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Facing the Failure Threshold: How to Identify Your Minimum Viable Failure (MVF)

Entrepreneur-in-Residence Chuck Sacco on how defining your failures might just be your key to success.


March 24, 2015

By Chuck Sacco

Failure. The “F” Word.

It’s on every startup’s agenda today. Failure is popular. Even Esquire magazine recently ran an extensive feature on startup failures and the new culture of failure. Unfortunately, entrepreneurs are getting advice from all corners: fail fast; fail slow; don’t fail; don’t fear failure; failure is good; failure is bad; failure is a badge of honor; or, just fail and get out of my face.

The advice to entrepreneurs is conflicting, confusing and probably pretty harmful. Like anything, failure isn’t one-size-fits-all. It gets down to the definition – what is failure and what are the degrees of failure?  Is it failure because your startup didn’t get to IPO or acquisition? Is it failure because you didn’t become the next Facebook? Is it failure because you didn’t get past your A-round and you were ousted, yet the company moved on successfully without you?

It’s important to read between the lines. Nobody wants to fail, especially the deeper and longer they get into their startup journey. Nobody wants to spend other people’s money (OPM) and face the sometimes-painful realities of what happened to it all. Yet, I think entrepreneurs have different thresholds of what type of failure is acceptable. This even extends into how we decide to move forward in the face of big (or even small) failure points in our entrepreneurial journeys.

Failing On Your Own Dime

I recently listened to Philadelphia-area investor Howard Lubert give a talk at our faculty entrepreneurship bootcamp about investment. He had a great slide that basically said that by the time you take investment money, you better be done pivoting and you better have a plan. No more minimum viable product (MVP) at that point. The failure stakes just went way up. To an astute investor like Howard, failure is something done on your own dime.

One of the most satisfying outcomes that I have when teaching the “Launch It!” course at the Close School is when, about mid-way through the term (sometimes earlier), students realize that their idea probably isn’t going to succeed. At least not in its current incarnation. Often, this happens before they even get to their MVP. They quickly learn they need to pivot on their problem and customer hypotheses before even getting to the possible solution. They feel their original idea has failed and sometimes struggle with what to do next. Some are OK with this, but others are devastated.

So I’m starting to ask this question to our students and the early stage startups incubating in the Baiada Institute for Entrepreneurship: “What is the minimum amount of failure that you can afford to have and what will you do when you hit that point?”  

If you have a personal bankroll, then your failure threshold may be fairly high. If you’re leveraging OPM, then it probably needs to be very low. If you fell in love with your idea before validating product-market fit, then you may have a high threshold and will want to push through despite a number of failures along the way. All of this comes with fundamental decision making – deciding what to do in the face of a major failure point.

I’m calling this “Minimum Viable Failure” (MVF).

Just as with a MVP, you want to spend the least amount of time and money possible to get to major failure points. Use Lean Startup methods to determine where your biggest risks reside and have an idea of what will be your Minimum Viable Failure. Asking yourself as early as possible about how much failure you can afford will go a long way in helping you make good decisions down the line.

Never set out to fail. But knowing how much and what type of failure you can afford will help you better deal with the challenges and unexpected outcomes that nearly every startups faces in their journey.