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Vinod Khosla: My Willingness to Fail Is Entirely Responsible for My Success

By Vinod Khosla · Investing · 1 min read

I'd rather have a high probability of failure and a large consequence of success than reduce risk to the point where probability of success is high and the consequences of success are inconsequential. My willingness to fail is entirely responsible for my success.

Key Points

Smart failure: you risk 10-20% of your burn, you win 10x or 100x. Never fail in a way that kills the company.
Not being willing to fail means you won't take risks — and if you don't do something new, you're doing what everybody else does
VCs and boards reduce risk until success becomes inconsequential — that kills big ideas

I'd rather have a high probability of failure and a large consequence of success than reduce risk to the point where success is inconsequential.

Smart Failure vs. Dumb Failure

Khosla: There's smart failure and dumb failure. Smart failure is when you take risks where if you lose something, when you win you win much more — 10x or 100x.

The part that gets forgotten: you never want to fail in a way that kills your company. Mostly, failures should be learning experiments where failing costs 10-20% of your burn, not 80%. Failing still gives you a chance to try something new. Failure is a way to learn — not that failure is a good thing.

Smart failure costs 10-20% of your burn. It gives you a chance to try something new. Never fail in a way that kills the company.

To Do Something Exceptional, You Have to Do Something Out of the Ordinary

Khosla: Not being willing to fail means you won't take any risks. You won't do anything new and innovative. And if you don't do something new and innovative, you're doing what everybody else does.

To do something exceptional, you have to do something out of the ordinary. And that usually means risk. If you're doing the ordinary stuff, the low-risk stuff — you're doing what everybody else knows how to do and will do.

To do something exceptional, do something out of the ordinary. That usually means risk.

When Boards Reduce Risk Until Success Is Inconsequential

Khosla: I'd rather have a high probability of failure and a large consequence of success than reduce risk to the point where probability of success is high and the consequences of success are inconsequential.

That happens in a lot of startup companies, especially with boards. VCs try to get early revenue or reduce risk to the point where if you succeed, it's inconsequential success. You're not doing something big or consequential.

Boards reduce risk until success is inconsequential. You're not doing something big anymore.

Willingness to Fail — Plus a Lot of Luck

Khosla: My willingness to fail is entirely responsible for my success. It enabled my success. My willingness to take risks that others wouldn't is what made me successful. That plus a lot of luck.

Many of you are really good, tried really hard, and just get a few lucky breaks and you're successful. A few bad breaks and you're unsuccessful. That's why I say — you can try again.

My willingness to fail is entirely responsible for my success. That plus a lot of luck.