By: Benjamin Chen

With his flashy suits and his bulldozer style of presenting ideas, a man I’ll call “Merrick” made an immediate impression. I met him during my time at iXL Enterprises, a high-end web design firm where I served as Global CTO and CIO. Merrick was the CTO of a company that iXL had acquired, and he came along with the deal. When iXL went public, Merrick became a millionaire, and almost immediately, he approached me about an “opportunity”: a portal for selling tools online.

It was an area I knew nothing about. What I did know was that I wanted to make more money, and in that era of high valuations, eager investors, and media hype for any emerging online brand, Merrick’s idea seemed like it couldn’t lose. I placed a significant amount of my hard-earned IPO cash into his company.

To make a long story short, I lost a lot of money on that investment. At the time, I didn’t understand some of the most basic things about how venture capital works. For instance, professional VCs expect 80% of their investments to fail, and they reserve additional funds internally for series B, C, and D rounds to prevent dilution. I leaped before I looked, and I paid dearly for it.

Years later, I would make an even costlier mistake. After founding AppGenesys, a venture-backed cloud computing infrastructure startup with institutional investors including Flatiron Partners, SoftBank, and Intel, I ignored the clearest signal my team could give me. Our head of sales, Keith, flanked by regional directors and our head of marketing, laid out the problem: our all-in-one platform was overwhelming for most clients. Customers wanted simpler, à la carte options. Keith urged me to pivot.

Instead of listening, I dismissed his concerns. I believed our comprehensive solution was exactly what customers needed. The sales team, I told myself, just wasn’t selling it effectively. I told them to double down.

That decision (and the deep misalignment it entrenched between me, the sales team, the product, and our customers) was the beginning of the end. AppGenesys faltered. The large clients we’d landed represented only 10% of our potential market, and our bundled approach proved insurmountable for the other 90%. Keith resigned. The company was forced to sell off the platform, having never achieved the success that everyone anticipated. It was a very costly missed opportunity: Amazon’s AWS, which provides exactly the kind of functionality Keith had been pushing for, launched just a few years later. Today, it accounts for roughly 15% of Amazon’s sales and approximately 75% of its profits.

These are not stories I’m proud of. But they are stories I’m grateful for, and that distinction is the subject I want to talk about.

The Guardrails That Funnel You Forward

I’ve spent more than 40 years training in the martial arts (Taekwondo, Hapkido, and Brazilian Jiu-Jitsu, where I earned my black belt). Most people start martial arts for the same reason: they want to learn how to fight. What they don’t realize is that the knowledge they’re seeking is built on a daily foundation of attempts that don’t measure up, techniques that don’t work, and sessions that don’t go their way. In other words, it’s built on a foundation of failure.

Many people quit at white belt, or just a belt or two in, discouraged by how much failure still lies ahead of them. The ones who stick around are typically the ones who recognize that failure for what it really is: a set of guardrails, funneling them toward future success.

The same is true in business. My investment with Merrick felt devastating at the time. But it forced me to study the game of startup investing in ways I never would have otherwise. I learned what to look for, what red flags to watch for, and how professionals manage risk. That failure became the tuition I paid for an education that has paid off many times over. And AppGenesys? That experience taught me something no MBA program could: that alignment between your product, your team, and your customer isn’t a nice-to-have, it’s oxygen. Ignore it and you suffocate, no matter how much capital you have or how brilliant your technology is.

Turning on the Lights

I find it helpful to think of everything you know and everything you know how to do as a well-lit area surrounded by darkness. The darkness contains everything you don’t yet know, haven’t yet experienced, and don’t yet understand. When you’re standing at the edge of your personal “known universe” and looking out, the darkness is so complete that you can’t see anything.

But imagine that just inside that darkness (even though you can’t see it) is a table with a lamp on it. If you step out into the dark, you can turn that lamp on, and that patch of darkness becomes part of your known world. Now imagine that in every direction, at every point where the known meets the unknown, there’s another table and another lamp. Stretching as far as you can imagine, the darkness is full of lights waiting to be turned on.

I like this idea because it has nothing to do with success and failure and everything to do with adding familiarity, something that is, by definition, impossible not to achieve. It is literally impossible to interact with anything and not come away with at least a slightly better understanding of how it works. And gaining knowledge of a thing is always a movement toward success with that thing.

Fail Fast, Learn Faster

If failure is how we learn, and learning is how we succeed, then failing frequently and strategically is how we succeed faster. This is the driving force behind the startup world’s central mantra: “Fail fast.”

I saw this play out firsthand during the six years I spent launching a lighting division at RAB Lighting, where I oversaw a major electrical product launch involving more than 1,000 SKUs. Working within a tight time window, it was critical that structural flaws be discovered and corrected early. One of the biggest challenges we encountered had to do with shipping: our warehouses were optimized for large light fixtures, not the thousands of lightbulb products with subtle model number differences we were now handling. Tiny variations in brightness or color were causing frequent picking and packing errors.

Rather than trying to design the perfect system upfront (an impossibility with a product line this complex), we held weekly meetings with the warehouse teams, identified what was going wrong, and fixed it incrementally. We enlarged label fonts, redesigned SKU layouts, and reorganized the warehouse by brightness and color. Each cycle of testing and refinement brought incremental improvement. Through repeated iterations, we forged a process robust enough to handle anything the division threw at it.

The Only Way Forward Is Through

Here’s a truth I’ve come to accept after nearly four decades as an entrepreneur and investor: We rarely know everything there is to know, and we can rarely predict everything that will happen. We’re not gods, we’re just human beings. As Donald Rumsfeld famously put it, there are known knowns, known unknowns, and unknown unknowns.

The vital thing to recognize is that the best (and in fact the only) way to get the information we need for a “perfect” plan is to proceed with an imperfect one. The energy spent in that “failure” is just the price of the knowledge that the better plan requires. There is no difference between “failure” and “research” if the failure teaches you even part of what you need to know.

I lost money with Merrick. I lost a company with AppGenesys. And every one of those experiences made me better at what I do, not in spite of the failure, but because of it. The setbacks didn’t take me further from success. They were the price of admission.

Benjamin Chen is a serial entrepreneur, supply chain expert, and black belt in Taekwondo, Hapkido, and Brazilian Jiu-Jitsu. He has successfully built businesses across industrial, enterprise software, cloud, and consumer internet sectors. He’s sat on the boards and senior management teams of 4 companies that have gone public in the U.S., raised significant investment capital across multiple ventures, and helped lead M&A processes across 30 transactions. His from-scratch lighting and controls business grew into a substantial division within its first six years. He’s also a professor at Freedom Jiu-Jitsu in Carlsbad, CA. His new book is Lessons from the Mat: The 12 Martial Arts Principles that Will Help You Succeed in Business and in Life. Learn more at FromtheMatAcademy.com.