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Most of us fear failure more than we fear almost anything else in the world.

Failure is painful; we all know that. But failure is also useful. Failing is the best way for people to grow, because failing is the only way we really learn. It lets us know when we should change course, and gives us experience to do something the next time around.

That’s the theme of a recent book by Megan McArdle, a former staff journalist at The Economist and The Atlantic who currently writes for Bloomberg View. The book is called The Up Side of Down: Why Failing Well Is the Key to Success.

The book is an essential reminder to embrace failure as a way to learn and re-invent. That’s a useful lesson for everyone, especially entrepreneurs, to grasp. The book is filled with reporting and research. There are lots of interesting anecdotes, and we decided to share six of the most valuable ones for entrepreneurs.

Get ready for some fun stories to learn from.

Story 1: Building a Spaghetti Structure

 “I have not failed. I’ve just found 10,000 ways that won’t work.” - Thomas Edison

Peter Skillman is a user experience designer who came up with a design exercise. It’s called the Marshmallow Challenge.

Skillman would assemble different groups of people (e.g. engineers, lawyers, MBAs, toddlers), give them 20 pieces of spaghetti, a meter of tape, a marshmallow, a piece of string, and 18 minutes to build the tallest freestanding structure that would support the marshmallow.

Guess who did worst?

MBAs. They were too busy writing mission statements and plotting out organization charts to build a solid structure. Lawyers did almost as badly. Too many individuals in both groups spent more time playing status games than actually building.

Who did well? The engineers from MIT, certainly. But the best performing people aren’t whom you’d expect:

Kindergarteners built structures taller than those of engineers. And they did something that no other group did: they asked for more spaghetti.

They didn’t get hemmed in by assumptions. More importantly, they weren’t afraid to fail.

Instead of wasting time figuring out who’s in charge and what the ideal spaghetti tower would look like, they dove right in and started creating. They experimented endlessly, and just built the tallest tower they could.

These towers were illogical, lurching this way and that. But they were taller than the perfectly balanced and aesthetically elegant towers built by the engineers.

The toddlers built the tallest structures because they didn’t waste time with status games, because they challenged assumptions, and because there weren’t afraid to experiment.

“Multiple iterations,” says Skillman, “almost always beats single-minded focus around a single idea.”

Story 2: You Don’t Know Whether You’ll Succeed Until You Launch

“It’s not how far you fall, but how high you bounce that counts.” - Zig Ziglar

If you lived through the ‘90s you may recall an ambitious movie set on water.

That movie required a giant set constructed in a massive body of water to simulate ocean. It’s tricky, not to mention expensive, to work with that stuff; a wave once washed away an $8 million piece of the set, which had to be re-built. It went way over-budget, soon surpassing $200 million to become the most expensive movie ever made until then.

The cast and crew were publicly skeptical that this movie would do well. It also faced huge production delays. The movie was supposed to be a summer blockbuster, but was delayed so severely that it premiered in November.

The press made fun of the film and the director. The studio lost hope and prayed to break even. Even the director was pessimistic: He worked “in the absolute knowledge that the studio would lose $100 million. It was a certainty.”

When the movie finally came out, the reception was tepid. But what happened in a few months?

Titanic is still one of the top-grossing films of all time, after adjustments for inflation.

No one saw this coming. Everyone had given up hope: the cast, the crew, the studio, the press; even the director wanted to just get it done and over with. Nobody knew that it might succeed. And it did.

Titanic defied expectations. There was a market for the movie when nobody thought there would be. Usually insiders are optimistic even when no one else is. That wasn’t the case here. People who worked on the project, who had more reason than anyone else to believe in themselves, were openly pessimistic about how well this movie would go.

But it was a winner. McArdle's point is that nobody really knows which products will succeed until they're launched. There is failed company behind nearly every successful entrepreneur, and almost every successful company has launched products that have failed.

Story 3: How Much Does Market Research Tell You?

