“Fail fast” is not an excuse for being a moron, a flake, or a scumbag.

I wrote before on technology’s ethical crisis, a behavioral devolution that’s left me rather disgusted with the society and culture of venture-funded technology startups, also known as “VC-istan”. There are a lot of problems with the venture-funded technology industry, and I only covered a few of them in that post. Barely addressed was that so much of what we do is socially worthless bubble bullshit, like Zynga– which, in my mind, only proves that a company can be taken seriously even when its name sounds like 4th-grade anatomical slang. Most of us in venture-funded technology are merely bankers, except for the distinction that we buy and sell internet ads instead of securities. This world of crappy imitations and bad ideas exists because there’s a class of entrepreneurs (who are well-liked by venture capitalists) who’ve become convinced that “the idea doesn’t matter”. That’s ridiculous! It’s good to pivot, and sometimes one has to change or abandon an idea to survive, but ideas and purposes do matter. When this fast-and-loose attitude is taken toward ideas, the result is that stupid ideas get lots of funding. That’s unpleasant to look at, but it doesn’t have the moral weight of some of VC-istan’s deeper problems, which I’ve already addressed. To pore into those, I think we have to look at a two-word good idea taken too far, and in horribly wrong directions: fail fast.

As a systems engineering term, “fail-fast” is the principle that a failing component should report failure, and stop operation, immediately, rather than attempting to continue in spite of its malfunction. The diametric opposite of this is “silent failure”, which is almost always undesirable. In software engineering, it’s generally understood that an average runtime bug is 10 times as costly as one found in the compilation process, and that a “do-the-wrong-thing” silent bug can be 10 to 1000 times more costly than one that throws a visible error at runtime. In software engineering, redundant systems are usually preferable because components can fail (and they will, for causes ranging from programming errors to hardware defects to data corruption caused by cosmic rays) without bringing the whole system down and, in these, for dysfunctional components to halt fast is usually a desirable behavior.

In the systems case, it’s important to look at what “fail” and “fast” mean. Fail means to stop operation once there is a detected possibility of erroneous behavior. Fast means to report the failure as soon as possible. Whether it’s a bug in software or a defect in a manufacturing process, it’s always astronomically cheaper to fix it earlier rather than later. The idea isn’t to glorify failure. It’s an acknowledgment that failure happens, and it’s a strategy for addressing it. Fail fast doesn’t mean “make things unreliable”. It means “be prepared for unexpected wrongness, and ready to fix it immediately”.

In VC-istan, “fail fast” is an attitude taken toward business, in which failure becomes almost a badge of honor. I believe this is intended as an antidote for the far more typical and pernicious attitude toward business failure, which is to personalize and stigmatize it, as seen in “middle America” and most of Europe. I’ll agree that I prefer the fail-fast attitude over the paralyzing risk aversion of most of the world. The reason Silicon Valley is able to generate technological innovation at a rate faster than any other place is this lack of stigma against good-faith failure. On the other hand, I find the cavalier attitude toward failure to often veer into frank irresponsibility, and that’s what I want to address.

The typical VC startup founder is rich. Without inherited connections, it takes about twelve months worth of work without a salary to produce something that VCs will even look at. (With such connections, VC mentoring comes immediately and a fundable product can be built within about half that time.) Even for the rich and well-connected, it’s dicey. VC acceptance rates are typically below 1 percent, so a lot of good ideas are being rejected, even coming from well-positioned people. Raising money is always hard, but for people who aren’t wealthy, the risk is generally intolerable: twelve months without salary and a high likelihood that it will amount to zilch. Why’s this relevant? Because rich people can afford a cavalier attitude toward failure. Losing a job just means moving vacations around. If one company dies, another can be built.

In an ideal world, everyone would be rich, by which I mean that material limits wouldn’t dominate peoples’ lives and their work in the way they do now. This would be a world of such abundance as to implicitly provide the safety associated with socialism, without the drawbacks, and in which poverty would be eliminated as thoroughly as smallpox. I believe humanity will reach a state like this, but probably not until the end of my lifetime, if not some time after I’m dead. In this “post-scarcity” world, libertarian capitalism would actually be a great system (and so it’s easy to see why out-of-touch rich people like it so much). Business failure would just be the impersonal death of bad ideas, resources would quickly be allocated to the good ones, and people would rise into and fall out of leadership positions as appropriate but could gracefully decline when not needed, rather than having to fire their help, pull their kids out of college, or move halfway across the country when this happens. If everyone were rich, libertarian capitalism would be a wonderful economic system. However, we don’t live in an ideal world. We have to make do with what we have.

