Reed Hastings has a vivid phrase for what running his first company felt like. “Near-drowning,” he said. “Constantly.” Pure Software, which he founded in 1991, grew faster than he could manage it. He asked his board twice to replace him as CEO, and they refused. By 1997, the company was absorbed by a competitor, what Hastings later described as “a soft landing to what would have been very bad news.” A year later, he co-founded Netflix.

Hastings rebuilt himself. “I got to start over as a CEO,” he said. “In the first company, I was sincere but naïve. In the second, because you get to start over, you’re much more thoughtful.” Netflix, he added, he had “definitely enjoyed more.” The near-drowning, it turned out, had taught him how to swim.

That arc of collapse, reflection, and radical rebirth is an enduring patterns in entrepreneurial life. And increasingly, the world’s leading business schools are treating it not as a cautionary tale but as a curriculum.

The Business of Starting Over

At London Business School, Herminia Ibarra has spent decades studying what actually happens when people reinvent themselves professionally. Her conclusion challenges almost everything the self-help industry tells us about change. Most of us believe that clarity should precede action: figure out who you want to be, then go become it. Ibarra argues this is precisely backwards.

Career reinvention, she explains, is not a linear path toward some predetermined identity. It is a “crooked journey” along which we try on a range of possible selves. Knowing what we want is the result of doing and experimenting, not a prerequisite for it. The implication is that you cannot think your way into a new identity, you have to act your way in.

This has profound consequences for how we understand entrepreneurial restart. The founders who come back stronger after failure are rarely those who spent their downtime constructing a perfect new plan. They are the ones who tried things – new networks, new roles, new problems – and let a new sense of self emerge from the doing. The identity follows the action, not the other way round.

Ibarra’s framework also explains something that MBA admissions teams have noticed for years. Founders who show up inthe business school classroom after a failed venture are often among the most intellectually alive people in the room. They are not there to learn what they missed. They are there, often without quite knowing it, to become someone different.

What Failure Actually Teaches

Tom Eisenmann has been studying startup failure at Harvard Business School for years, and the data the co-Chair of HBS Foundry has assembled disrupts several assumptions. Two-thirds of startups, he found, never generate a positive return. But what he wanted to understand wasn’t just why companies fail, it was what happens to the people inside them when they do.

His finding on this, published in Harvard Business Review, show that roughly half of the founders in his research who shut down a startup in 2015 had, within five years, healed sufficiently and learned enough to launch another company. That is not a statistic about resilience in the abstract. It is an empirical argument that failure, properly processed, is a rehearsal.

Eisenmann identifies six recurring patterns behind startup failure – structural, relational, strategic – and insists that most of them are not character flaws. They are navigational errors made by capable people in conditions of genuine uncertainty. The founder who ran out of cash before finding product-market fit is not a fool. He or she is someone who needed more information than was available. The lesson is not “don’t start again.” The lesson is, start again better informed.

His prescription for failing well is as important as his taxonomy of failure patterns. Preserve your relationships. Pay your suppliers. Be honest with your investors. Support your team in finding what comes next. The grace with which you close one chapter, Eisenmann argues, directly shapes the authority with which you open the next one.

The quality of a restart is partly a function of the quality of the ending. How you leave is who you become.

Stewart Butterfield’s Double Life

The entrepreneurial biography of Flickr and Slack co-founder, Stewart Butterfield illustrates the power of identity reinvention. He has now done it twice, and each time the product he was trying to build failed while an entirely different and more valuable one emerged from the wreckage.

In 2002, Butterfield’s gaming startup ran out of money. From its dying code, a photo-sharing feature survived, Flickr. Yahoo acquired it in 2005. Then, in 2009, Butterfield tried again with a cooperative multiplayer game called Glitch. Conceptually fascinating, but commercially doomed. By December 2012, the servers were shut down.

What Butterfield and his team couldn’t stop using, even as everything else was failing, was an internal communication tool they had built to keep themselves coordinated. It was persistent, searchable, and useful. In August 2013, they launched it publicly as Slack. Salesforce acquired it in 2021 for $27.7 billion.

The obvious conclusion is that Butterfield got lucky twice. The more interesting take is that he got skilled at something most founders resist: releasing his attachment to the original vision when the evidence demanded it. Closing Glitch was not just a business decision, but a psychological one. Most founders cling to the original idea because it feels like identity. Butterfield let go. 

This is Herminia Ibarra’s framework at play. Butterfield didn’t plan Flickr or Slack. He experimented, paid attention to what worked, and allowed a new professional self to emerge around the evidence. He acted his way into both identities,and each one was richer for having been built on the foundations of something that had failed.

What the MBA Classroom Is Learning

The shift in how business schools approach failure is not just rhetoric. HBS runs a second-year elective called The Founder Mindset which explicitly examines how founders succeed because of the way they handled their failures, and argues that pushing through intellectual and emotional limits makes founders stronger and more resilient, not despite the difficulty but through it. Eisenmann himself developed a dedicated MBA elective on entrepreneurial failure, built around case studies of companies that came apart and the humans left standing.

In Barcelona, ESADE Business School has made run with this idea. Its entrepreneurship program operates on the principle that a failed founder is not a cautionary case study but an experienced one. During a visit to Stanford, an ESADE student on the MSC Innovation and Entrepreneurship programme, Kaia Lubbers was cold-called by Steve Blank, the father of the Lean Startup movement, and asked, “what is the word for a failed entrepreneur?” Her answer, without hesitation, “Experienced.”

Jan Brinckmann, who leads ESADE’s Entrepreneurship Institute, goes further. He defines entrepreneurship not primarily as a business activity but as “your personal declaration of independence.” That framing matters. If entrepreneurship is fundamentally about identity and self-determination rather than products and markets, then failure is not the end of the story. It is the middle of it – the necessary passage between who you were and who you are becoming.

The Oldest Story

There is a reason this pattern resonates so deeply in human culture, across faith traditions, philosophies, and storytelling the world over. It maps something true about how transformation actually works. You cannot become someone fundamentally new without first relinquishing who you were. The old self has to go before the new one can arrive.

For entrepreneurs and leaders, this is not merely poetic. The research shows that the founders who build their greatest ventures are often not the ones who avoided failure. They are the ones who went through it, and came out the other side not just intact but reconfigured.

Butterfield, Hastings, and the thousands of less famous founders who closed one chapter, processed what happened, and opened another are all telling the same story. The past does not have to define you. The permission to begin again is always available. And the new thing you build, informed by everything the previous attempt taught you, may well be the one that changes everything.

The only question is whether you are willing to let go of who you were in order to become who you could be.

About the author

Matt Symonds is Chief Editor of BlueSky Thinking, and host of BlueSky Media Connect, bringing together b-schools and universities to meet editors from FT, BBC, Bloomberg, WSJ, The Economist, NYTimes and other global / regional media.

He is the S of QS, co-founding QS Quacquarelli Symonds, publishers of the QS World University Rankings. Matt I also co-Founder and Director of Fortuna Admissions, a coaching dream team of former business school and university admissions professionals from top-tier institutions, including Harvard, Stanford, Wharton, INSEAD, LBS, Chicago Booth, Columbia, Northwestern Kellogg, Berkeley Haas.

Matt co-host the CentreCourt MBA & Masters Festivals with John A. Byrne and Poets & Quants. Author of the international bestseller, “Getting the MBA Admissions Edge” sponsored by Goldman Sachs, McKinsey, Bain, BCG, he writes about Higher Education and management for BBC, Times of India and formerly Forbes, The Economist and Bloomberg.

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