Win, Lose, Next. How not being very good in business led to my success
By the end, we were very successful. We sold our business to a big corporation and became senior executives. We were Presidents and VPs, and we lived happily ever after. But the road there was filled with beginner mistakes we survived and learned from. Stick around, and I’ll tell you what we learned.
Here’s a little background. The time was 1990, and the business was video publishing, the making of training videos for distribution on cassettes. We could do that, David and I. We were Hollywood pros, and we knew how to make good looking programs. Our first project was taking a book called Controlling the Image and turning it into on-camera demonstrations. The book had an enthusiastic ready-made audience and Harry Mathias, the writer, was an excellent teacher. How could we miss?
The rationale that propelled us forward was simple. “People want these videos, and we know how to make them without spending a fortune. If we make them well and sell them directly through mail order, we get to keep most of the money”. That was the rationale. The fantasy was this, “We’ll be lying in bed on a Saturday morning, and we’ll hear the letters dropping into the slot. When we go down and open the mailbox, there will be checks from faraway places, checks from people we’ve never heard of”, God how we liked to imagine that.
Our modeling was equally sophisticated. It was something along the lines of “Pro Video magazine has 19,000 readers. If we run an ad every month for $500 and only one percent of the readers respond that will generate $9500 gross dollars. By doing all the work ourselves and operating out of our homes, we can save a fortune on rent, staff, etc.”
All this was true of course but only as true as the underlying assumptions, and who has ever started a business with a model that predicted failure — or worse a business that idled along with its head barely above water? Not us, that’s for sure. When the model said moving five hundred units wouldn’t work, we said “Let’s plug in six hundred and see what the numbers say” and we did that until we had a business plan that predicted success. I wish I could say that was just us, naive beginners with no rigor in our process but years later I saw the same fantastical thinking replicated at a sophisticated corporation with lots of smart and experienced people sitting in the room. That plan cost the company millions of dollars.
I don’t have an easy answer for this. You have to believe before you start something and making a model helps you imagine where you are going. But if you’re going to a place you’ve never been, it’s far too easy to imagine paradise without seeing all the hellholes along the way. Having made my share of business plans, most of which worked out here’s where I end up;
Your model is probably wrong, but you have to trust it anyway!
At least to start. Reality will tell you soon enough what you got right and what you got wrong, and then it’s up to you to adapt quickly to what the world is showing you. The reason the failed model of the big corporation cost them so much money is that they believed in it for too long.
For us, the reality of the business was more complicated than we had imagined. We did know how to make good programs, and we understood how packaging and duplication worked, but slowly it became apparent we had a child eyed understanding of distribution. In the excitement of starting our new business, it took about a year before it sank in that while we loved making the videos, we only made money when we sold them, and that was not our primary interest. That should have been our first lesson, but we didn’t understand the implications of what we were learning. Some years earlier I had had the good fortune of working for Jac Holzman, the founder of Electra Records and a very sharp guy. One time Jac said to me;
“The most important quality in an executive is their sense of implication.”
I knew he was telling me an important thing, so I didn’t forget it, but I didn’t really understand what he was trying to tell me in any deep way. So we worked on our problem, not understanding we were not the best people to solve it. Years later and having met some people along the way who were geniuses at smelling opportunity and figuring out the deal I’ve come to a better understanding of what could have been learned when we realized that we didn’t care about distribution;
If you are not driven to make money find someone who is. And by this, I don’t mean someone who says“of course I want to make some money.” I mean someone who lives and breathes to get ahead, to make a buck, to close the deal. Also;
If no one interested in making money is interested in your plan, it might be because they don’t see a way to make money at it. It’s one thing to care about making something; it’s another thing entirely to live to sell it. Maybe you have both sides, some do, but if you think that money will come without a moneymaker to help it flow be prepared for the money to take a long time getting there. And that leads me to this;
If you are mainly consumed by the idea of making something, find someone who is equally consumed by the thought of selling it. Then treat them like the gold they are!
David, Rosey and I were not driven by the selling part. We tried of course. We went to trade shows, had revenue meetings, made spreadsheets showing us how if this, then that, but the truth is, the video business consumed none of us. Along the way, we made programs, acquired videos from others, cut distribution deals and in many other ways emulated the acts of a successful business. But our primary desire was to make the programs, and that resulted in beautiful videos and a sleepy little business. We were not driven enough by the need to move product to put every bit of our time and energy into the part where the money flowed. By three years in we had employees and offices and we were proud of what we did, but there wasn’t a lot of money to take home at the end of the week.
