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Max Levchin Says Embracing Failure Is Dumb

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Slide founder and CEO Max Levchin

Google (s GOOG) CEO Eric Schmidt tried to put a positive spin on the failure of Google Wave this week by calling it a clever product with a great UI and good features that just didn’t get enough traction. “We celebrate our failures,” he said during a Q&A with reporters at the first Techonomy conference in Tahoe, California, just minutes after essentially blaming society for not being ready for technology.

Listen to Max Levchin, and you’d think that Schmidt got it all wrong. Levchin is CEO of Slide, the social gaming company that Google acquired this week for a reported $182 million. He’s joining Google as part of the acquisition in an as-yet-unannounced role, and he famously co-founded Paypal (s EBAY) before starting Slide.

Before that, Levchin cut his teeth with a number of other startups, most of which flopped. To say he’s experienced failure is an understatement. He struggled with it to the point where a ruined credit history prevented him from buying a car, getting a cell phone, and renting an apartment. Don’t expect Levchin to celebrate failure any time soon. Here’s what he had to say when I talked to him about the subject a few months ago:

“For some strange reason, in the last few years, the industry, or the press that covers the industry, has come to glorify failure. I think it’s completely wrong. Failure is not good.”

I interviewed Levchin as a part of a radio feature about the culture of FAIL that I was working on a few months back, and it’s worth noting that our conversation focused on startups, not big companies like Google. We also didn’t spend much time at all talking about Slide. However, in hindsight, the conversation seems like an interesting window into the mind of Max Levchin, who first tried his luck as an entrepreneur in rural Illinois after immigrating to the U.S. with his parents. “We drove to Chicago every weekend trying to persuade people to give us money,” he remembered.

These efforts inevitably failed, but Levchin kept going without much downtime. “Every time I had torn up my certificate of incorporation… the delay between that and registering a new company was typically no more than 24 hours,” he told me. These years before Paypal gave him some perspective about things that are important for an entrepreneur, one of them being that it’s not worth trying to persuade your target audience of your product’s greatness if they don’t see any value in it.  “I don’t believe in teaching the market the lessons”, he told me. “You can’t convince people to do things that they’re not naturally going to do.”

There’s been much written this week about the price of the Slide acquisition, with some people remembering a New York Times article from 2007 in which Levchin said he wouldn’t consider Slide a success unless it made at least the $1.54 billion that Ebay paid for Paypal. However, TechCrunch reported that Levchin got $39 million out of the Slide sale, which isn’t too shabby either.

And then there’s another option: Slide may not have been a stellar success, but maybe it wasn’t actually the money that convinced Levchin to sell, but the opportunity to take on a much bigger challenge at Google. The search giant could definitely use some of his attitude, instead of Schmidt’s the-world-isn’t-ready-for-us approach, as it focuses on changing its DNA to try to succeed in social. While some people doubt Levchin will want to stay at Google, it could be an amazing opportunity.

Levchin may have been talking about the transition times between his early startups when I talked to him a few months back, but his words almost seem to foreshadow what happened this week:

“I had a moment where I realized that I had an idea in my mind that I’d much rather be doing than what I was working on today. And that’s when the clock started between me trying to persuade myself that no, the current one still has a shot, versus the next one being just a far more compelling thing to do. And by the time I was finally ready to close the book on the previous one, the next one was looming so large in my head I was more than ready to go and work on that.”

11 Responses to “Max Levchin Says Embracing Failure Is Dumb”

  1. Of course ‘failure is not good’. That’s why stories about its counterintuitive positive impacts interest the press like a ‘man bites dog story’. Surprising to hear Levchin express such a myopic perspective especially as an entrepreneur. The whole point of embracing failure is to seek the ‘silver lining’ dividends in the ‘not-good’-ness (if you shun failure entirely then you miss these), as well as to broaden the outlook to a perspective that realises that sometimes failure is a painful but necessary ingredient in a larger success.

  2. The reason why people have been intrigued by the counterintuitive concept of embracing ‘failure’ is for the very reason that failure is not good. So it is sort of a ‘man bites dog story’. Everyone know about the not-goodness of failure. But in fearing, avoiding, and otherwise decrying that stuff of ‘failure’, more current perspectives are that failures often have important dividends of silver linings that get missed when failure is completely derided. Also, while the failure itself might be bad, the large context around the failure puts it into perspective that the failure is simply a painful, not-good, but necessary ingredient to a larger success.

  3. What I think what Eric Schmidt is emphasizing is that the company is willing to take risks, and risks often lead to failure. “We learn from our failures more than our successes”. But I also sense that failure only works beneficially for those who are aiming toward success. I think if one pursues failure for it’s own sake (as in a “Culture of Failure”) than it becomes a vice. Failure is positive only after it’s converted to knowledge and discarded. But tolerance of failure is essential in creating and innovating anything.

  4. I would suggest to Max that “celebrating” or “embracing” failure is a bit of a misnomer. What is really being celebrated is /trying/ something — making an /effort/ to succeed, taking chances. And when you take a chance, you often fail. No one in their right mind is going to celebrate a failure, but if they gave it the ol’ college try, they can celebrate /that effort/. The initially ironic phrase has become twisted (at least in Max’s mind) to mean just the opposite of its intent. If English isn’t his native tongue, perhaps that would explain his confusion — it’s a subtle play on words.

  5. These quotes are enlightening. It was my impression that with this sale Levchin didn’t see it so much as a smashing success than time to cash-out his chips.

    He’s spent a number of years on Slide, pivoting this way and that, chasing the next big thing in social. It was an admirable effort but, let’s face it, Slide’s nowhere near Zynga or any of the top players in this space. Their brief party with Facebook fizzled into mediocrity.

    $39MM or ~$200MM is really nothing to sneeze at. I’d take it in a heartbeat. But for someone who calls themselves a co-founder of PayPal, you really expect a lot more. With his resources, connections and tenacity there’s much more innovation he can bring to the Valley than the next social gaming company.

    Ergo, I saw it as his opportunity to cash out and seek out innovation in another role. I guess we’ll see what happens with the acquisition but I doubt he will be at Google (for long). Rather than following the next trend, I’d like to see him create one (like Pincus, for example) instead. He’s one of a handful of people in the Valley who really have the resources to do it.