gaming company that was at its peak at the time. One of their games was the most successful game in the world for years, and when we met in the bustling lobby of a San Francisco hotel during an annual gaming conference I asked him if it was true that the game, which generated several million dollars, was produced at a cost of only $250,000. He replied that factually that is true, the cost of developing that game was that amount, and that development took nine months. However, he said, the game was preceded by thirteen years of development in which they produced countless other games, most of which were never launched and others were almost never adopted by consumers, some received limited recognition and none were crowned a success. But all those projects, the time and effort invested in them, were part of that company's journey towards success.

It is impossible to isolate the effort and time invested in that one project from the rest. Of course, even if one considers all the years of work and money that went down the drain during the company’s work on previous projects, its success is still very impressive. What is important here is not the calculation of the return on the investment, rather, the perception that our path in life is a single continuous one, including the bumps along the road that are a part of a successful journey.

Most of the sports teams that win the league championship also experience losses along the way. Those people who are crowned as successful will tell you candidly that throughout their careers they have also experienced countless defeats, and of course in relationships, we are all familiar with the complexity and the many layers of the process.

And despite all this, the end result is everything when measuring success. The saying "winning isn't everything; it's the only thing," attributed to legendary football coach Vince Lombardi (even though he only quoted someone else), correctly describes how we tend to judge success in sports, business, and other areas of life. Looking at it more broadly, we know that not only are our successes and failures just chapters in a longer journey, and that the very superficial point of view separating winners and losers hinders curiosity, creativity, and experience, but that also in many cases the difference between positive and negative results is a toss-up, determined by unknown forces over which we have little control.

Many entrepreneurs will openly admit that their ventures "just succeeded" and that they cannot define or really put their finger on what they did right and what was the secret of their success. In the same way, quite a few entrepreneurs will analyze their unsuccessful projects and will not be able to identify points of concern or intersections at which they made the "wrong" decisions. The outcome is often the result of circumstances over which we have no control or ability to measure, so the end result does not necessarily indicate the quality of our work.

Many years ago when I worked for the media corporation MTV Networks in the U.S., we were desperate to signal to the market that we were making a significant investment in the field of digital media. There was a lot of pressure from the company's management, and as a result, we made a decision to offer a relatively small startup the high sum of over $100 million to acquire it. The offer was excessively high for the real market value of that startup, and indeed after three or four years, we sold it for one dollar to another company. This business move stemmed from reasons that were related to the image of our company as a company that did not adapt to the digital revolution, so for momentary PR considerations, we made a decision (unfortunate, in itself) to turn that ephemeral startup into a success story. Not only did the people behind it become wealthy, but they can now share their story of success and get recognition as great executives who know how to lead a venture to an exit, and translate a vision into reality. It is another example that the bottom line is important, but does not tell the whole story.