Take us back, what was the seed that led you to co-found Fuckup Nights?
I was born in Mexico City and I was part of a middle income bubble, where you think you understand the world. Later, while studying business administration, I met women working as artisans in isolated Indigenous communities. I bought one of their bags and many of my friends complimented me on it. I thought I could start a social enterprise and I did everything by the book. I did a long business plan filled with assumptions, found partners, and investors, and after two years the business failed. Why? The financial planning was awful.
What is it like for you when you had that realization?
I was in denial until one night I was playing with the spreadsheets trying to figure out how the business could be profitable and I realized I didn’t know how to save this social entreprise. I realized the best thing I could do was be honest with myself, my co-founders, and the women, and close the business. I started the social enterprise to create a positive effect in the lives of the women and I felt I had done exactly the opposite. For that reason, I decided not to share the story with anyone for seven years.
One night, in September 2012, I was having dinner with four of my best friends and we were talking about the realities of being an entrepreneur. We all realized we all had screwed-up organizations and we realized we had not shared these stories, despite being really close friends. Once we did, we found that it was insightful, inspiring, and even liberating. We decided to replicate that conversation about failure with more friends. We planned that in 15 minutes, and that became the first Fuckup Night.
Why did you decide to continue?
After the first night, we received a lot of positive feedback and the event was surprisingly successful. The first one wasn’t hard to organize, so we thought let’s do this once a month. That is how my failure journey started.
Fuckup Nights is now in more than 300 cities. Congratulations. Tell us about the model.
At first it was a hobby and we all had a lot of things to do, so our mantra was, “keep it simple and make it happen.” This idea of simplicity—we took it to the extreme. For example, we didn’t open social media accounts, because managing them is not simple. But people wanted to keep track of the project and get information on new dates. After six months, we created Twitter and Facebook accounts. Then, magic started happening because people all over the world realized this crazy thing existed and started asking, “How can I start one in my city?” We created simple procedural manuals, and Fuckup Nights started growing. Two months later, Fuckup Nights was taking place in 15 cities and it was clear that someone needed to work on Fuckup Nights full-time, or else it was going to be a fuck up.
How did you monetize it?
In the beginning, we had piggy banks at events and asked for donations. We never got much money. We thought about looking for patrons of failure. It was a failure. We made a list of the 30 super rich in Mexico City and invited them for dinner at my place. We cooked, decorated, and planned our pitch. It was a nice night, but no one decided to become a patron—another failure.
People were insisting that it could be a franchise. I decided to give it a try. I emailed all the organizers in the 100 cities and asked them what if they would be willing to pay for a licence to organize Fuckup Nights. They all said yes. I asked them the amount they would be willing to pay. The minimum was $30 and I thought if we charged $30 a month, we would be successful. When we did that, we lost half the community. It’s typical market research failure. You ask what people would be willing to pay and in actuality, they don’t want to pay. We started working with the half that stayed and we started growing in a slower, but healthier, way.
What are the other revenue streams?
A lot of people were asking, “what is the main reason entrepreneurs fail?” We didn’t have an answer, but there was a need in the market to understand business failure in a deeper way. We managed to fund research on business failure in Mexico. We replicated the study in Colombia, and we have continued to do research for governments interested in learning why businesses fail in a certain industry or region. The other stream is where we organize Fuckup Nights for companies. Now we have 15 people working full-time for Fuckup Nights and hundreds of volunteers.
How would you characterize the evolution of our relationship with failure?
Where failure is best received is still in Silicon Valley. Sometimes I feel they are taking it to a dangerous extreme. I think this fail fast culture can have negative implications, because it minimizes the impact of business failure. It’s not just investors that are going to lose their money. People are going to lose their jobs, especially in the case of social enterprises. If they fail, it has a negative effect on the ecosystems the organization was trying to serve.
What happens when cultures and organizations take this to the extreme?
Some entrepreneurs may see it as an easy way out.
If you see failure as a badge of honour, it’s easy to give up.
Fuckup Nights is not there to glorify; it’s there so people can share their learnings and others can avoid being in that place.
Are we becoming more thoughtful about harnessing and sharing the wisdom that comes from failure?
We need to practice more mindful failures. In my view, that means paying a lot of attention to what is going on in the organization, in your team, and in yourself. You need to think about the impact that failure will have on your team, their families, and all the other stakeholders impacted by the business.
What skill sets do we need in our organizations to take smarter risks and have more resilience?
Resiliency is a muscle you can build. To do this, you create safe spaces where you can share your worries and your pain points. From there, people can develop more skills and grow. We also need to create a network of people that will be there during the hard times. The other thing is to host pre-mortems. They are exercises of imagination where you ask your team to think about the worst possible future scenarios and then you make plans to avoid those situations. It’s more like a risk assessment process based in imagination. They are more interesting that post-mortems.
What is the next big leap for failure?
The next leap is to change the culture in big companies and social impact organizations so they learn to fail well. In the entrepreneurial space, the concept of failure is already there. In a big company, your bonus is tied to success. Human resources areas need to rethink how they can create incentives to encourage employees to share their failures.