The Highs and Lows of Entrepreneurship
Navigating the Treacherous Waters of Business Near the Brink of Failure
Navigating the treacherous waters of business near the brink of failure presents a dilemma as old as commerce itself. It's a high-stakes game of financial chicken: do we keep fueling the tank in hopes of reaching profitability, or do we slam on the brakes to avoid getting killed in the crash? This conundrum rarely has a straightforward answer, but my journey through it with two family businesses, Captive Plastics (Captive) and Lincoln Mold and Die (Lincoln), might shed some light.
Before we dive into their stories, let's sidestep into an often-overlooked aspect of business - the cost of ownership. I rarely receive hate mail, but this gem from the archives stands out:
"As a former employee of both Captive Plastics and Lincoln Mold, I must say, you might bear his name, but you've traded any claim to his righteousness. Your father was a great man; you, merely a bean-counter." — (name withheld)
The allure of being the 'boss' is often a mirage in the entrepreneurial desert. In the case of Captive, my initiation into ownership was signing an $800,000 personal guarantee to a bank that was already showing signs of impatience following my father's passing. With my personal account almost echoing in emptiness, what's another $800,000 on the express ride to bankruptcy? I was in it, like it or not, and one of my first executive decisions was to set my salary at a whopping $1,000 a year. Yes, you read that right. My weekly pre-tax income? A grand $19.23 - why even bother, right? This symbolic salary, however, was my key to maintaining medical coverage during this tumultuous period. And for the record, the unhappy bank and the company's struggles predated my leadership - so my period of personal mourning had to be shelved.
Ultimately, this sacrifice paid off. Though the full story unfolds elsewhere in these posts, the gist is that Captive was rescued from the jaws of failure. The turnaround allowed me to reward those who contributed to this success in ways unimaginable during my father's time - myself included. Without this chapter, I likely wouldn't be here dispensing these pearls of wisdom.
In stark contrast, Lincoln's story is one of a relentless struggle with no fairy-tale ending. Despite our best efforts to pivot, this smaller entity could never find its profitable north star. During its unprofitable twilight, I ceased drawing any salary from it. Fortunately, the successful turnaround of Captive enabled me to cover over $1,000,000 in liabilities from Lincoln's defined benefit plan when we finally had to shut its doors. This was on top of liquidating all assets, including real estate, to chip away at the mountain of debt. Reflecting now, from a sheer 'bean-counter' perspective, Lincoln's situation dwarfed the challenges I faced with Captive post my father's demise. Though the PBGC Pension Insurance would likely have cushioned the retirees, my financial obliteration would have been assured.
The Startup Survival Kit: How Founders Make Ends Meet
Embarking on the journey of a startup or steering a mature business away from the precipice of failure is akin to navigating the twin mysteries of birth and death in life. It's a profound comparison, one that underscores the universal themes of creation, struggle, and transformation.
I stumbled upon a fascinating discussion on Quora that encapsulated this perfectly. In response to the question, "How do founders pay their bills after they quit their full-time jobs but are still seeking investment in their startups?", Ivan Mojsilovic, CEO of Yanado.com, and Sam Rosenthal painted a vivid picture of the startup survival kit:
1. Eggs for breakfast every day
2. Cheap coffee for lunch
3. Eggs for dinner (if you’re tired of eggs, skip dinner)
4. No restaurants
5. No new clothes
6. No cars (public transportation or walking)
7. No sex (this was hard)
8. Bills, what bills? (it’s sucks not paying bills, but what the hell)
You would be surprised on how little money you can live on.
And from Sam Rosenthal:
9. When we want entertainment, we go to places with no admissions. Parks and friends houses. I never knew how many great parks there are in my area until we had no money.
10. If a vital appliance breaks, we (my wife and I) become that appliance. I am now an expert dishwasher with a John-Henry-like ability to outdo even the most advanced dish cleansing apparatus! Though I suspect using a lot more water.
11. Any new big items we make ourselves. I’m making my son his first bed because, it seems, the littler the bed the more expensive. Lumber is cheap.
