Startup Opinion

The mainstream media sneers at success and revels in failure — and it feeds a culture of mediocrity

Elaine Stead /

Elaine Stead

Human VC founder Elaine Stead.

One of the greatest threats to our lifestyle, our economic success and our way of life is our almost religious commitment to a culture of mediocrity.

These are harsh words, I know. But, as someone who has been on the end of some very harsh words over the last two years, primarily through our national financial press, harsh words are exactly what’s needed to clap back against the scourge that will eventually render us all economically, politically and ambitiously impotent. 

Newsflash: I’ve failed. Not ultimately, not in totality, not even in the majority, but occasionally. As a VC, I’ve had a few investments in my portfolio fail. Categorically. As in, out of business, no return of capital. Some were even my direct responsibility within the portfolio, and even if they weren’t, as the leader of the team, my name is rightly attached to them in part.

I’m also forever synonymous with the failure of the public company Blue Sky — as a board member at the time of an activist short selling attack, and as a business unit leader in the months following, during our attempt to stabilise the ship. Blue Sky failed for three main reasons: our growth rate prior to the attack, combined with an activist short seller attack which was false, misleading and deceptive, and the board’s mistakes in the wake of the attack. I wear part responsibility for at least one of these three reasons.

And these have all received a lot of press, a lot of criticism, much mocking and a lot of personal attacks. Attacks that have now been ongoing for the 20th month in a row. Some of it, offered as a qualified analysis or criticism of our decisions, has been warranted and deserved. Most of it, framed as accusations and jeers, has not. Particularly the consistent, insistent and persistent attention and focus on me, on my failures and on why this means I am — pick one, any one — a terrible investor, dumb, incompetent or a fraud and that anyone associated with me is also any of these things. It’s not deserved — not because I don’t own these failures, I do, but because they are not the full story.

Let me explain.

Let’s set aside the fact that venture capital as an asset class is structured the way it is, because it assumes the inevitability that the majority of investments will fail. It happens to every VC fund and manager. Every other VC manager will have a similar failure profile to mine. Every VC LP knows this going in and accepts these risks — they know the opportunity to generate outsized returns carries with it the risk of outsized losses. 

The full story on my VC business is that just prior to the short seller attack, when we were raising our fifth VC fund, our realised and unrealised returns were benchmarked in the top quartile globally. Our realised returns were circa 13% IRR net of fees (and we were only at the start of exiting and realising the portfolio). I have exited three VC investments in the last four years, which I believe, and I’m happy to be corrected here, may equate to the same number of VC investments exited than achieved by the entire rest of the Australian VC community put together in that time frame.

Objectively, my investment track record is not just sound, it is globally competitive. I have had repeat LPs in multiple funds. I am an investor of high referral with founders. I’m known in the market for being tough but fair, empathetic, helpful as a wartime investor and board member, and prepared to tough it out alongside my founders until the very last second, and to stand by them in the months and years that follow any failure. 

But you don’t hear about that in the public discourse. You only hear about the things that have gone wrong.

Why? Because it makes good copy. Because it sells newspapers. Because people have vested interests that are not aligned with mine. Because we are all, deep down, petrified of failure and the guilty pleasure of hearing about others’ failures distracts us from the inevitability of our own. Failure is sensational. It’s schadenfreude.

Here is why this is not only doing me an injustice (and dear lord, it is), but it is doing us all an injustice.

Australia is falling behind. We are not world leaders in any fast-moving, high-growth technology-led new industry. For sure, we have nodes that are doing phenomenal things, and we have ambitious, world-class people, but I challenge you to name a future industry at which we are winning, on a global or scalable level.

In this environment, what will be our economic saviour when our agricultural and natural resource advantages expire? What will be the net creator of jobs when startups (which currently generate 90% of net jobs growth in Australia) and their founders are stifled, suffocated and turned away? Because if they fail — and let’s be perfectly frank here, startups will and must fail for there to be knowledge growth — they will be pilloried for the term of their natural lives.

We don’t seem to be able to comprehend that the outcome of a tech venture (or any venture for that matter) is not necessarily reflective of the decisions made or the people within it. Bad outcomes can happen when everyone does everything right and great outcomes can happen even when you make 15 mistakes along the way.

Is it really necessary to state the rather obvious point that people are not ‘bad’ or ‘evil’ because they fail, in the same way people are not always ‘heroes’ when they succeed?

In this country, we are culturally primed to back an underdog. That is, until that underdog is perceived to be getting ‘too far ahead of themselves’, at which point we turn on them. It’s widely known as ‘tall poppy syndrome’. Make no mistake, this is obliterating ambition. The message here is ‘don’t get too successful’, but also don’t ever dare to fail — just stay between the lines.

Be average. Be safe. Be mediocre.  

We are so petrified of failure that we refuse to acknowledge it can make us better or more valuable to the industry. We won’t admit we can all learn from failures, and that contributing to the collective intelligence is surely the silver lining of a dark cloud.

I find it baffling that we would choose to vote our failed entrepreneurs off the island like a tribal council on Survivor, rather than bring them back into the fold to learn from their mistakes.

Think I’m being alarmist?

Look at how the media reports on our companies and founders, berating them for their success, such as when Mike Cannon-Brooks or any public company founder dares to sell down their shares. Or humiliating founders or investors for failing, such as Jodie Fox.

The personal cost of this highly selective media narrative is also dangerously high stakes — it causes the targets enormous emotional distress. Our entrepreneurial population is already vulnerable, over-indexing in mental health issues. Having been asked to speak on this topic a lot over the last 18 months, where I get to talk to the community directly, and people reaching out to me privately, I’m aware of at least two targets for whom this has led to contemplating suicide — and that’s just the tip of the iceberg.

Is our media really prepared to wear responsibility for this?

I have been asked how we actually change this, and I’ve thought hard about it. And ultimately, I think it’s quite simple. We just need to call it out. We need to reject the practice of making failure the centre of the narrative, instead of talking about what was achieved during it and asking what can be learnt.

When people are mocked for failing instead of celebrated for being brave enough to have a go, we have to stand up and say that it’s not right. When people are cut down for being ambitious, successful or self-congratulatory, we have to defend their courage.

We need to reject our national tall poppy syndrome and celebrate the people who recognise a challenge and attempt to rise to it.

Editor’s note: this article was updated on October 31, 2019, at 4pm.

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Elaine Stead

Elaine Stead is the founder of Human VC, and former head of Blue Sky Venture Capital.

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