Recently I watched the 2007 movie Lions for Lambs. In this movie a brilliant but apathetic student asks his professor (Robert Redford), “Is there any difference in trying but failing, and simply failing to try – if you end up in the same place anyway?” He was attempting to justify taking the safe route; never really taking a stand or trying anything big.
What do you think? Do you cringe at trying something big because of the possibility of failure? What if you tried for the promotion but failed to get it, started a business but lost your investment, or tried a MLM system but got nothing other than a garage full of vitamins – are you somehow better off? Or would your life have been better if you had avoided the hassle and the disappointment altogether?
Yes, I’m hearing from people every day who tried and failed. One gentleman lost $11 million in a gas and oil business. Another lost $3.2 million inherited from his grandmother in a failed retail clothing business. A close friend lost $24 million in a failed real estate development. Research shows that if you are under thirty years old, there is 90% chance you will be fired sometime in the next twenty years. Bernie Marcus was fired from a job as manager of theHandyDanImprovementCenter, then went on to start Home Depot. In 1988 I experienced a horrible “failure” in business – having to borrow a car to drive to start generating income again. Should I have avoided the pain and anguish by taking a safer route, or was that experience the necessary catalyst for learning the principles that launched the success I enjoy today?
My theory is that you will be a brighter, better person for trying something big – even if you “fail.”
What has your life experience taught you about trying big things? Have you learned to keep a low profile to avoid failure? Or have you found that “failure” leads to bigger successes?
No More Dreaded Mondays tells the story of my failures and provides principles for coming back to success.
I haven’t found that I can learn anything without failing at first. This is especially true with learning a new language, a new computer program, etc., etc. Oh, and thanks for the list of resources. I found a free course on Hebrews through one of the links. I tried learning it on my own before and “failed,” but I did learn a little. This course has an instructor who has videos to go with it. Some of the things I learned are coming back.
Eva – what a great point. As I look back on my biggest successes I too see that I failed first. And last year one of my goals was to learn Spanish. I got the Pimsleur system, listened and then I’d go to my favorite Mexican restaurant and be totally baffled. Still trying to figure out how to win in that area.
Try http://DuoLingo.com. It’s free and fun. I’ve gotten back to Spanish (with a minor) and it’s very helpful.
Personally I find it stunning.. these guys losing 11 million, 3.2 million and 24 million dollars. If I lost $1500 my wife would take the kids and leave me, and file for divorce. I’m not sure where that would place me personally on the Brighter and Better for Trying Scale, but I undoubtedly respect their persistence. Great work!
Dan – I hope your assumption is not really true. Those experiences can make a marriage stronger and the ride is exhilarating.
No assumptions. It’s as true as acceleration due to gravity is 9.8 meters/second squared. But we all have obstacles, and I believe there are obstacles far more substantial. I’m sure there are plaenty of men who succeeded without wives like Nathaniel Hawthorne had. Perhaps it makes success that much sweeter! And I think most wives probably have some limitations on amounts they’re willing to let their husbands lose, it’s just my wife makes it a bit more of a creative challenge. I was just amazed at the amounts these men invested in their endeavor when if I had less than half of what they invested I would’ve considered myself successful. I love that success can be measured personally. Again…kudos to these guys! Amazing work!
I can’t imagine losing millions of dollars, either. I lost $10K in a failed real estate deal, and it contributed to breaking up with the lady I was dating at the time. That’s a LOT of money to me. I’m still trying to figure out how(or if) to try again, and that was in 2003…
One question – what did you learn from your failure? Where in the dealmaking process did you lose sight of your goal and start chasing dollars (whenever you get to a point where you can’t walk away, you’ve lost.) When you get answers to those questions, you can develop a better investment strategy AND and exit strategy that will ensure you have a parachute if things start to go south. I’ve lost money on some investments, and it’s taught me to honor and value the term, “stop loss.”
Unfortunately, I learned that you have to HAVE money to MAKE money. Not sure what you mean by ‘chasing dollars’, since the goal of the deal was to turn a profit. It was a property purchased from a county auction. I won the bid at $80K, and had to put down 10%(non-refundable) and close in the next month or two(can’t remember which). So my plan was to get a loan for the $72K balance, plus the $40K rehab fee, for a total of $112K. I would have been qualified for that amount easily. The property, once fixed up, was worth $180K-210K. However, the bank’s appraiser put in a much higher estimate of $90K for rehab, which meant a total loan of $162K. That loan amount was too high for me to qualify for, so I couldn’t complete the deal. I lost my deposit, plus money I had put in to secure the property and start repairs. If I had had $80K sitting around, I wouldn’t have had to deal with the bank for acquisition. I could have either gotten a smaller loan for rehab, or cashflowed it even though it would have taken longer. Other than having a pile of money already, I’m not sure what I could have done differently. Not bid in the first place, I suppose…
Actually, I see numerous takeaways here. 1) don’t go into anything undercapitalized – if you needed to borrow that much money, then you were overleveraged in the first place. 2) have a plan B – had you had more than one financing option available, you wouldn’t have been completely dependent on the sole opinion of the bank’s appraiser, 3) have an exit strategy – what could you have done to recover your funding? If there were others bidding on the property, why not contact them and offer to sell at your cost? I recently did a resume for a real estate manager who was faced with a similar situation – he had obtained lease agreements on some very pricey Manhattan real estate when his company decided not to locate in Manhattan. My customer turned around and flipped those leases, making a profit for his company and getting out from under what could have been some very expensive contracts. That’s taking lemons and making lemonade.