12. Invest in caffeine drenched products. I get up early to spend time with the kids and go to sleep late dealing with household stuff (some mentioned above).
13. Become an expert at the budget. Luckily, my wife handles this. As the author mentioned for #8, sometimes people will be payed later because that’s the only option.
#7 is still somewhat of an issue given the general level of exhaustion for the both of us. However, we’ve had some luck with strict scheduling. Though this too may well not be enough when, for example, one of us falls asleep reading to the kids. Kids beds and rocking chairs can be surprisingly comfortable and the mate knows it’s just better to let the other sleep than to stick to an intimacy schedule.
These anecdotes are more than just survival tips; they're a testament to the resilience and ingenuity required to breathe life into a new venture or to resuscitate a faltering one. My "eggs" was rice and Kraft Original Macaroni & Cheese. My "furniture" was a bed frame made of cardboard boxes.
However, the flip side is equally potent. Failure, be it in a startup or a turnaround attempt, carries a heavy toll. Had Captive not been revived, personal bankruptcy was waiting in the wings. And Lincoln's eventual downfall years later would have been a crushing blow, perhaps impossible to recover from.
You tread this path, and if fortune favors you - in either a startup or a business turnaround - the rewards can be astronomical, often deemed 'unfair' by onlookers. But take a misstep, and the consequences are equally dramatic, potentially leading to a financial abyss from which recovery is a Herculean task.
The journey through the tumultuous phases of startup and failure mode is an unrelenting test of endurance. It demands an almost masochistic resilience to withstand constant setbacks, akin to being perpetually 'punched in the face.' Vacations were rare, fleeting escapes, snatched in moments when the inferno of crises reduced to mere smoldering embers, and only as far as a few hours' drive could afford.
The Bipolar Nature of Entrepreneurship
But here's the crux: living perpetually on the edge, in the throes of failure or the chaos of a startup, is not a sustainable state. While there are those who foolishly revel in luxury as their empires crumble, let's set aside these extraordinary follies for another discussion.
Consider the fate of giants like Circuit City. Founded in 1949, this behemoth took six decades to meet its demise in a Chapter 7 liquidation. The lifecycle of a business mirrors human life in many ways: each day is a blend of highs and lows, and each step forward is paradoxically a step closer to the inevitable end. Yet, unlike human life, a business can extend its lifespan through astute leadership and strategic decision-making. The corporate graveyard is filled with the remains of once-dominant names: Kodak, Polaroid, Blockbuster, Borders, and so on. Each fell victim to various pitfalls. Did you know, for instance, that Foot Locker is the sole survivor of the F.W. Woolworth Company?
The startup world, too, is littered with the carcasses of ambitious ventures like Wesabe, Color, and Friendster. These entities burned bright but brief, their names fading swiftly from public memory despite their recent existence.
In this ruthless arena, luck plays a significant role, but the brutal truth is that entrepreneurship isn't for everyone. It's an unforgiving path, laden with obstacles, where the odds are overwhelmingly stacked against you. Many who venture into this world are quickly weeded out, a natural selection of sorts. Success demands not just responsibility for outcomes, good or bad, but also a brutal self-awareness of one's limitations and the wisdom to seek help when needed.
So, when you encounter someone who has navigated these treacherous waters successfully, take a moment to acknowledge their achievement. Their triumph against the odds is not just a personal victory but a testament to their ability to impact the lives of many, shaping destinies and carving out new paths in the ever-evolving narrative of business.
This image from Gapingvoid could very well be the official emblem of entrepreneurship. It perfectly captures the bipolar nature of this thrilling yet formidable venture. The panels oscillate between "Hell yeah!" and "Oh, fuck." — a concise yet profound depiction of the entrepreneur's emotional spectrum. These two phrases could easily serve as mile markers on the entrepreneurial highway, a reminder of the unpredictable swings between triumph and tribulation.
