What I learned after losing $20K of my family’s money
(Originally posted on Upswing Poker)
As a professional poker player, I have had to redefine my definition of failure. Losing in a cash game session, bubbling a tournament, or having a losing month could all be considered failures. But what if they are simply inevitable? If variance dictates these events will occur, why call them failures?
It was NOT easy to stay calm after this experience
It got me thinking — failure in all parts of life is inevitable as well, especially if we are attempting big success. Leaving our comfort zones, trying something different, taking a new job, relocating, and even dating, are all risks. But this is where all the fun in life happens.
It’s exciting and scary and sometimes we fall flat on our faces. Let’s be real, the exhilaration is partly why we started playing poker in the first place, right?
You’re Probably Wondering How I Lost that $20k
So back to how I lost $20,000. I met someone through poker who had an idea for a mobile app that I thought was great.
It was for on-demand mentoring. The idea was that at any given time, you could log onto an app and hire a coach for your needs. Let’s say you just ended a poker session and you had some hands to go over. You could log-on, find a poker coach, and have a session through the app.
If only it was this easy.
The guy with the idea was charismatic, flattering to myself and excited about the idea. I got excited too.
He had given me the impression that there were already big investors committed for a lot of money. My family and I invested $20,000 and I began working with the company. It by far the biggest financial risk I’d ever taken, but the thought of the possible return was thrilling.
The dream didn’t last for long, as my gut pretty quickly kicked in. I knew something wasn’t right.
For awhile though, I was in denial and tried to make it work. It all fell apart after I confronted him about many discrepancies, and he admitted to taking nearly my entire family’s investment as a personal paycheck.
Turns out there were no other investors except for one for $2,000.
Most people would label this as a pretty epic failure. I’ve been tempted to as well. But then I thought, if I redefined failure before, why can’t I do it again?
If it is all subjective anyway, why define anything as a failure? As long as you learn and grow, why can’t it be considered a success?
Because I can tell you one thing, I’ll never make some of those mistakes again. If I decided to invest in a business again tomorrow, I would:
- Have a lawyer look over everything in depth
- Realize that investing in a company means investing in people because execution is everything. Had I better known the person I was investing in (and his partner), I wouldn’t come near them with any of my money
- As far as what to look for in people — Do they keep their word? How do they handle setbacks?
If you’ve gone a year without winning in poker, if you lose an investment, if you start a business that fails, if you get a divorce- What did it teach you?
Are you a better player/person than you were before that year? Did you learn anything about yourself or about people? What life lessons are you taking away from the experience?
Understanding that failure and success can be shifted based on what we choose to focus on gives us the freedom to continue taking risks! Just knowing as long as we learn, have fun, and become better people from the experience, no matter the result, it’s gonna be all good.
I learned that I’m capable of absorbing a large financial loss. I experienced unconditional love from my family despite my missteps. I now have a voracious appetite for entrepreneurship which hadn’t existed before.
Who knows how much that will return for me in the future. And so, I’d say, rather than a failure, the experience was pretty f***ing valuable.
In this episode of my podcast, I explain in more detail what happened and the lessons I learned.
EDIT: The name of this person is Chris Sweis (@coolbearcjs on Twitter) He wrote the following blog post in response to my podcast -
So I find myself having to write an autopsy for a project that failed last year.medium.com
Here is my reply back to him:
The seed round was $750k, not $500k as you wrote. I experienced you as misleading when representing where you were in the seed round at the time I invested. First you said, “We are close to closing the seed round.” Then you said it was at $200k and money promised from others. Then, in San Fran, I said point blank, “How much has actually been wired into the bank account? You said, “$50k.” Then, when it all came out, you finally said that the only money ever deposited in the bank was $22,000 ($20,000 from me).
The cap table you speak of was just an excel doc with names and numbers of what that person may want to invest. It was incredibly misleading because it had names and numbers of people who did not yet put money in the bank to invest.
When I asked where the money went, you told me to servers and other things. When I said that doesn’t add up, you finally admitted to taking two personal paychecks of over $8,000 each. ($16,000 total)
You did not invest a dime in the company.
Use of funds was allocated to employee salaries but was communicated to me that it would go into place WHEN THE SEED ROUND CLOSED. Then we would have money for everything including paying employees. I worked for two months and was never paid because I knew we could afford it yet! Our developers were never paid either!
You were the ONLY person to get paid.
Transparency WAS NOT THERE. You and Ro were never transparent about where the funds went. I asked many times to see a balance sheet. I have still never seen it.
Originally published at www.kristyarnett.com.