The Case For Intelligent Failure To Invent The Future

Editor’s note: Vinod Khosla is the founder of Khosla Ventures.

The world is changing at an increasingly rapid pace. In the past, experts with spreadsheets and econometric models or social scientists with subscale studies and linear models may have been useful. These so-called experts extrapolated from what came before, but as the rate of change has increased, looking to the past often is no longer meaningful – especially in a world driven by new technology.

In 1986, the McKinsey consulting group was asked to forecast the number of cell phones that would be in use in the United States by the year 2000; their model predicted fewer than one million, but the actual figure was more than two orders of magnitude greater at 109 million. How could one predict in 1986 what technology would look like by 2000?

Today, the means of production and distribution are being democratized and technology’s ability to enable creative uses and business models is quickly evolving. One person can spread an idea to billions. One person can build a product used by billions. The future will not be like the past. The future will be built by those who will take risks and action to invent the world they want.

Our civilization’s needs are expanding rapidly, as seven billion people reach for the lifestyle of the 700 million most well off while our physical resources cannot keep pace.

The only way to bridge the gap is with intellectual capital, which will multiply the resources available to us. When five-to-seven billion people all demand equal energy consumption per capita, natural resources per capita (lumber, copper, steel, etc.), medical, health and educational resources and resource-intensive foods (meat, poultry, sugars, etc.); the way out is not linear scaling but rather resource multiplication through innovative technology.

Already, Wikipedia is the most powerful medical tool we have globally today; Google the most powerful learning tool; Facebook and Twitter the most powerful social tools. It is an absolute necessity that we develop intellectual property that multiplies our resources if we are to bridge this gap. We must invent our way into a new future. There is many an entrepreneur toiling away in anonymity, working on things few others know is important, but some of them will change the world.

Over the years, I have developed great skepticism toward so-called experts and pontificators who seem authoritative in forecasting and create an illusion of knowing based on very little actual expertise. For instance, a University of California study conducted over the course of twenty years polled 284 eminent experts – ranging from politicians to professors and correspondents to consultants – all with widely differing opinions from Marxists to free-marketers. The so-called “experts” made 28,000 predictions about the future, but researchers found they were only slightly more accurate than chance and worse than basic computer algorithms. Most planning and reliance on traditional methods and processes lead to similar errors all while giving people false confidence, especially as the rate of change accelerates. Academics, especially in the social sciences, don’t do much better.

On the other hand, I have experienced the power of doers, the chaotic and naïve world of optimistic entrepreneurs who just try things, admit mistakes, fail, learn, iterate, try again and find solutions – often out of necessity.

Accepting, even encouraging, the right kind of failure is the best way to discover the solution to our problems and close the resource gap. Learning by engaging, iterating and persisting, rather than pursuing academic studies or writing papers, seem to be the major drivers of change (although I also am a fan of scholarship to expand human knowledge that in some cases entrepreneurs may apply or leverage).

In bridging the gap between the resources we have and the resources and progress we want, the biggest risk we can take is to not take any risks at all. Taking risks means accepting failure and also recognizing that not all failure is good. Failure because of intelligent but risky attempts may be the only way we bridge this gap. As Robert F. Kennedy so aptly put it, “Only those who dare to fail greatly can ever achieve greatly.”

Many smart people have taken big risks and made intelligent attempts at audacious goals but still failed. Sometimes the failure is because they pursued the wrong vision. Sometimes the vision is right but the tactics are wrong. Often, the failure can be simply attributed to just plain bad luck.

There are a dozen reasons a good venture can fail. In my decades of encouraging entrepreneurs and innovation, I have learned that an entrepreneur probably only controls approximately 30 to 40-percent of the factors that affect their success. Competitors and environmental circumstances often make up the rest. This doesn’t mean we shouldn’t try, because if we didn’t then the world would approach stasis.

If we take the very small percentage of entrepreneurs who succeed (keeping in mind that early in their careers, it’s hard to differentiate the successful entrepreneurs from the failures) and look at the impact they have made and the resources they have helped multiply, the failures seem trivial by comparison.

A 90-percent probability of failure means a 10-percent chance of changing the world, if the goal is ambitious enough. We may have lost resources in those failed efforts, and naive journalists may have poked fun at them, but without the attempts, we would not eventually have developed the many innovations that revolutionize how we live today – including the personal computer, email, the Internet, the mobile phone, the tablet or any of the endless applications built on these technologies.

We would not have Google, Twitter, Amazon, Uber or countless others. Although a hundred entrepreneurs may fail for each one that succeeds, the successes make the failures worthwhile.

Too often, there is a tendency, especially among investors, large corporations, and public officials, to reduce the probability of failure to the point that the consequences of success become inconsequential.

In the area of sustainable energy, only cost effective and clean solutions matter, and those are likely to come from entrepreneurs attempting Black Swan technologies or approaches that few believe are possible. Already, Tesla has changed the automaker’s view of electric cars, and Google’s driverless car effort has gotten others moving on self-driving cars.

In the areas of agriculture and food, we are seeing early attempts at unconventional approaches and innovation to upend the current resource inefficient system. In education, the old guard laughs at early failures in online learning and massive open online courses (MOOCs) considering them naive, but entrepreneurs are now trying the next iteration after learning from their mistakes (even though many academic pontificators dismiss this education style entirely).

Beyond the litany of information technology pioneers, the efforts of innovators in other fields have been equally impressive in forcing change in their respective fields. Entrepreneurs at Genentech in the 1980s revolutionized pharmaceutical drug discovery. Horizontal drilling caused a big, but questionable, shift in energy production, which affected natural gas prices and home heating bills.

Entrepreneurship itself is not a complete solution as social and political factors often play a part, but it is still the single most important resource multiplier we have. In fact, entrepreneurship, especially technology-based entrepreneurship, may be the only necessary, if not sufficient, response to meet the global population’s desires for a better life and to give seven billion people the resource rich lifestyle that approximately seven hundred million of us currently enjoy.

George Bernard Shaw famously said, “The reasonable man adapts himself to the world: the unreasonable one persists in trying to adapt the world to himself. Therefore all progress depends on the unreasonable man.”

It is encouraging to see entrepreneurs fighting to overcome the naysayers who pervade our world. It is energizing to feel the passion that entrepreneurs with a dream bring to their industry. Skeptics and cynics never did the impossible, and we need the impossible to bridge our resource gap. Please don’t call a committee hearing or start a research study to follow up on this idea. Just go do it.