Startup Failure: Seattle’s Stigma, Boston’s Chip on Its Shoulder, and Silicon Valley’s Badge of Honor

11/9/09Follow @gthuang

“People say if you fail in Seattle, you’re screwed,” said Marcelo Calbucci. “If you fail in the Bay Area, you just have a badge of honor.”

We were at the TechStars reunion event in Seattle last week, listening to early-stage investors Brad Feld, Andy Sack, Steve Hall, Greg Gottesman, Shawn Broderick, and Chris Sheehan speak about entrepreneurship and the tech startup scene in their respective cities. Calbucci, the founder of Seattle 2.0 and Sampa (which folded in August), was asking the panelists about how the tolerance of failure, whether real or perceived, affects a region’s culture of innovation.

It’s a deep question, and it continues the discussion of startup cultures in different cities that I highlighted last week. It’s also part of a debate on failure that has been going on since long before I wrote about it in Xconomy last January. There seem to be two camps. Most entrepreneurs I’ve talked to feel there is a stigma associated with having a failed startup in Seattle. Most venture capitalists, not so much. But it’s a much broader issue than just Seattle. My colleague Bruce talked with a Web 2.0 startup founder in San Diego last week who said his first failure, earlier this year, “was truly a painful experience, and I’m still not over it.” And meanwhile, Brad Feld, the co-founder of TechStars and Foundry Group in Boulder, CO, had some provocative things to say about the failure aspect of Boston’s culture.

But first, Andy Sack of Seattle’s Founder’s Co-op gave his perspective on having failed at his last startup, Judy’s Book, after having had three successes prior to that. “As much as you teach entrepreneurship, as much as there’s supply of capital out there, really when push comes to shove, entrepreneurship comes from within,” he said. “I couldn’t take a job at any of the big companies. We’ve been through the tech boom of the ‘90s. We’re just coming off of a major hiccup. I’d say right now, early-stage investors in Seattle have retreated some; venture capital has retreated some, they’re focused primarily on their portfolio. That said, you [Calbucci] failed and went out and started your own thing. I failed and went out and started my own thing. Because we didn’t know any better. The entrepreneurs that don’t know any better, they just go do it again.”

Greg Gottesman of Seattle-based Madrona Venture Group is one of those VCs who says he doesn’t see failure as a black mark. “My sense in this community is, to people who matter most, I don’t think failure is a huge negative,” he said. “There are certain types of failures, like failure of integrity—that’s hard to recover from. But failure of a startup, just speaking with all my partners, that’s not a negative. We talk about that as a learning experience. It’s just another piece of the puzzle.”

So how does Seattle’s tolerance of failure differ from, say, Boston’s or Silicon Valley’s? Feld, who has been investing nationally for 15 years, said, “I actually believe that the shtick of ‘failure as a badge of honor’ is really great shtick. I’ve failed a lot. It’s hard to fail. Failure impacts a person in … Next Page »

Gregory T. Huang is Xconomy's Deputy Editor, National IT Editor, and the Editor of Xconomy Boston. You can e-mail him at gthuang@xconomy.com or call him at 617-252-7323. Follow @gthuang

Single Page Currently on Page: 1 2

By posting a comment, you agree to our terms and conditions.

  • http://www.dailygrommet.com Jules

    Great article Greg. I’m weighing in here from Boston. Brad Feld is absolutely right about the chip on our shoulders here. But no one is grousing about the Silicon Valley (or Seattle or Austin or Boulder) successes. We root you guys on wholeheartedly.

    No rather, we Boston entrepreneurs direct our grumblings at the local VC community, which is still catching up to the vibrant level of innovation happening right in front of them. We keep losing too many deals and good people to West Coast companies and investors.

    For better or worse, some Boston investors want to relive their enterprise software and hardware success heydays and invest in their proxies, like infrastructure and plumbing technologies, and web analytical plays. We need Boston investors who can embrace green tech and social media and consumer internet. Those are the game changers that will really build the Boston entrepreneurial scene. And, by association, the broader Boston image across the country. People get excited about technologies and products they can directly use. Not the safe infrastructure plays.

  • http://www.joshuamaher.com Josh Maher

    Hey Greg,

    Interesting piece, I missed the techstars event and hadn’t seen this article but had some interesting thoughts on the topic that I posted at http://www.techflash.com/seattle/2009/11/guest_post_what_makes_seattle_a_good_place_for_startups.html

    The most interesting piece of what Feld said in your report is that the folks in Boston are changing their attitude and building good startups despite the availability of local VCs… Because of the good startups, the VCs are finding them anyway. This is in line with my thinking, Seattle has some big differences – but this attitude and community are more key then the number of deals in the works or the number of exits is key…