When looking at people in the 99th percentile of success in terms of financial abundance, they would have, more often than not, experienced huge or multiple failures. In retrospect, these failures allow them to perceive failure differently.
Failure, in and of itself, is not a destination — a failed attempt is not the end of the road, but rather feedback to do something differently until it works.
Experiencing failure provides one with an inherent understanding and acceptance that failure is a prerequisite to innovation and progress. Without failure and perseverance, we would not have the technological and scientific advancements that we have today.
A good example of someone who became accustomed to failure and risk-taking was Malcom Mclean. He was an ambitious and daring entrepreneur who made building wealth look simple. His journey began modestly by working at a fuel station. While there, he had an epiphany that there was good money to be made in transporting fuel. The first real risk he took was in 1934. He borrowed an old fuel tanker and started trucking, transporting fuel from one destination to another. Within a year, he owned two trucks and had nine drivers employed with their own trucks. His business expanded rapidly, and by 1945 his business had 162 trucks transporting fuel and earned $2.2m in revenue. To save money, he switched to diesel early and pioneered conveyors to move cargo between trucks. By 1954 he had over 600 trucks, financed by a lot of debt which was another risk that he decided to take.
He then had another brilliant idea. Annual coastal shipping was in a steep decline because of the war and overall uncertainty. The roads, on the other hand, were increasingly congested because more cars were being purchased. He thought why not drive his trailers on to cargo ships and have rigs pick them up at ports near the destination? With a high appetite for risk, he made yet another bold move. He sold his entire trucking business and bought a big shipping business, mostly with borrowed money. He then had an even better idea. Instead of putting whole trailers on ships, why not lift the bodies of the trailers off of the wheels and stack them on the ships? He tested the plan on paper. He then decided to try it out with a shipment of beer from New York to Miami. He found it could cut the cost by an enormous 94% compared to the normal break-bulk cargo.
Mclean then bought an entire oil tanker and redesigned it to carry containers on the deck. He also bought two big cranes and converted them to lift containers and stack them on the deck. He also commissioned the construction of a fleet of 33-foot containers. He spent two years persuading the authorities that the containers were safe, while fighting off litigation actions in the courts by railways and truckers. Mclean brought the cost of shipping down from $5.83 a ton for cargo rates to 16 cents a ton.
Such drastic cost-saving methods spoke for itself but other shipping companies baulked at the hefty investment needed to get into container shipping. Their labour force were also uncooperative so ports were reluctant to change or innovate. The container shipping revolution seemed like a failure and seemed destined to remain unchanged.
Mclean then hired hungry and young entrepreneurs from his former trucking business for the renamed Sea-Land business to solve the problem. He borrowed more money and built bigger ships. He started shipping from the East Coast to California, through the Panama Canal. He had a stroke of luck when his main competitor on the Puerto Rico route went bust after its’ buyer took on too much debt. By 1965, Sea-Land had fifteen container ships and 13,533 containers.
This anecdote is a practical example of how failure and risk-taking allowed international trade to happen through shipping containers for exporting and importing. It has undoubtedly changed the world ever since. It is easy to see from Malcom Mclean that how one deals with failure is an excellent determinant of the quality of ones’ overall success.
Entrepreneurship is a numbers game — the hit rate of success is so low that the only way to success is to keep on trying through failure. All it takes is getting it right once to reap rip-roaring gains. In one’s first few attempts, everything is new and unfamiliar, and this means that mistakes are bound to happen. Through pivoting and perseverance, however, one gets better, making smarter decisions and fewer mistakes. This leads to greater likelihood of success further down the line. First-time entrepreneurs who make it big are few and far between — they tend to be the exception, not the rule.
Jeff Bezos says that if you are not failing, you are not swinging hard enough. One should always be swinging for the fences — this is done through embracing failure and taking risks.
Naval Ravikant, the most successful angel investor of all time, started out with seven businesses that all failed and 50 on-going projects, all of which did not come to fruition. His single major success in terms of product-market-founder fit was Angel List. It took him 13 years to figure it out and build the company up.
One should also learn to thrive on risk and turn it into an exhilarating hobby. Fortunes are built on entrepreneurs who are able to stomach enormous risks and come out smarter and hard-working than if they hadn’t taken those risks. The most successful entrepreneurs tend to enjoy games of chance — these games allowed them to rewire their brains to grow accustomed to risk-taking. One should learn to enjoy the thrill of the risk. This then percolates into the habits of the mind when dealing with business.
The only way to train yourself to take risks is to reorient your perception of failure. If you are detached from and not solely focused on the outcome, learning to live with failure will come naturally to you. When this happens, you can gradually start taking bigger and bigger risks because you will become desensitized to failure and will no longer have an emotional reaction or attachment to it.
Failure and risk-taking are two of the most fundamental aspects of entrepreneurship, yet it remains to be taught in any course or in any school. On the other hand, risk and the experience of failure can only be learned and normalized through practical experience, rather than through theoretical knowledge. This means that it all boils down to being a practitioner and learning to roll with the punches.
Author: Taahir Khalfe