The Anna Karenina principle in entrepreneurship

The opening sentence of Tolstoy’s Anna Karenina

“Happy families are all alike; every unhappy family is unhappy in its own way”

– has inspired the term “The Anna Karenina” principle. It readily applies to entrepreneurship:

Successful entrepreneurs are all alike; every non-successful entrepreneur fails in his or her own way. Success, then, is not about ensuring positive factors, but avoiding all the negative ones.

Succeeding by avoiding failure may sound like an oxymoron, but if you replace “avoid” with “learning from and adapting to”, then success is all about finding and ironing out the kinks.

Is there life after Dragons’ Den?

There you have it. The real-life Dragons have spoken. Your idea has been turned down. What are you to do? It is an emotional rollercoaster.

On the one hand, you can resign and savor life without uncertainty. But then you start thinking about all those cases – too many to be discounted as flukes – where expert opinion suggested that something would not work; but it somehow did. There was widespread skepticism that the concept of Kiva would not be scalable. Banks did not buy into Muhammad Yunus’s idea of lending to the poor. Hewlett Packard twice turned down the opportunity to build the Apple I computer. So did Commodore, Atari, and Don Valentine, the “grandfather of Silicon Valley venture capital” (he did invest a year later). Kodak, General Electric, and IBM all turned down the opportunity to build the original Xerox office copier.

Such inspiring stories can easily tip the scales towards the other extreme, of charging ahead despite the negative feedback. But then again, venture capitalists are often right about rejecting particular ideas; yours might as well be one of those. Can you really afford to ignore the opinion of others (some of whom have seen many entrepreneurs try … and not succeed)?

How can you weigh these two extremes? The bottom line is that you can’t. In the absence of any action to provide some tangible evidence for the merits of your idea, it is simply one opinion against another. The real kicker is that people tend to regret the things they do not do, not the ones they do do. If you do nothing, you will forever agonize about what might have been. But you also don’t want to do too much, for your children will never forgive you the frivolous wasting of their college education fund.

What is left is taking a small step, feeling your way forward, just as you do when the lights suddently go out and it is pitch dark. There is a blessing in rejection. It is the feedback of why others think the idea would not work. It is an assumption that you can test on a small scale. If it works, great; you can go on to the next. If it doesn’t … perhaps you will get new feedback about what might work … which will open a door you would have never known existed.

In search and praise of (well intentioned) failure

To succeed, many things need to go right. To fail, only one of them needs to go wrong.

Economists talk of the paradox of thrift: saving money is good for you, but if everyone saves too much, then we all may be worse off. Curiously, the same logic applies to entrepreneurial failure, but the other way around: failing is bad for you, but if everyone tries (and many fail), we may be better off overall as there will surely be some spectacular successes among us.

This interplay works very well in sports. Big competitions – the Olympics, world championships, etc. – work best when a lot of good athletes compete in them. But for each individual competitor, the odds are normally stacked against winning. Yet, it is being in the competition that is the essence of being an athlete. The title applies to anyone who competes, regardless of whether they actually win. Most amazingly, no one fails in sports; they simply do not win.

Unfortunately, when talking about entrepreneurship, we tend to reserve the title “entrepreneur” only to those who win. Becoming an entrepreneur implies having successfully started a business or other venture with economic or social impact.  And the title stays forever: we say X is an entrepreneur, never X was an entrepreneur.

Entrepreneurship is a competitive endeavor, so why don’t we call anyone who competes in good faith and to the best of their ability “entrepreneur”? Some will succeed, many will wait for the next tournament(s). But all become equally appreciated.