Why you should care
Because trying until you succeed is important.
Leticia Gasca is the co-founder and former director of FuckUp Nights, an events series where entrepreneurs share stories of failure. She also runs a think tank called The Failure Institute.
Nils von Heijne, serial digital entrepreneur, is standing in front of a hundred people, describing how he failed in three different business attempts. First, he risked his own money, then he killed his own business. In his third attempt? He lost the money of others. When he finished speaking, he received a standing ovation from the audience. He was lauded as courageous and smart — a man who would tell his own story of failure publicly.
If we took Marty McFly’s time-traveling DeLorean and visited any previous century or country, no one would congratulate Nils. On the contrary, he would be the victim of a lifelong stigma as well as corporal and monetary punishment.
… an ear was nailed to a post and later ripped free, rendering a permanent mark of shame: a shredded ear.
Here’s how he might have fared: In ancient Greece, bankruptcy laws forced the owner of a failed business to sit in the marketplace with a basket over his head. In ancient Rome, the insolvent debtor’s body was auctioned off in the middle of town. In pre-modern Italy, insolvent debtors were brought naked to a public square, where they were required to bang their buttocks on a specially designated rock before a heckling crowd. In 17th-century Scotland, those who went bankrupt were required to publicly wear a distinctive coat and cap, half yellow and half brown. Similarly, in France, the bankrupted individual was carried to the center of the marketplace, where his bankruptcy was publicly announced. And to avoid immediate imprisonment, he had to wear a green bonnet until he or a family member covered his debt; if this never happened, he would wear the bonnet for the rest of his life.
These publicly humiliating rules and practices served to both manifest and reinforce the stigma associated with business failure. In Germany, the Hamburg Bankruptcy Acts of 1630 and 1753 imposed the threat of expropriation and imprisonment against some bankrupts. The British Bankruptcy Acts of 1604 and 1623 provided that certain bankrupts be pilloried — an ear was nailed to a post and later ripped free, rendering a permanent mark of shame: a shredded ear. Further reflective of the punitive nature of bankruptcy in England, the Bankruptcy Act of 1705 offered the death penalty for fraudulent bankrupts until an 1820 enactment replaced death with imprisonment. During the 19th century, bankrupts in France were not allowed to hold public office, sit on juries, practice as stockbrokers or appear before the Bourse until they had paid their debts in full. Similarly, in Germany at that time, bankrupts could not vote or hold seats in Parliament.
Today, business failure is still a big stigma in some cultures. The Global Entrepreneurship Monitor, among the dozens of indicators it tracks, looks at the fear of failure, calculating it as the percentage of the population between 18 and 64 years old who perceive good opportunities to start a business but indicate that fear of failure would prevent them from doing so. The highest scores for this are found in Europe, Asia and Oceania, where about 40 percent say they are risk-averse. In Japan, failure is still a taboo for historical and cultural reasons. In ancient times, if you were defeated in battle you committed seppuku, aka hara-kiri (ritual suicide by slicing the belly). After the Japanese stock market crashed in 1997, for example, the Japanese suicide total rose by nearly 35 percent, according to the National Police Agency.
But there has never been a moment of history with less negative charge on failure than now. There are even those who claim that we should celebrate failure — like me. Let’s be frank, nobody wants to fail, but failure is sometimes a catalyst for learning. Sure, it can also lead to divorce, attempted suicide and even mass layoffs. But losing the negative stigma has a positive side: Most businesses fail, and it is unnecessary for those millions of failed entrepreneurs to suffer punishment as described above.
Of course, accepting bankruptcy also has a negative side. Bankruptcy can become the easy exit for lazy people, and that makes it easy to forget the collateral damage of the death of a business: Jobs are lost, investors lose money and everyone involved loses time that they could have dedicated to another venture.
Still, the culture change has had major impacts. If we were more critical of bankruptcy, entrepreneurs might give up less easily, and, as a consequence, the failure rate would probably be lower. Oh, and Donald Trump would not be president.