“The only real mistake is the one from which we learn nothing.” - Henry Ford

A venerable company in an old industry was anxious: An upstart competitor had been competing away a lot of its sales. It had to develop a new product.

The company’s very first product came out when Lincoln was still in the White House. It was one of America’s most respected firms. This is a company with tradition – and a great deal of resources.

How did it respond to its competitor? It started a project to develop a replacement product that would outsell that of its competitor’s. But before it would roll out, it did everything it could to try to make sure that the product would sell. How could it do that? By commissioning a great deal of market research.

Actually, that’s an understatement. The company commissioned more market research than anyone else in the history of the world. Researchers went around the country, from Pennsylvania to Wisconsin to California, offering samples to customers and making refinements to its product. It conducted surveys and asked questions to focus groups, and then it did them again.

The answer came back overwhelmingly that the new product was better. It was better not only than the previous product but also what the competitor offered.

The company was certain that it had a winner in its hands.

What happened when the product launched?

The backlash to New Coke nearly took down the entire company. It lasted less than three months before Coca-Cola returned Coke back to the shelves.

You’ve heard of the term “Minimum Viable Product.” You don’t need to be like New Coke and wait for focus groups to tell you what to do. Build a basic product with the core features ready, and then launch it and see whether people like it. Then continually learn from feedback and refine the features.

This is the internet age. As Naval Ravikant, the co-founder of AngelList, says: “Hardware? No, now you just put it on Amazon or Rackspace. Software? It’s all open-source. Distribution? It’s the App Store, it’s Facebook. Customer service? It’s Twitter—just respond to your best customers on Twitter and Get Satisfaction. Sales and marketing? It’s Google AdWords, AdSense.”

The costs of starting a business on the internet has plummeted. It’s easy now to set up a new store or to launch a new product. Market research goes only so far; it may in fact be cheaper to launch a product to test market demand than assembling a great deal of data and conducting focus groups. Launch; it's the only real way to test success.

Story 4: KFC and Colonel Sanders' Road Trip

 

“I can accept failure, everyone fails at something. But I can't accept not trying.” - Michael Jordan

If you’ve ever had Kentucky Fried Chicken then you’ve eaten out of a bucket with Colonel Sanders’ face on it. No, this isn’t really about how Colonel Sanders was never a real Colonel in the U.S. Army. The story McArdle tells is so much more interesting than that.

Harland Sanders never got his act together before he was 40. He experienced a long string of failures and had spent the first twenty years of his working life drifting around, quitting or getting fired for insubordination every time he managed to find employment. His wife eventually left him and fled with their children.

In his forties his finally found a footing, running a service station that also served fried chicken to weary travelers. That went well for a while, but then the government constructed Interstate 75 and diverted away all his traffic. Now he was 65 and faced being broke once more.

The failure of his restaurant was not his fault. But he didn’t sit still.

Instead, he got on the road in the early 1950s. He cooked his fried chicken for hundreds of restaurant owners, begging them to give him a 5-cent commission every time they used his recipe. He crisscrossed the country in a beat-up Cadillac, talking to people every day, and also faced rejection every day.

It was only at a restaurant in Utah that he found someone willing to take him on. An owner spotted the potential of the recipe and agreed to franchise the dish. And look how KFC has grown.

Harland Sanders’ success was born of bad luck and an ability for always looking around the corner. He didn’t give up, he didn’t sit still, and he never expected for opportunity to land in his lap. Instead he went out and found it.

Story 5: Growth Mind-set People and Fixed Mind-set People

“My great concern is not whether you have failed, but whether you are content with failure.” - Abraham Lincoln

According to Carol Dweck, a psychology professor at Stanford, there are two kinds of people when it comes to thinking about challenges. One group thinks that talent is a fixed thing: You either have it for a particular skill, or you do not. The other group thinks that you can build your talents by doing stuff that you’re not good at.