This illustration resonates deeply with the narrative we've been exploring: the peaks of exhilarating successes and the valleys of potential failures. It's a visual metaphor for the stark reality previously discussed — of boxed mac & cheese feasts, of vacations measured in smoke rather than leisure, and of the unrelenting drive it takes to navigate through the fog of uncertainty.
The simplicity of the image belies the complexity of the experiences it represents. It's a testament to the resilience required to not only survive but to thrive in the face of adversity. The pendulum swings from euphoria to panic, mirroring the real-life experiences of entrepreneurs who ride the same tumultuous waves.
Just as the image's character stands in a sea of red, entrepreneurs often find themselves in challenging circumstances, wondering if the tide will turn in their favor. Yet, it is in these moments of doubt and fear that the seeds of resilience are sown. And when the panel flips to "Hell yeah!" it's a celebration not just of the momentary victory, but of the journey that made that victory possible — a journey marked by tenacity, grit, and an unwavering belief in the end game.
So to every entrepreneur who sees themselves in these panels: know that your journey is universal, your struggles are acknowledged, and your victories, no matter how fleeting, are the stuff of legends. The juxtaposition of "Hell yeah!" and "Oh, fuck." is not just a meme — it's a badge of honor, a sign that you're playing the game, and a reminder that the greatest stories are not those without failure, but those that rise from it.
Can Entrepreneurship Be Taught?
As we reach the end of this discourse, a pressing question looms: Can entrepreneurship truly be taught? Gary Vaynerchuk vehemently denies the possibility, viewing entrepreneurship through a lens of rugged individualism and raw determination. He states, “I fully, fully, 100,000% with no hedge, do not believe that you can teach entrepreneurship.” His perspective sees entrepreneurship not as a set of skills to be learned, but as an innate drive, a relentless pursuit that couldn't be quenched by traditional education or structured learning. He reminisces about his own disinterest in academics, a sentiment born from an unwavering focus on commerce and an unapologetic disconnection from anything that didn't relate to his entrepreneurial spirit.
But what are your thoughts? Can the fire of entrepreneurship be sparked within the walls of a classroom, or is it a flame that must be kindled in the real world, fanned by the winds of experience and instinct? Does the DNA of entrepreneurship reside in us all, waiting to be activated, or is it an exclusive trait carried only by a select few who see no allure in Saturn when there's business to be done?
As you ponder on the highs and the sobering lows depicted in the Gapingvoid illustration, as you reflect on the stories of success and failure, growth and decline, consider this: Is entrepreneurship a wild seed that grows unbidden, or can it be cultivated, nurtured, and taught?
During a visit to SpaceX, an encounter I had the privilege to witness firsthand offered a raw glimpse into the entrepreneur's journey. Someone in the small crowd posed a question to Elon Musk: "What is the secret to being a great entrepreneur?" There was a moment of contemplative silence, a collective breath held in anticipation. Elon's response was as profound as it was succinct: "A high tolerance for pain." He then reflected on the dire straits of Tesla and Solar City, the crushing disappointment of the first three Falcon 1 launches, and the personal turmoil of a divorce. To roll the dice a fourth time with Falcon 1, he had to lay all his remaining personal assets on the line. The rest, as they say, is history.
This tale, often told with the sheen of success, belies the grit and torment that paved the way. It's the hardship narrative that doesn't make the headlines—the sleepless nights, the weight of the world on one's shoulders, the brinkmanship of betting everything on a dream. Musk's story is the embodiment of that narrative, a testament to enduring the "hard one" to arrive at the triumph that the world lauds. It prompts a moment of introspection: How many of us could navigate such harrowing straits? How many would even have the fortitude to try? Musk's journey, while unique in its scale, poses a universal challenge—measuring our own capacity for risk, resilience, and the unyielding pursuit of a vision amidst life's tumultuous storms. Musk's journey highlights a crucial truth: the ability to endure immense hardship, a trait perhaps unteachable, is a fundamental prerequisite for any entrepreneur, distinguishing mere aspiration from genuine entrepreneurial resolve.