Who Would You Deem Worthy of a Second Chance?

Published in UT San Diego, February 2, 2015

“Gimme a second chance.”

I went back to the Miramar brig last month (third time, but I don’t have to stay overnight) to talk to about 70 inmates on the subject of entrepreneurship. The topic this time was the “20 reasons startups fail.” If you regularly read this column, you already know them by heart — team, market, money, etc.

But when it came time for questions, I got one that stopped me in my tracks. “Would you hire a convicted felon?” Whoa. Real world here, wake up, pay attention.

I told them that the issue was not the crime per se, but if you failed to disclose the issue early in the interview process, and if it were found out later, that probably would kill your chances. Transparency is the order of the day. At the same time, the crimes that these men and women were in the brig for were not on the order of murder and mayhem. They were primarily disciplinary and drug related.

And to compound the complexity, I would argue that former military are often the very best people to hire. The issues of team, discipline, goals — those are instilled in the military. We all know about programs to support hiring a veteran, and I would argue that is not doing someone a favor, that in fact, a veteran brings huge skills.

But the question hung in the air. I wondered if we as a society discriminate against gender, against race, against sexual orientation — and then to top it off, do we give second chances to people who have made a criminal mistake? It is easy to pay lip service, but do we really give second chances?

So now let’s look at second chances for entrepreneurs. Here is a statistic that will chill your bones a bit. Harvard did a study on failure, and here is what Shikhar Ghosh found. “If failure means the investors lose most of their money, the rate is 30 to 40 percent, if it means that the startup did not achieve the anticipated financial return, the rate is 70 to 80 percent, and if failure is defined as falling short of projections, the rate is 90 to 95 percent.”

In the entrepreneurship game, “failure” is a badge of honor to be worn proudly and serves you well when you do the next company. And many things outside your control — timing, market, money, demand, customer, revenue, etc. — often affect that failure.

But one of the biggest problems, says Ghosh, is too much money, not too little. “When you don’t have money, you reformulate the dog food so that the dogs will eat it. When you have a lot of money, you can afford to argue with the dogs that it is nutritious and good for them and they should like it.”

The venture community values experience over a clean slate. Henry Ford, Steve Jobs and Gururaj “Desh” Deshpande all experienced multiple failures before achieving success.

But Ghosh also warns about personal failures. Those are when the individual does something that violates a fiduciary duty, commits a crime or acts immorally. And personal failures often come when the CEO is trying desperately to save his company and he crosses the line, he misrepresents, he commits fraud. Ghosh says that when you do that, you are taking an enterprise failure and making it a personal failure — and that is not easily forgiven.

Back to the Naval Consolidated Brig. My students had each committed some kind of personal failure, but I think as a society we need to find generosity and give second chances. Stuff happens. I believe in redemption; every failed entrepreneur seeks it. Why should it be denied to others?

(Watch the final scene of the “Pulp Fiction” movie.)

The irony is that the financial world (Wall Street) hires the fallen back frequently, but the venture world appears to be less forgiving. How will those of us who run companies respond when the candidate in front of you says that he or she has a criminal record?

Rule No. 387

Walk a mile in someone else’s shoes. Your feet will hurt.


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