Here’s another way to think about it: the former group takes a “fixed mind-set” to challenges. They reference their intelligence, which can be considerable, as the litmus test for whether they should try something new: If you’re good at something, you’ll do it; if you’re not so good, that activity should probably be avoided.

When fixed mind-set people are forced into a challenge they’re not prepared for, they can engage in the remarkable task of self-handicapping. Don’t believe it? Think back to your high school or college days: Didn’t you have friends who refused to study, who decided to go to the movies or get very drunk, right before the SATs or before a major exam? Why did these people do that?

Here’s why. Consider your friend’s response if he gets a bad grade: He can say that he failed because he didn’t study, not because he’s not smart; and if he does do well, then he can be a good deal more pleased: “Look, I did super well without even studying.”

Let’s move on to the other type of people. They’re known as growth mind-set people. Instead of avoiding the things they’re not good at, they embrace new challenges as opportunities to learn. They don’t take their own intelligence as a measuring stick: Instead they realize that it could be improved. So instead of avoiding challenges, they happily take them on and believe that their performance can be improved.

It may be painful to see that you’re not as good as other people on a task. But there’s no doubt that the constant improvement sought by growth mind-set people make them more likely to stumble on a good idea.

Are you a growth mind-set person or a fixed mind-set person? If you delight in trying new things out even though you don't initially perform well in them, if you learn from criticism, and if you persist in the face of setbacks, then you're likely a growth mind-set person. And if you tend to see effort as fruitless, if you try to avoid challenges, and if you feel threatened by the success of others, then you're likely a fixed mind-set person.

Guess who makes for better entrepreneurs?

Story 6: The Joys of Climbing High

“What is the point of being alive if you don’t at least try to do something remarkable?” – John Green

This last part isn’t really a story. It’s more the identification of a trend.

Parents these days are scared. For the first time in a long time parents believe that their children will have a worse standard of living than they do now. What is their response to securing the future for their kids? Many parents believe that the way to guarantee a good job in the future is to do as much as they can to win a coveted seat at an elite university. Only then can they be safe.

There are stories of the well-to-do in New York trying to get their daughters into the premier nursery, which will ensure that the go to the right elementary school, which gets them into the right high school, and finally the conveyor belt ends at an Ivy or a top-30 school.

How do these manifest? High school kids now have to have an outstanding GPA, high SATs, glowing recommendations, volunteer a whole lot preferably in a developing country, and be distinguished athletically and artistically. The result: high school students spend their waking hours doing homework, practicing a musical instrument, or engaging in various other resumé-enhancing activities.

Parents are now trying to engineer away failure for their kids, and that means removing obstacles. And in the process, parents are depriving kids of what they really need, writes McArdle: “the ability to learn from their mistakes, to be knocked down and to pick themselves up.”

There are lots of other examples of the trend towards making sure that kids don’t face obstacles. You may also call it helicopter parenting. It’s the process of shielding kids away from any sort of harm, any sort of risk.

Let’s end this section by quoting from McArdle: “The metaphor for our age is the disappearance of high monkey bars from playgrounds around the country. We have made it impossible for children to fall very far – and in so doing, we have robbed them of the joys of climbing high.”

There will never be a time when you feel that it's perfectly fine to fail. There's always reason not to embark on a new venture or try to build something new. And not doing so will never give you the joys of climbing really high.

Conclusion

McArdle’s message is clear: We can't wait for an opportunity that's perfectly safe. As painful as failure feels, we should embrace it – smartly – because failure is the only way we really learn. Taking risks allow us to see what works and what doesn’t, and may give us the opportunity to really do something new. 

This only scratches the surface of The Up Side of Down. If you’ve liked what we shared, take a look at the book. It features many more stories and studies presented here, including very interesting discussions of the differences of bankruptcy laws between America and Europe, more discussion of children, and also quite intimate and embarrassing ways that McArdle herself have dealt with personal failures.


About The Author

Dan Wang is a Shopify Content Specialist studying economics and philosophy at the University of Rochester. Talk to Dan on Twitter.