Inside Silicon Valley's Annual Failure Conference At FailCon, entrepreneurs study other's failures and how to prepare for their success.

Everyone loves a good failure story, especially in Silicon Valley. Yes, schadenfreude is a powerful thing, but this is not about that. This is about failure when it's the setup for a happy ending--those second chances that become the stuff of business legend. Because in business, those who didn't get it quite right the first (or seventh) time can still land on top: Witness PayPal, Apple and Twitter.

Nice, right? Except for one thing: These quick rags-to-riches tales gloss over the brutal fact that life as an entrepreneur is an emotional roller coaster, one that many people find too hard to take. Marc Andreessen, co-founder of Netscape and top venture capital firm Andreessen Horowitz, has described it thusly: "You flip rapidly from day to day: one where you are euphorically convinced you are going to own the world, to [one] in which doom seems only weeks away and you feel completely ruined, and back again. Over and over and over."

Elon Musk, who famously borrowed money from friends to pay his rent before his companies Tesla Motors and SpaceX took off, is even more blunt. Entrepreneurship, he has said, is like "eating glass and staring into the abyss of death."

Given a news cycle that favors shiny, new launches, reports of millions raised and disruptions caused by scrappy upstarts, what might an "honest" discussion of failure look like? This question is what brought me to downtown San Francisco on a brisk October morning to attend the fourth annual FailCon, billed as a one-day conference for technology entrepreneurs, investors, developers and designers to "study their own and others' failures and prepare for success."

To begin, Cass Phillipps, the conference's executive producer (and founder of an unsuccessful business herself) invited people to raise their hand if they had failed at a startup. More than half of the roughly 450 attendees unabashedly did so--a sort of bizarro-world exclusive club of people taking pride in their drubbings. That feeling returned to me throughout the day, as I was asked to share stories of failure and lessons I've learned from my own disappointments.

After, when I asked Phillipps how FailCon manages to attract A-list speakers willing to talk about their darkest moments--this year's lineup included Lean Startup prophet Eric Ries; Gina Bianchini, co-founder of Ning and founder of Mightybell; and Chip Conley, founder and former CEO of Joie de Vivre Hotels, the largest boutique hotel chain in California--she told me that speakers appreciate the chance to tell it like it is, even if it means sharing stories of an ugly divorce or a desperate second mortgage.

"We've all been to a lot of events that were inspiring, but there wasn't practical advice," she says. "It's helpful to hear how others messed up and why it didn't work, so new entrepreneurs don't have to reinvent the wheel."

Indeed, Conley spoke frankly during the conference about losing passion for his business during the recession, and how some of his friends even took their own lives; Ries admitted he'd done just about everything wrong at his first startup and deserved all the "I told you so's."

But when I chatted with attendees in the coffee line, during lunch, waiting for the restroom, everyone said the same thing: They wanted even more dirt--they wanted to know precisely how far their heroes had fallen before making their big comebacks.

Because in the Valley, dreams are so ambitious that even a conference about failure isn't really about failure. It's about how awesome you're going to feel after you pick yourself back up and get it right.