Well, this is kind of vague, but generally speaking the best approach is neither apologize or joke about it. Just acknowledge it simply and keep moving. Don't

Well, this is kind of vague, but generally speaking the best approach is neither apologize or joke about it. Just acknowledge it simply and keep moving. Don't go down a rat-hole of trying to fix it on the spot. The best response is also often a matter of the product demographic/audience and maturity cycle. I would handle a tech demo of a failed pacemaker differently than I would handle a failed demo of a just-announced Instagram competitor.