In the real world, failure hurts people, and most of those people aren’t 23-year-olds with $5-million trust funds. Investors (not all of whom are rich) lose large amounts of money, and employees get fired, often without notice or severance. Careers of innocent people can be damaged. This doesn’t mean that failure is morally unacceptable. Good-faith failure must be accepted, because if failure leads to broad-based social rejection, you end up with a society where no one takes real risk and no advancement occurs. This isn’t an abstract danger. It’s something that most people see every single fucking day in the typical corporate workplace: a bland, risk-intolerant environment where people are so afraid of social rejection that people torture themselves in order to seem busy and important, but no one is taking creative risks, and real work isn’t getting done. So my attitude toward those who take risk and fail in good faith is one of empathy and, sometimes, admiration. I’ve been there. It happens to almost everyone who wants to accomplish something in this world.

My issue with “fail fast”, and the more general cavalier attitude toward business failure observed in VC-istan, is that people who espouse this mantra generally step outside the bounds of good-faith failure, responsible risk-taking, and ethical behavior. When you take millions of dollars of someone else’s money, you should try really fucking hard not to fail. It’s a basic ethical responsibility not to let others depend on you unless you will do your best not to let them down. You should put your all into the fight. If you give it your best and don’t make it, you’ve learned a lot on someone else’s dime. That’s fine. The problem with “fail fast” is that it sounds to me a lot like “give up early, when shit gets hard”. People with that attitude will never achieve anything.

Usually, the worst “fail fast” ethical transgressions are against employees rather than investors. Investors have rights. Dilute their equity in an unfair way, and a lawsuit ensues. Throw the business away recklessly, and end up in court– possibly in jail. One can’t easily fire an investor either; at the least, one has to give the money back. On the other hand, a remnant of the flat-out elitist, aristocratic mindset that we have to kill the shit out of every couple hundred years (cf. French Revolution) is the concept that investors, socially speaking, deserve to outrank employees. This is absurd and disgusting because employees are the most important actual investors, by far, in a technology company. Money investors are just putting in funds (and, in the case of VC, money that belongs to other people). They deserve basic respect of their interests for this, but it shouldn’t qualify them (as it does) to make most of the important decisions. Employees, for contrast, are investing their time, careers, creative energy, and raw effort, often for pay that is a small fraction of the value they add. Morally speaking, it means they’re putting a lot more into the venture.

I’ve seen too many sociopaths using “fail fast” rhetoric to justify their irresponsible risk-taking. One example of a fail-fast acolyte is someone in his mid-20s whom I once saw manage the technical organization of an important company. I won’t get into too many details, but it’s an ongoing and catastrophic failure, and although it’s evident to me at least (because I’ve seen this shit before) that he is personally headed toward disaster, it’s not clear whether the company will follow him down the drain. (That company is in serious danger of failing an important deliverable because of decisions he made.) I hope it doesn’t. First, he took a scorched earth policy toward the existing code, which was written under tight deadline pressure. (Despite this twerp’s claims to the contrary about the “old team”, the engineers who wrote it were excellent, and the code quality problems were a direct result of the deadline pressure.) I don’t consider that decision an unusual moral failure on his part. Give a 25-year-old programmer the authority to burn a bunch of difficult legacy code and he usually will. At that age, I probably would have done so as well. That’s one very good reason not to give snot-nosed kids the reins to important companies without close supervision. I remember being 18 and thinking I knew everything. A decade later… turns out I really didn’t. Taken too far, the “fail fast” mentality appeals to impulsive young males who enjoy waving a gun around and shooting at things they can’t see and don’t understand.

