About nine years ago I was 30 years old, and after building several profitable companies I was dead broke. The kind of broke where bill collectors were calling and I did not know where I was going to get my rent payment. That’s tough to admit for someone like me who’s proud of the things I’ve accomplished on my own because I worked extremely hard.
I was down. I felt like an idiot because here I was, this big shot spending a bunch of money on cars and drinks and other ridiculous things I thought were cool, and just like that, it was all gone. And when I say just like that, I mean that literally. One day my company was managing millions of dollars, the next day I barely had a penny. All of this because I didn’t structure my business to be agile enough to move with the times.
Let me tell you how it happened. Years before I founded my current startup, I built a successful marketing agency. We catered to one niche — the mortgage industry — which was booming at the time. The marketing agency was stable, and the revenue stream was strong, so I got complacent. In my mind, I had it all figured out and thought, “This is what I am going to be doing for the rest of my life.” I put everything I had into that agency. The idea of merging into another revenue stream or diversifying outside of that vertical never even crossed my mind. And then the mortgage industry imploded, the credit market plummeted, and I went from having tens of millions of dollars worth of clients on Tuesday to having zero on Wednesday.
That kind of experience would break a lot of people. And yes, I was obviously devastated, but I licked my wounds and got ready to bounce back with my next venture. For this business, I took on a partner and we hypothesized that building software to help people save their homes would be a billion-dollar business. At the time, we didn’t know anything about software. We hired a third-party company that no one had ever heard of. We spent over a year building the software and tweaking the design to perfection and raised a million dollars in capital investment for the project.
Then we put our feet to the ground and blazed ahead, never getting any feedback from potential customers. So of course when we finally launched, there was dead silence. Our idea fell flat on its face and we lost all the money we raised because we jumped headfirst without even testing a prototype.
I learned a lot from those two experiences, but one of the biggest lessons is that you have to be agile if you’re going to succeed. You can’t get comfortable once you’ve had a little success. The world moves way too fast and technology is too much of a game-changer to ever think you can settle into one way of approaching your business.
My grandfather used to mention the Russian expression: “The wise man learns from someone else’s mistakes, the smart man learns from his own, and the stupid one never learns.” Clearly, I wasn’t wise, because the same failure to be agile that tripped me up has been the stumbling block for thousands of entrepreneurs before me. But I am smart. Every time I’ve been kicked in the face, I’ve learned how to block. When I’ve fallen, I’ve learned where to lay down extra padding. When I run into roadblocks, I’ve learned how to change directions. That’s agility, and I learned all that the hard way — from my own screw-ups.
But you can avoid all of that and learn from my mistakes. Here are a few suggestions so you don’t fall into the same trap:
Focus on the process, not the end result.
Just because you started out with a vision doesn’t mean that’s what you’re going to end up with. Agility means being prepared to change directions if things aren’t working out. Some of the most successful businesses in the world started out as something completely different. The entrepreneurs that built these businesses shifted, pivoted and made a space for themselves where their vision worked. If you look at your business as an experiment, then you never fail. You’re just working on the right formula.
Pay attention to the market and be ready to give it what it wants.
One of the biggest factors that will change the direction of a business idea is market feedback. When my business partner and I launched our software without ever getting a feel for what the market wanted, we ignored the only true validator of any great idea. Even if you’ve got investors throwing cash at you, all that means is that you’ve developed a convincing sales pitch. But if people don’t want to buy your product or service — no matter how many indicators of greatness you had — you need to let it go or pivot and take it back to the drawing board. Remember, my marketing agency was bringing in huge revenue until the mortgage industry crashed. Take time to diversify instead of putting all of your eggs in one basket.
Listen to feedback and let your community guide you.
I’ve started to integrate feedback and data into my business by operating skunk-works style with our community. We’ve set up a big lab where we launch ideas, get feedback from the community and build things that people want. This has been invaluable. But if you aren’t nimble enough to execute on the feedback consumers give or the ideas that your community generates, then it’s pointless.
The reality is that in business, things change, things break and things fall apart. When that happens, you need to be able to pick yourself up every time and say, “That was a great learning experience. What’s next?” That agility will clear the path for successful ideas not yet on the horizon.
Originally posted on Forbes by Jason Saltzman