Photo: Winged Victory
I was doing product research on a Shopify plugin we’re developing and I came across this post in the Shopify forums from someone trying to sell clothing:
I invested 2000 and nothing
I’ve had my store redesigned twice. I’ve took courses, marketing courses, ripped off by *mentors* and 600 on SEO. I don’t know what to do I’m so anxious.
On the one hand, I’m sympathetic- it sucks to invest, to work, and to see nothing in return. On the other hand though, that’s sort of how it works.
Yes, there are people who stumble into customers. The dice in the roulette wheel lands on their number and they have a huge head start on everyone else.
And we see those stories. Entrepreneurs brag about their success or others promote these stories to sell their own products and services- see this method works, here’s an example.
But that’s not the way it works for most folks.
A Training Program That Creates Wildly Successful Entrepreneurs
As an example, seven years ago an entrepreneur launched an expensive training course for first time entrepreneurs. The guy running it did a fantastic job promoting the course and an innovative approach to developing a business.
The training was designed with cohorts of students all going through at the same time. After the first cohort graduated, he began to tell the story about one of his students in the marketing for the next cohort. This student was a jackpot success story. In a matter of months the student was able to create revenue in the tens of thousands of dollars. His success was all over the internet.
Several years later, I was talking about the program with a well respected founder. I mentioned the student and the jackpot success story and he said, “Yeah, well, he was the only one.”
“What do you mean? Did you take the course?”
“No, they brought me in as an advisor. There was something like forty people in that class and he’s the only student who made any money.”
It was really a function of the Pareto principle where 20% of the inputs account for 80% of the results. In any training program with 40 people someone is going to do extremely well.
The person running the program highlights that winner to sell the next cohort and reinforces survivor bias. You only see the survivor, not all the failures. And then you mistakenly assume the story is representative of the cohort.
How Success Has Worked for Me
Most of the things that I’ve done haven’t worked. Most of my efforts have produced failure.
Mostly, I’ve lost money and wasted time.
Almost nothing I’ve done has been a run away success. And definitely no business project meets that criteria.
However, just like the 80/20 rule in that cohort of students where one of them is a winner, a few of the projects I’ve completed have done very well.
And those few winners carry all my losses and generate profit on top of them.
While most things don’t work, rarely are they a complete waste.
Usually, you get something back:
- A lesson
- Market intelligence
- A resource
- A connection
As an example, a couple of years ago I hired a freelance designer to redesign our company website (they did the design, we coded it. ) The goal was to have our website accurately reflect the level of work we did. We’ve done some wonderful things for our clients and the old website didn’t reflect this.
I paid a designer $1,200 and it cost our team ~$2,000 in direct costs and opportunity cost. So let’s say the final costs were around $3,000. Which is pretty cheap for a small redesign, but it’s still more than I spend on a 2 week vacation.
Though our portfolio better represents us, it hasn’t made any significant difference in landing the kinds of clients we wanted.
However, the designer I hired was still a university student and he did way more than I asked for in creating portfolio illustrations. He was trying to provide us options while creating some stuff he could use for school assignments. In the end, we used only 1 in 5 of the illustrations he created.
Since then, I’ve built products, landing pages, and lead magnets in different markets using those extra illustrations. It’s saved me the money and time it takes to source a designer and has contributed to a couple hundred email addresses, product purchases, and several speaking gigs.
The redesign didn’t have the desired effect, but it wasn’t a complete waste- we did update an aging design and we acquired some resources and experience.
Innovation is Expensive
If you keep working in one specific domain, or towards a specific goal, or with a specific approach, you’ll improve your odds with each new endeavor.
Those resources, connections, insights, and lessons begin to accumulate. Your chances of failing are still very high, but much better than starting from scratch.
Starting from scratch, innovating, is expensive. It’s the experience of that person on the Shopify forum.
A trend in success stories for entrepreneurs that are “early” successes is that they worked a job in the exact industry where they launched their product or service.
This gives them a huge advantage in lessons, connections, and resources for when they start. They’re not innovating, they’re building on previous innovation.
The point is not to work a job before you launch something, it’s to be aware of the cost you pay if you take a shotgun approach to new endeavors.
To maximize your chances of finding winners, you need to accumulate advantage with each failure.
If that person on Shopify failed in troubleshooting their problems, a high traction approach would be:
- To try and launch another Shopify store in a different market.
- To sell a Shopify store setup service.
- To try and launch a different kind of clothing store (e.g. political t-shirts.)
A low traction approach would be to abandon their lessons and:
- Found a start-up around digital recipes.
- Become a Virtual Assistant freelancer.
- Write an e-book on raising chickens in your backyard.
You Have to Be Able To Stomach Loss
The key is being willing to come back to the table again and again.
Bring your hard work, your lessons from last time, your education, your network, and your resources and then be willing and ready to fail.
Because the odds are against you.
Most things don’t work.