"You aren't a real entrepreneur until you've had to deal with failure," says the website describing FailCon. It goes on to characterize FailCon as "the first conference ever to ask successful founders, investors, designers and developers 'What's gone wrong and how did you fix it?' "

FailCon drew well over 300 attendees to the Kabuki Hotel in San Francisco on Oct. 27 to hear entrepreneurs and venture capitalists talk about their failed companies. Among them was PayPal co-founder Max Levchin--now CEO of Slide, a Facebook app maker--who talked about his first four failed companies. Mark Pinkus, who runs the popular social gaming site Zynga, described his troubles with Tribe.net. The failed site was one of the web's original social networks. Sixteen startups offered website demonstrations, and attendees picked the two they thought "least likely to fail."

Winners of the FailCon Success Contest were FidoFactor.com, a sort of Yelp! for the dog community, and YourVersion.com, a site that finds new web content based on your interests, and lets you bookmark and share that content with friends.

Attendees included everyone from entrepreneurs to MBA students, venture capitalists, angel investors and C-level executives.

The event was arranged by Cassie Phillipps, an event coordinator, and Diane Loviglio, herself a startup entrepreneur. Loviglio is currently beta testing Wattbot.com, a site designed to match interested consumers with clean-energy providers. Aready, Phillipps and Loviglio are making plans for FailCon 2010. For example, they'd like to have roundtables over lunch, where an experienced entrepreneur could mentor other attendees at the table. "You'd get fed lunch and get to ask and brainstorm and go around the table and have a really intimate conversation. You could really learn from each other," Phillipps says.

"This is a topic that almost everyone's wanted to talk about and wanted an excuse to talk about and didn't feel like they were supposed to," Phillipps says. "A lot of investors I've talked to say, 'We won't trust you until we've seen how you handle a failure.' I hope this conference helped people learn this is something not to shy away from," she concludes.

Despite her experience coordinating conferences, Phillipps doesn't consider herself an entrepreneur. Real entrepreneurs, she says, want to change the world. As she told the audience at the conference: "I'm not trying to change the world with what I'm doing: I'm trying to help you change the world."

That's what FailCon was all about. After arranging last year's SNAP Summit, Phillipps felt there was something missing. She describes it as "just blasé. Nothing went wrong, but nothing stood out as impressive." The wow factor was missing, she says.

Loviglio, who'd been attending events in order to get to know people and learn more about being a first-time entrepreneur, had a similar reaction to the many conventions she was attending. "They're all 'AwesomeCon,' " she says, with speakers who try to exude coolness. She wanted to hear from the opposite perspective.

Thus the idea of FailCon was born. Phillipps and Loviglio began working on the project in May. Their goal was not simply to offer a dozen stories of failure, but to create a structure for the day by offering the key points in developing a company where entrepreneurs can take a misstep. It started with early team development, moved on to product design and then investment capital. The day ended with a talk on "The Future of Failure."

Phillipps' closing remarks presented a challenge to the entrepreneurs attending: "How many of you are going to walk away from this and stop doing what you're doing--knowing that nine out of 10 of you will leave this room losing everything? Knowing all the areas in a company where you can fail?" she asked.They laughed, says Phillipps, but no one raised a hand.

"That's so what wonderful about this industry," Phillipps says. "There's this spirit--whether it's being stubborn or tenacious--we stick it out."

She hopes attendees walked away with this lesson: "We can't be afraid of failure; let's just embrace it and support each other through it." FailCon lessons learned:

1. You need to go through several iterations before you settle on your company design. "People are usually happy with the third or fourth iteration, but you have to go through all six," Loviglio says. On the other hand, "you can't iterate forever." At some point, you have to launch.
   
   
2. "If you want to get VC funding, you need to get out there and start pitching the idea before the product's finished," Loviglio says. "You need to make sure you get out there before all the VCs have that slot filled in their playbook."
   
   
3. On the other hand, says Phillipps, you don't want to be the first, either. If you're too far in front of the field, no one will understand what you're proposing. That might be why Tribe.net didn't make it. "If Pincus had come one step after Myspace and one step before Facebook, he could have been Facebook," Phillipps says.