Like I said, you need to have money to make money. That covers #1 and #2. That goes along with Dan’s question about why the rich get richer – money and connections. For #3, there wasn’t any way for me to know who the other bidders were, or what their bids were. It’s a nice thought though – I’ll keep that in mind. But as of right now, I can’t find any other properties that I can afford without having $50K+. That will take me at least 4 years to save up, unfortunately. I’ll be 56 then, and might not be able to do a lot of the rehab work myself. Which means…I’m going to have to come up with a different way to earn money. My current job(which I hate anyway) won’t let me earn the kind of money I need to be successful/wealthy/retire anytime soon.
Knowledge of the real estate market is more important than having money. I know people who make lots of money without having ANY of their own money in the game. Investors are ready and waiting to fund someone who has taken the time to know the market and search out the deals. There are discussions going on daily in this 48 Days group – http://www.48days.net/group/realestateinvesting
It may take money to make money, but it doesn’t take a LOT of money. You say it will take at least four years for you to “save” 50K – that means you are able to put back 12.5K a year? That’s more than enough to put into one or more solid mutual funds or to begin a portfolio of dividend-paying stocks that allows you to reinvest the dividends. You’ll grow your pot a lot faster with a 3% to 5% ROI than you will at .05% interest, and you may not even have to tap into the capital when you start your real estate investing. You can use it as collateral instead, knowing that you could sell off the equity if need be. When I bought my second house, I was able to use my money market fund (paying a whopping 5% at the time) as collateral for the mortgage, and when my first property sold, use that to pay off most of the mortgage (my house was fully paid). I’ve never made over $50K in any year, but I’ve had banks literally throwing money my way because they know I’m a solid risk. Of course, I take no loans unless there is a circumstance that forces me to do so. Dan’s right, too – knowledge and strong negotiating skills matter more in real estate than money. I know of a local group of angel investors who are willing to fund deals for a percentage of profits after the sale, and I don’t live in a metropolis. Learn, get prepared with an opportunity fund (note I didn’t call it an “emergency fund”) and network with the right people. As millionaire Michael Todd once said, “The harder I work, the luckier I get.”
Wow. Amazing how they kept going forward. Back in 2006 I lost my “nest egg”. Close to one million dollars. In real estate and the stock market. I was planning on retiring at the age of forty. I’m now three months shy of 45, broke and unemployed. I have started a small baking business that I hope gets me some cash quick. It has been painful to see my money disappear. But, as my mom always told me growing up, money comes and goes. I’ve gone through high and lows since then, but I refuse to give up. My 7 year old daughter once Told me as j asked her, “what do you think keeps people from achieving their goals?”
She replied, “if you’re talking about you, I think you’re scared. Which is also why people don’t do what they want. They’re afraid.”
Sam – wow, that’s a pretty profound insight from your little girl. I think she’s right. Those experiences can make us afraid. I’ve seen lots of people who have had a “failure” and then decided it was safest to just stay down – don’t try anything and you can’t have that painful experience of failure again. But I don’t know any way to get to success without the possibility of failure. Every big think I attempt has the strong possibility of failure. I’ve had some dreadful failures along the way but I get up every morning excited about stretching to bigger things. If the baking business blends your Passion and Talent, and there’s an identified Market – you’re on your way to recapturing that million dollars and more.
Reminds me of the Naploeon Hill quote: “Most people have achieve their greatest success just one step beyond their greatest failure”. Wisdom to live by. Thanks Dan!
I’m working on a HUGE project right now… the answer will probably be NO… but, what if I’m wrong? If I don’t try the answer is definitely NO. So, I’m willing to take the chance for the possible YES. Roosevelt said “The only thing we have to fear is fear itself.”; so while my idea scares me to death, I think it’s also a great idea and worth working through my doubts and fears to get it done. Dan, thanks for all your encouragement!
Christine, way to go on taking a chance for that possible YES! I’m rooting for you!
Failure is not always an option, but quitting is. Either way, I view it as re-direction with refined focus.
My full-time career began with what you could call a failure. I was a teacher at an inner-city high school. I was ill-prepared for the job, having completed student teaching in a small town and having naively assumed that the job would be easy. At only 22, I dreaded going to work every morning, and wondered if I had wasted 4 years of college. I left after only one year. However, that experience is something that taught me about the complexity of life at a younger age than most. One colleague told me that it made me stronger than any of my colleagues at the place where I was before will ever be. Two years later, I finished my Master’s degree and leveraged my lessons learned from that one year into a full-time job at a university. Eight years after that, my experience at a university and community college led me to an administrative position at age 33 at the community college in the same city where my career began. Now, I sometimes visit that school to help them out. I never would have had the courage to go to grad school and improve my credentials if I hadn’t experienced that first year of “failure.”
Andy – wow, that’s a great example of allowing failure to motivate you to take specific action. Congrats on not just crouching down in defeat but learning and moving up anyway.
I have had an interest in the sharemarket. When i was between work i started reading books (from the local library) on investing directly, and started small but lost money in a rising market. I continued reading, started making some money, and now average 1% profit each week. Now i have a history of success and some money to back it up, i am taking out a loan on one of the places we own to step it up with a view to doing this full time. Can’t wait cause it turns out this is really what i love doing – just as well as my original line of work is on a slow death march….