My second encounter with this person’s “fail fast” sociopathy was in a discussion of hiring strategy, in which he discussed building “30/60/90 plans” for new hires, which would entail milestones that new employees would be expected to meet. As a way of setting guidelines, this is not a bad idea. Technology workplaces are a bit too dynamic for people to actually know what a person’s priorities should be three months in advance, but it’s always good to have a default plan and baseline expectations. New hires typically come on board, in a chaotic environment, not knowing what’s expected or how to “on-board”, and a bit of structure is a useful. This little sociopath wanted to take things a bit further. He thought it would be a good idea to fire people immediately if they missed the targets. New hire takes 35 days to meet the 30-day goal? Gone, after one month. No chance to move to another part of the organization, no opportunity to improve, no notice, no severance, and it’s all made “fair” by putting all new hires on a PIP from the outset. I’m pretty sure, I’ll note, that this young twerp has never been fired himself– and my money’s on him being three to 12 months away from his first experience with it, depending on how fast he can learn that primary executive skill of shifting blame, and how long he can run it. These sorts of terrible ideas emerge when people are permitted to take irresponsible risks with others’ careers. Most of the damaging HR “innovations” companies invent (which become tomorrow’s morale-damaging bureaucratic cruft) occur not because they’re good ideas for the company, but because people within these companies want to propose wacky ideas that affect other people, in the hope that some “greater fool” in upper-management will see the half-baked concept as “visionary” and promote the person who invented it, regardless of the idea’s lack of merit. That’s how Google’s douche-tsunami (douchenami?) system of stack-ranking and “calibration scores”, for just one example, was born.

I don’t like people who are cavalier about failure when they haven’t been on the other side of it, either as an investor who lost a large sum of money, or as a laid-off or unjustly-fired employee. To put it plainly and simply: “failing fast” with other peoples’ risk is not courage. I say this as someone who has taken a lot of risks and failed a few times, who has always accepted the consequences of what he has started, and who has always done everything possible to make sure that anyone taking a risk with me knows what he or she is getting into.

I’m going to advise something altogether different from “fail fast”, because the term “fast” has chronological implications that I don’t find useful. Protracted failures driven by denial are bad, sure. I agree with that aspect of “fast”, but people should try to avoid failure if they can, rather than jumping immediately to declare defeat and move on to a sexier prospect. Fail safely or, at least, smartly. Know what the risks are, disclose them to those who are taking them, and be prepared to address failures that occur. There are cases where chronologically fast failure are appropriate, and there are times when it is not. Largely, the ethics of this come down to what risks the involved parties have agreed to take. People who invest in a startup accept the risk of losing the entire investment in a good-faith business failure, but they don’t accept the risk that the founder will just give up or do something overtly unethical with the money (bad-faith failure). Employees in startups accept the risk of losing their jobs immediately, without severance, if the company goes out of business; but if they’re misled about how much runway the company has, they’ve been wronged.

The ethics of “fail fast” depend largely on the explicit and implicit contracts surrounding failure: how failure is defined, and how it is to be handled. These are conversations people don’t like having, but they’re extremely important. Failures happen. Often these contracts are left implicit. For example, a person who joins a five-person company accepts that if he doesn’t fit well with the project (because a startup of that size only has one project) his employment must end. More on that, being a founder means that one will be (and should be) fired immediately if one doesn’t work well with the rest of the team, just as being a elected official means one accepts the risk of being fired for being unpopular. On the other hand, a person who joins a more stable, large company, does so with the expectation of risk mitigation. Specifically, people join large companies with the understanding that being a poor fit for one’s initial project doesn’t mean leaving the company. The additional robustness of career is a primary incentive for people to join huge companies. Therefore, large companies that impede internal mobility, usually under pretenses of false objectivity in the performance review process, are deeply unethical and their reputations should be tarnished gleefully and often, in order to prevent others in the future from being blown up by undisclosed risks.

The “fail fast” mantra implies that failure is hard, and that it takes a certain fortitude to look failure in the eye and accept the risk. Alone, that’s not hard. Lying down is easy. Quitting on someone else’s risk and dime is not hard. Letting people down is not hard. The hard part is communicating risks as they actually are to people before they get involved, finding people willing to take those risks, working as hard as possible not to let people down, and working even harder to help everyone recover from the loss should failure occur.

About these ads

20 thoughts on ““Fail fast” is not an excuse for being a moron, a flake, or a scumbag.

  1. Wonderful essay. Brought back and rekindled a lot of the lessons I learned from the previous start-up I worked with.

  2. This post reads a little like a long-winded list of straw men. Long-winded because it contains only one point: ‘Failing fast’ should not be an excuse for taking a cavalier attitude to entrepreneurship. Cool.

