A contenstant starts out strong and then "blows it" but still goes home with cash they didn't have when they started. Did they 'fail' or not?
Cuil had five million visitors during its first month and still has 150K, plus they have received $33 million from someone else's pocket. Even if they go under, the members will keep a nice slice of that for the ride home. The connections they have developed from such a high profile project position them well for their next endeavor. In addition, individual members are unlikely to be remembered as causing the 'failure' unless there is political backbiting among them after they leave (something that could well happen).
I'm sure pg would prefer people to think your way rather than mine. But I can't help feeling I wouldn't mind being in the position of Cuil's founders even if the hackers think I failed to slay the giant.
Using your logic it would be almost impossible to fail. Sure they lost millions, solved no problems and wasted dozens of labor years, but some staffers got to network and get a new job out of it!
I find it more interesting how intelligent people looking at their own search results could think this was enough to become a significant search engine. Maybe they just had to launch something knowing they were not ready.