Why you should fail early and fail often
This post will give you some numbers to show that failing early and often is a good idea.
Let's presume you have ten years to make a million dollars by starting a company and selling it. And let's presume that there are two scenarios: one where you start a company and keep going at it for ten years, and one where you start a company and if it doesn't work out after a year close it down and start another one.
The first scenario is simple.
Let's presume there's a 10% chance of suceeding in starting a company and selling it for a million dollars. Your chance of becoming a millionaire in ten years is obviously 10%
The second scenario is a bit more complicated.
With the same presumptions as in scenario you have a 10% chance of becoming a millionaire after year one. If this doesn't work out you have another 10% shot in year two, and so on. This adds up to a 65% chance of success after ten years. Quite an improvement! But maybe this doesn't tell the whole story: Surely you will have a higher chance of succeeding with a company you spend ten years on than a company you spend one year on. Let's say you only have half as big a chance of succeding if you only spend a year on your business. This will still give you a 40% chance of success after ten years. As a matter of fact for the two scenarios to give you an equal chance of success after ten years your chance of success with the one year company needs only be 1%.
Here is a graph that shows it more clearly.
This is, of course, a simplified explanation that doesn't take all factors into account. If you initial idea doesn't work out you could morph your company into something else, you may need more than one year before you can sell your company or maybe your goal is to only make $100.000. You may not even know whether you're doing great or are on the brink of bankruptcy.
The question to ask is: If I was offered this company for free would I take it? It's a hard question, and ideally you should put it to other people that don't have an affection for the idea, and haven't spent many hours pondering over it.
You may be surprised at the answer, and if you are maybe you should start something else.