The Upside of Failure

  •    Nathan is the president of Digital Scout, part of PlayOn! Sports. This post is based on a talk that he gave at Columbus Startup Week in May 2015.

Entrepreneurs don't like to think about failure. We'd much rather focus on the positive. We're doing something most people consider weird and crazy—building businesses out of nothing—so we can't afford to let too much doubt and uncertainty cloud our visions.

That mindset, of course, is crucial to our success. But if our zeal makes us ignore the possibility of failure, then we're making a big mistake. The truth is if you choose an entrepreneurial life, there's a good chance you'll fail. The Ewing Marion Kauffman Foundation reports that just 46 percent of U.S. startups with employees survive through five years.

Failure is an unavoidable part of doing business. Yes, it's painful. It will feel like the end of the world when it happens to you. But it's also an opportunity to learn and reflect. And you can manage it if you take certain precautions.

Here are four lessons I've learned during the ups and downs of my nearly 17 years as an entrepreneur.

Recognize the importance of luck

My first business,, grew quickly. Within three months after starting in 1998, more than 100 recruiters were posting their openings on our online job board, one of the first in the Midwest. Within two years, we hit $1 million in revenue.

Then the 9-11 terrorist attacks occurred. The HR industry basically froze, and I was forced to sell my business to a larger more established company. I might have weathered the storm if I secured more funding or grew the business faster. But the reality was my timing was bad, and there wasn't much I could do. Even though we like to consider ourselves the masters of our own fate, luck is a huge factor in determining entrepreneurial success.

Avoid isolation

It's easy to disappear into your own cocoon when you're working crazy hours trying to build your business. That isolation, however, can be a big problem when you inevitably face failure.

After ended, my wife, Holly, gave me critical support. We talked through the intensely emotional and personal experience. I doubt I could have bounced back so quickly without her.

Take time to recharge

My next startup, Caster Ventures, an online streaming video company, also didn't work out. When I was forced to shut it down in 2009, I was crushed. I had spent the first 10 years of my career running through walls until I reached a wall I couldn't run through. I hadn't reached the heights I hoped for, and I questioned if running my own business was the right career for me.

I took time out from being an entrepreneur, accepting a more stable job with an ad agency. The break was important. It allowed me to recharge during a time when I was frustrated and burned out. It also helped me realize that being involved with a startup company is really what I loved to do, and I couldn't replicate it anywhere else.

Learn from your mistakes

When I was hired to turn around an education and sports web company called the Digital School Network in 2011, I set out to revive its legacy product, Digital Scout, a high school sports statistic tracking service. It was a huge undertaking that involved upgrading technology and expanding the customer base.

I realized I needed to build a stronger team with better skills and experience to help accelerate a major turnaround. Within 36 months, we not only transformed Digital Scout but successfully sold the product and team to PlayOn! Sports, the nation's leading high school sports media company.

I didn't recognize it until later, but failure had made me a stronger leader. I subconsciously applied a lesson I learned from my second business, Caster Ventures. The main reason Caster went under was because I didn't have a good enough team in place to build the business quickly. With Digital Scout, I made sure I didn't make the same mistake again.