    Beyond that, there is no meaningful link between adhering to ‘failing fast’ and being misleading about runway, having aggressive hiring practices or having a 5M trust fund etc.

    Perhaps most importantly, ‘failing fast’ and having a healthy attitude towards failure are separate concepts. The first relates to working quickly to test the validity of product and/or business ideas. The latter is a much broader social attitude that makes risk-taking more acceptable and attractive, and cushions the scorn a failed entrepreneur might feel by casting failures as valuable lessons.

    Nowhere – as is suggested here – are the two concepts combined and exaggerated to cast entrepreneurs as courageous just for applying the failing fast approach to building products.

    • There’s a lot of value in a specific type of “failing fast”, which is failing safely while minimizing harm to others. I didn’t say ” ‘Fail fast’ is always wrong”, I said ” ‘Fail fast’ is no excuse”. I stand by that.

      In a computer system, fail-fast is desirable. Better to catch a bug at compile time than run time. Better to throw a runtime exception than silently do the wrong thing. Best to build redundant systems and take failing modules out as soon as they malfunction. I agree with all of these “fail fast” principles. Also, yes, if an idea has proven itself a failure, it’s better to move on to another one than to linger in denial. Agreed.

      I just find myself disgusted when people apply “fail fast” where it doesn’t belong, and using it as a justification for being unethical and, often, outright harmful to other people. An example of this is the person who thought it was OK to fire people (from a company of decent size) at 30 days. He’s probably never been fired in his life, or he’d know how shitty it is do so such a thing.

  3. I predict that we will see more and more of the “employee fail fast” you decry among larger companies, who will justify it as “adopting nimble startup behaviors”. Indeed, we have already seen it: as my boss^2 at an early job at a bank said, it used to be that if you worked for a bank, and you didn’t steal from the bank, you had a job for life. No longer; even CEOs are disposable now, though they have enough clout to negotiate terms that will leave them little worse off than if they had kept their jobs.

    • I would feel better about people taking “fail fast” approaches on employee relations (ie. fire people quickly) if they were decent about it. If they’re willing to cut a severance check for the reasonable duration of a job search, allow the person to represent himself as still employed during the search, and let the record show a mutual departure, then they should go on and fire the people they don’t want. If they’re going to cold-fire someone without knowing what is really going on, and have that person taken out of the office by security like a criminal, then they’re scum and I look forward to their ruin.

      Very small companies (under 10 people) should fire people as soon as it’s obvious that the person is not going to work out. Large companies should give people more of a chance, though. A manager who prevents an employee from having a relationship with the rest of the company because the two of them didn’t get along is being a vindictive piece of shit.

  4. Very good point, Michael.
    I’ve been myself in a situation where after 6 months of 12 hrs a day building the product, the CEO decided to shut down the company after just another 30 days, because he was not being able to raise money with it.
    I walked away with nothing, and he still owes me money I put in the company to help pay for design work.
    I blame myself though, I didn’t do any background check on him, I believed every word, and I ignored the signals it was going to be a wreck.
    I agree with you, a lot of people just do stuff like that… but I feel we can’t stop them, and we can only do a better job ourselves to not associate with such people.
    Maybe you could do a follow up post, talking about ways to avoid such problems?

    Gui

    • The words that mean the opposite are, “You can trust me”. Never work for a promise. This person isn’t your friend. It’s business. Get every goddamn promise in writing and have a real contract.

      This is even more true in relationships with companies. That company can decide no longer to employ you any day– literally for no reason. Several people within that company can unilaterally make that decision. Tomorrow, someone you’ve never met might be given that power. Never trust a company. Work for them, learn everything you can on someone else’s dime and risk, but remember that almost all human organizations are headed toward slime in this world, and it’s just a question of the speed at which they rot.

      I may do a “warning signs of unethical people” post in the future, but the truth is that unethical people look and act exactly like decent people– until they decide to screw you over. They don’t have “warning signs”. They seem like the rest of us. The cartoonish asshole boss isn’t the person you need to fear; his social skills are so bad that, if you need to go over his head, you probably can. You need to worry about the person who’s nice to everyone– except when it counts. It’s impossible to see these people until they strike, so you need to be circumspect about everyone. It sucks that it’s this kind of world, but I don’t know how to change it.

