Recently, Mahendra Palsule wrote a post about Role Playing and Entrepreneurship. In a short twitter conversation, I asked him whether we need better definitions of success and failure as it pertains to entrepreneurs. To understand what I meant, I’d urge you to read his post, before you read the rest of this post.
Nikhil Pahwa was also in the conversation, he had something very lovely to say:
Markers of success are well-defined when compared to markers of failure. All markers, whether of success or failure, are relative, of course. A startup that gets sold for ten million vs. one that get’s sold for a million is considered a “better” success story. So at least we have gradation in defining success by “how much.”
Failures don’t have that. Failures don’t get a mention; forget exposure. There are very few success stories to learn from – about what works; but very few failure stories to learn from – about what doesn’t work. Because there is little learning about what doesn’t work, I suspect, the same mistakes get repeated.
Lest you start adding a plethora of links to articles about what doesn’t work, rest assured I’ve read many. But these are generalised or abstracted versions of pretty much what doesn’t work — in life. After you read these articles you don’t get the feeling that you have learnt something new. In fact, almost all of these articles only reinforce what you already know or believed. Very few are contextualised, finely crafted, case-studies, and fewer that would relate to an Indian entrepreneur.
Most success or failure stories (when they do get some exposure) are essentially defined by the financial outcome. A success is one that makes money, grows or is sold off, and a failure is one that closes down because it has no more money to run the business. The how and why they got to that situation is important to understand, but essentially, the markers of success or failures are essentially financial. The underlying assumption of these markers is that the venture intended a large financial gain, somewhere on the horizon.
To paraphrase another tweet by Nikhil, you, the entrepreneur, need to define your own definition of success and then make a statement of having achieved it. It would be wrong to superimpose an “industry comparable” (to borrow a word from the VC fraternity) on your own venture to measure success. Till then, everything is WIP.
What if a business started with a different objective? For example, to be a stable, local, small business that provides good quality services and products? No doubt there is a financial part to this business also, but large financial gain or a high-value exit is not the primary objective of the business. The entrepreneur may wish to continue providing good quality services and products to a small market size that sustains the business and allows him the achieve his or her objective. I’d call it a success. Some, may call it a failure. Consider another company that provides a good learning environment for thirty employees, pays them decent salaries, on time, and does good (but not path-breaking) work for its customers; it could be termed a success — even if it is nowhere close to being an multi-million dollar acquisition target. Or, is that failure?
The criterion of measurement has to match the scale of intention.