This Is Why You Don't Actually Learn From Failure

Most people will tell you that failure is a part of the process and you should learn from your mistakes. But here’s the simple honest reality: most people don’t actually learn from their mistakes, and that’s because their ego stops them from learning. In most cases, failure teaches you to never do that thing again. If you start a business and fail miserably, statistically speaking, it’s very unlikely you’ll start another one. If you invest some money and you lose everything, again statistically speaking, it’s very unlikely you will invest ever again.

So what should you do instead? How should you approach this failure situation? Well, you’re in the right place to find out. Welcome to Alux, so let’s begin with the old saying, “Failure is a part of the process.” That’s only half right. The correct form is: failure is an optional part of the process. If you find success after taking a big L, it’s not because of the failure; it’s despite it. Sure, your TED Talk will sound more dramatic if you say, “Failure taught you how to win,” but we all know that’s not really how it works.

We’ll argue that you have all the reasons in the world to avoid failure at all costs. We mentioned in the intro that, for one, most people don’t really learn from their mistakes. They have a tendency to gamble with the odds, and saying “maybe this time it’ll work” sounds a lot more interesting than “let’s adapt and apply what we’ve learned so far.” Think about the people who keep buying lottery tickets. Every time they don’t win, technically speaking, they fail. As a matter of fact, it’s almost a guarantee that they will fail.

You’re more likely to get hit by lightning than win the lottery, yet people still do it time and time again. And that’s because the hope of a different outcome is stronger than the impact of the lesson. Also, hoping doesn’t require any effort. It’s easy to hope this time will be different than to actively think about what went wrong and strategize a new plan.

Now, you’ve probably all heard the story of Colonel Harlan Sanders, the founder of KFC, who faced many rejections before finding success with his chicken recipe. As a matter of fact, legend has it that he was rejected a total of one thousand nine times. And we say legend because nobody can actually verify that number; it’s simply an urban myth. Yet his story to this day serves as an inspiring example of determination and resilience.

The point we’re trying to make with this is that failure is over-glorified. Everybody knows how Colonel Sanders failed countless times, but how many people know the business model that he was trying to sell? If we were to ask you what’s the valuable lesson you could take away from the KFC example, what’s your answer? Well, as a matter of fact, pause the video and leave your answer in the comments. We’ll guess that most of you wrote resilience or not letting failure dictate your success.

But how many of you wrote, “Sometimes your timing sucks” or “You might be bad at pitching”? Because, you see, let’s just imagine here that there were indeed one thousand nine rejections. After all of those rejections, he never changed the actual product; the recipe remained the same. So why was the tenth and tenth time a success? Well, nobody actually knows, and nobody cares, because that's not interesting for most people. It’s not an inspiring story.

This is what we mean when we say failure is over-glorified. Nobody learns anything from it; it’s not an achievement. We’ve been invited to plenty of celebration parties; we’ve yet to be invited to a party where they celebrate a failure.

Now, the next reason why you should avoid failure at all costs is really simple and really straightforward: failure is a waste of time and resources. It’s a “f around and find out” kind of situation. Pretty obvious when you think about it. Let’s say you get all excited and you’re starting a dropshipping business, and you decide for some reason to drop 10K on ads. After you run the campaign and cross the line, you find out your ads didn’t really do much and you lost money.

You could say that you learned the valuable lesson of conversion rate and the cost of acquisition, but the reality is you spent 10 grand on something you could have learned in five minutes from a course for a fraction of the price, which, by the way, is a great reason why you should check out our courses at alux.com. But you know, back to the point: in business, at least, failure is purely a waste of time and resources. On top of the opportunity cost, no matter how cute you want to dress it, an L is an L.

And not only do you waste those precious limited resources, but you’re also now in a position where you first need to bounce back and then try something else. So, double the effort. When you have employees on payroll, shareholders and investors, and other business expenses, that L can really set you back for a long time.

So, the recap: you don’t learn much from your failures, and it’s also an over-glorified phenomenon that shades the real negative impact it has. And we could also add the emotional toll, the stress, but by this point we think you agree with us that in a perfect scenario, failure is not an option. But we know that life doesn’t work that way. Nobody can predict the future; we can only make educated guesses, and sometimes those guesses are wrong.

So what’s the right approach? Well, first of all, toss out the window the idea that failure is a teachable moment. If you have unlimited money and time, sure, try as many things as you want until something sticks. But we’re guessing that you’re not in that situation. Secondly, always think of the realistic worst-case scenario. Let’s say you decide to invest in some stocks. You’ve been watching the channel; you know what stocks we’ve personally invested in, and you make the first step.

Also, a word from our lawyers: this is not financial advice; it’s our educated guess. So you buy some stocks of your favorite companies. What’s the worst-case scenario? No, it’s not those companies going bankrupt; it’s you over-leveraging with borrowed money, and then those companies go bankrupt. And now, not only have you lost your money, but you’re also in debt.

You see, when you educate yourself on the worst-case scenario, you already start minimizing it, which is the next step: do everything in your educated ability to make the worst-case scenario as manageable as possible. If it’s still way too far out of your control, it’s a bad trade-off.

Which brings us to the next step: the trade-off. You see, every action you make in business is a trade-off between when you hope it’ll happen and when it will actually happen. The better you are at making these trades, the more often you’ll find success. And there are two ways to do it. First of all, your educated guess, or what you hope will happen, needs to be more accurate. And to do this well, you need to get more educated.

Let’s say you want to start a YouTube channel and become a content creator. Well, what you hope will happen is you quitting your job, working on your own terms, and being in full control of your time and money. Plus, you now have a cool job. This is an uneducated guess. When you learn it takes on average one to three years for a channel to pick up speed, well, your guess gets more accurate. Now you can say, “If I stay consistent for a year and learn everything I can on content creation, there’s a realistic chance I can build myself a secondary stream of income from producing content.”

The second method to make this trade-off better is to multiply the reward against the risk. Long-time Aluxers know about asymmetric risk; check out the video if you don’t. Essentially, this means the potential upside is unequal to the potential downside. So, imagine that you toss a coin in the air. If it lands on one side, you lose the coin; if it lands on the other side, someone gives you an extra coin. Sounds fun at parties, but in business, this is a huge waste of time.

But imagine that you toss the same coin and you lose it if it lands on one side, but someone gives you ten dollars if it lands on the other side. This is asymmetric risk. This is how people get super rich. If you can’t minimize the downside and you can’t find a way to maximize the upside, the trade-off will always work against you.

You see, failure is a part of the process, but only when you get to play again. If you start a business and it fails, and then you start another one and it fails, and you start a third one and this finally picks up and you’re now financially independent, well then, yeah, failure was a part of that process.

But if you run out of money after the second fail and now you’re flipping burgers, well, there was no process; you just failed. You see, Colonel Sanders didn’t randomly wake up one day in retirement and decide to go door to door to sell a fried chicken recipe until someone finally agreed to invest in his idea and create an empire. He was already in the restaurant business for more than 20 years. He slowly got some franchising going, and by the time he got tired, he sold the company for two million dollars, remained on the board of directors for sixty thousand a year, and that was that.

What KFC is today has nothing to do with the story that you’ve been told. It was just simple, honest work over a long period of time. People love success stories despite all the odds, but most of the time, they’re just stories. If you ever find yourself in a position where you have to succeed despite all the odds, well, that means that you’ve done goofed up, my friend, and you made a bad trade-off. That’s the failure that needs to be avoided at all costs.

We’ll see you back next time, Alux.