      • Hey Michael,

        I agree with you that it is pretty hard to spot them, maybe even impossible like you said.
        But at the same time I think there is a feeling like “I’m gonna miss the boat” if we require a pre-nup for everything.
        I may be generalizing something that’s just me, but I think startups are too chaotic, specially in the beginning. It’s like building a car while you drive it… there is a lot of missing pieces and you can bet the seat belt is one of them. I feel there has to be trust in a small startup, otherwise it won’t work.

        So my goal is to find other ways to add some safety, but yeah… the really good liars might be impossible to catch. Maybe though, we can create a how-to catch a bad liar or even a decent liar, before they do much damage.

  5. Overall I’m cool with reminding people that taking stuff from others imposes a certain burden of stewardship. I think the phrase you never used, but which this post is all about, is “moral hazard”. What you have when you’re insulated from the outcomes of the decisions you take.

    I’m uncomfortable with the employee-as-investor narrative. Let’s leave those out of the argument who work in exchange for options and just concentrate on those who work for direct $$$. They haven’t “invested” anything at all – they’ve *spent* time, not invested it. It isn’t due back to them with interest. Instead, it’s a sunk cost – there’s nothing they can do to get back that time – or, indeed, to get paid for that time over and above the salary they’ve already earned in exchange for it.

    Also, I think that the length of remaining runway is in a sense “privileged information”. Don’t misunderstand me, I can totally see why it would seem like a dick move to get someone to relocate for a startup job when you only have a month left, only to run out of runway when you have to put them out on the street. *But you don’t know that* until you’ve actually hit the end. And you can’t afford to tell people how close to the abyss you are, because that hurts your chances of getting the very employees who can get you to takeoff speed in that short time. You’d actually be guilty of, in your own words, playing fast and loose with your investors’ money by telling a prospective hire, “Look, we’re a month from the end of the runway, so unless you’re really desperate for a job or looking for a Nobel prize in startup physics, why don’t you move along, we’re just going to fritter away the last few dollars of our investors’ equity and not really even try to take off instead of either liquidating *now* or actually hiring the people who can get us up.”

    Lastly, a startup is not a democracy. A founder is not an “elected official”. (At least, not elected by the team as you seem to imply.) (Why s/he would hire a whole *team* of people they don’t work well with is another matter.) That said, it might still make business sense for the founder to “fire” themselves if said team is awesome enough. But, that’s the investors’ call, not the team’s. Maybe I just disagree with you in that I don’t think an investor is accountable *to employees* for making good investment decisions, or even good management decisions. I *do* think that investors/entrepeneurs are accountable to employees in terms of sticking to the “you pitch for work, I pay; do the work I give you and come back for more tomorrow” [social] contract.

    This wasn’t really the topic of your post, but there’s a flip side to the moral hazard angle: employees are insulated from [some of] the consequences of the choices they make. I’ve seen employees argue with a completely straight face that they “need” some super expensive piece of equipment or other capital in order to work effectively, when I’m 100% sure that that “need” would dissipate instantly if they were self-employed and that money had to come out of their own pockets. A huge company has infinite resources, and because it’s faceless you don’t have to feel guilty about scamming it!

  6. Pingback: Leadership and Management in America; What’s the Problem Here? Part 4 « nebraskaenergyobserver

  7. Great point of view.
    I am from France and i really enjoy to follow what is done in the silicon valley. But there are two things I do not understand:

    – start ups which raise 5 millions $ to create the new “geolocal social better linker between coffee lovers”. For me it is just like “take a niche and put trendy techno on it without any question about purpose”
    – the second is more trivial. I used to see a lot of articles like “Why the -new trendy, released this week, glossy feature/site/app” – will kill Facebook, Google and Apple and might even destroy humanity”. This is often pure bullshit and sensationalism.

  8. Pingback: Managing Startups: Best Posts of 2012 |

  9. Pingback: Managing Startups: Best Posts of 2012 (guest post)

  10. Pingback: Startup Strategies – Best of 2012 – Digital Cowboys

  11. Pingback: Managing Startups: Best Posts of 2012 | andrewbruce01

  12. Pingback: Whisky Web Day One Recap | PEEBS.ORG

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s