Then fortune smiled. A few years earlier I had been the first American technician for a revolutionary invention called the Louma Crane. It was a remote-controlled camera crane, and it gave filmmakers the ability to make shots they had never been able to make before. I had left The Louma behind to do other things but stayed friends with one of the inventors, Jean Marie Lavalou. One day Jean-Marie called me from Paris to tell me that their rental agent was not doing a good job renting the cranes and he was ready to pull the business from them. Did we want to be the rental agents for the Louma Cranes?
Ok, what just happened there? A guy called us with a business proposal that had nothing to do with the business we were in. Why would we even consider it?
Well by the time Jean Marie called we knew we were in trouble. Our business was stalled, we couldn’t see any way to change it for the better, and we were tired of being poor. So I told my partners and myself that we could take over the crane business and the additional cash flow would fix our problems. I figured I could make the crane business work by devoting twenty hours a week to it and that would leave the rest of my time for the video business. Well, it turned out that was bullshit, but I believed it, and that’s important too because;
You have to drink the Kool-Aid, not just mix it up for everybody else.
In spite of what I said before about having a realistic business plan, you also have to be constantly optimistic in your hopes, your projections, and your objectives. Not hopelessly so, just far enough ahead of reality that you have to strain and grunt to get close. I hated to fail; I always had and that had kept me from winning for a long time. But now my desires had finally gotten ahead of my fears, and that helped me make some good unsafe choices because:
If your desires aren’t one jump ahead of your fears, you won’t risk enough to get your dreams very far off of the ground.
So we said yes, and once we got started on this new venture, I discovered I could be pretty good in the right business. I had always loved figuring out how to make things work, but now I understood how to make money flow as part of that. Making mistakes was still painful but learning to admit the mistakes quickly and changing things as fast as we could made the consequences smaller and more manageable. Once we understood that, new risks became possible, they didn’t seem so…risky. Which leads me to this; if you’re wondering whether or not you should take a chance on something here’s my advice,
If you care, if you really believe, go ahead and throw yourself into the water. It may be colder than you imagined, but at least you get to swim, and for you, swimming is important!
That’s right; there are two pieces to this, your life and your success. For me, your life, the story you slowly forge by what you do every day is much more important than any artificial marker called success. I have known people who suffered complete business reversals and lived to be happy with themselves. I have also known people who piled up astounding amounts of wealth but who live apart from humanity afraid of “who’s going to try to fuck me today?”
Then two things came together for us. First, we were blessed by being in the right place at the right time. After the early years, when only a few films had used them, remote cranes were finally accepted, part of the toolset for making movies. And second, over the same time, I had been changed by showing up every day, I was ready. I was finally doing something I desired with both heart and mind, I knew how to do it, and we were doing it at a time when the world was ready to care.
So, what was our mantra? The thing we used to keep us on track? It was something we learned from Lynda Obst channeling Barry Diller in her book Hello He Lied, and we said it to each other all the time. What we said was;
WIN, LOSE, NEXT!
We said it to each other as we learned to go toe to toe with studio legal departments, to say no to them and refuse to sign the crappy contracts they sent us, ones that wanted it all their way. I learned to call producers and say “I’m sorry, I really want to rent you a crane, but your legal department has made it impossible.” Then I’d go home with my gut boiling and pray, waiting for a callback, hoping it would be one where they would say, “We’ve talked to legal, and we can live with most of your changes.” It was their way of saying yes and still having a little face left cause their gut was boiling too, and that was a moment to be nice because;
I now understood how important it was to believe you have a good hand when you sit down to play, but also how important it was to leave a little on the table, to create a little goodwill for the next time when you might not have such a good hand.
So that’s some of what I learned on the way to being successful. Our plan wasn’t good enough, and we didn’t fully understand the business we were going into, but we jumped into the water anyway, and then we swam to keep from drowning. Along the way opportunities presented themselves and we weren’t so stuck on what we had set out to do that we let them pass by. And by playing every day, we learned what to do and how to do it. You can do the same thing;
Figure out what you want to do, put your energy and desire into it along with every bit of your will and skill, then jump into the water and start swimming. Win, Lose, Next Baby, Win, Lose, Next!
You can see more of my pictures here
And here’s a link to pictures I currently offer for sale; Pixels