How I lost $2,000,000
The most costly lesson I ever learned
Last year, I lost $2,000,000.
It was by far the most costly mistake of my life, and the byproduct of a fundamental lack of self awareness. It’s a mistake I’ve wanted to write about for a long time—and I guess today’s the day.
Two years ago, a friend and I were presented with the option to purchase a small design company. It had a steady track record, and sales were growing with each passing year.
One thing we noticed after interviewing the founders and reading over the financial documents, was that there were some obvious opportunities for growth that the current owners were overlooking. With a handful of minor changes, we could seriously supercharge the growth of this company.
There was only one problem, however; something that we were completely blind to at the time. It wasn’t a problem with the company, or the revenue, or the employees—it was a problem with us. Neither of us cared about the products we would be selling, not even in the slightest. On a fundamental level, we were not—and never had been—customers of the product we were about to evangelize.
But that should be fine, right? Isn’t that what consultants and MBAs do all the time? Using their superior business acumen to tell entrepreneurs how to make more money, while spending less. They don’t have to actually care about the businesses they’re consulting for. They just need to have an intimate understanding of basic economic principals, and bada-bing-bada-boom. More money for everyone.
So despite our total disinterest in the product, we began fundraising. We pooled together money from our friends and family, and, ultimately, took a loan from the bank. We bought it. It was ours.
The company was dying from day one, and we couldn’t understand why. It was a long, slow bleed. Every day was a fight for survival, a fight to pay salaries, and we were losing. Within a year, the show was over. We shut our doors.
This was, without a doubt, the most epic and complete failure of my life. I often think about what went wrong, and what lessons I can draw from this $2,000,000 mistake. Two things come to mind.
Ignorance and Ego
Imagine you want to buy a ranch.
One where you can raise cattle and sheep, and little baby lamas. So you browse online, and find a working ranch for sale. You set up a tour. As you approach the property, you see that on the border there’s a tall fence.
The owner greets you, and let’s you in. The ranch is perfect—minus the unsightly fence—so you decide to take the plunge. You purchase the land, and after a few weeks of paperwork, it’s all yours. Now it’s time to get to business. The first thing on the agenda, tear down that fence.
It’s a huge undertaking, but you manage to take it down.
That night, as you lay your head on your pillow, you hear a terrible shriek coming from the stables. Shrieks of death. A pack of wolves—that had previously been taking refuge in the wooded area outside your ranch—had just stormed the stables. They killed dozens of your sheep.
This is the concept behind Chesterton’s Fence. It’s the idea that fences are constructed for a reason. Yet, we all too frequently tear them down, both physically and metaphorically, without consideration of why they were erected in the first place.
More often than not, this happens out of ignorance. When we’re overcome with ambition, we fail to understand our predecessors. We overlook their intentions and the considerations they made when faced with the decision of building that fence in the first place. It’s also an allegory for ego. Our unbridled hubris leads us to believe we know better than those who came before, and that the new is always better than the old.
This was my first mistake. I tore down fences without enough consideration as to why they were erected in the first place. I believed that I was smarter, had better information, and was more calculating than those who came before me. I was sorely mistaken.
Process Over Outcome
I was never really a good student.
I graduated high school by the skin of my teeth. In fact, I was such a bad student that I didn’t technically graduate at all. My name wasn’t in the program, my picture wasn’t in the yearbook; yet, strings were pulled and I slid though.
Motivating me must have been a nightmare for my parents. I never cared about the traditional rewards school promised—announcements on the honor role, acceptance to a prestigious school, the reward of a high paying job. I always felt that these were just more empty promises wielded by adults to get us to behave the way they wanted. A bit like how Santa Claus is weaponized each holiday season to keep rowdy kids in line. I wasn’t having it.
So the traditional exchange that a student makes of enduring daily drudgery now for a potential pay off later, didn’t appeal to me at all.
This was the first manifestation of something I wouldn’t quite have the words to describe until today. When sharing this story with a mentor, they suggested that what I was describing was the fact that I am Process Motivated rather than Outcome Motivated. That’s to say, I find it impossible to work hard on something I don’t care about.
To stir me into action—real whole-hearted action—the process itself has to be rewarding. I write each week because it is both challenging and rewarding in and of itself. I’m not hoping that one day after enough time and toil, all my efforts writing will be vindicated. No, each day I get to write is worth it—each day of the process is the reward.
The self-awareness and knowledge that outcomes do not motivate me, illuminated why I could never have succeeded in running that company. I fundamentally didn’t care about the product, and I had never been a customer. I tried to feign interest, but all attempts were hollow. I couldn’t make myself care about the pot of gold at the end of this journey.
Compare that to the previous owners. They lived and breathed their product. First, they started as users. Then, from a place of deep knowledge and expertise, they found holes in the market. Within a short period of time, they had become one of the most prolific companies in the space.
Their business, their product, and their customers were the first thing they thought of in the morning and the last thing they thought about out at night. It was their obsession. It was not, however, my obsession and despite my best efforts, I couldn’t make it to be.
The little voices
In the aftermath of this failure, I started my own business. Only now—after creating something I love—am I able to see how far off target I was. It’s a bit like finding your first real adult romance, after years of chaotic immature relationships. Ah, so this is what it’s supposed to feel like.
For some people, admission to a prestigious school, or a life-changing payday is enough to motivate them along the painful journey. They can slog through work that is meaningless, in exchange for a future that is potentially meaningful. I, however, am not one of those people. It took me a very long time to realize that.
My most costly mistakes, it seems, were simply that of being caught unawares. I was ignorant of the fact that fences, metaphorical or not, are erected for a reason. I was ignorant of the power and pervasiveness of my own ego. But most critically, I was ignorant to my true motivations.
You may see some of these same failings in yourself. If so, I urge you to learn from my experience. However, you may find that upon reflection, your vexes and vices are completely different from my own. Whatever the case may be, listen to those little voices. The ones that pull you towards the things you love, and repel you from the things you don’t.
Heed their warnings and save yourself the $2,000,000 lesson.
PS. If you’ve made it all the way down here and don’t feel that you’ve just wasted five minutes, consider hitting the Like button on this essay.
It helps others find it. And it makes me happy.