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Failure


ScottHall
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Hi everyone,

 

I thought an interesting topic idea would be one revolving around stories of failure in business, or elsewhere. An obvious one is Long Term Capital, chronicled in "When Genius Failed," but a coworker of mine shared another great story of failure a few years ago. It is from he founder of VeggieTales, and he writes very candidly about the missteps that led his company into bankruptcy.

 

It is an 11 part blog, and the first part is linked below.

 

http://philvischer.com/phil-news/what-happened-to-big-idea-part-1/

 

What other great stories of failure do you know of?

 

 

Scott

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There are two books with almost the same title that I almost always confuse, so apologies if this is the wrong one, but I think Billion Dollar Lessons is worth a read:

 

http://www.amazon.ca/Billion-Dollar-Lessons-Inexcusable-Business/dp/1591842891/

 

I don't remember it too vividly because I read it a while ago, but I gave it a good grade on my list of books I read, so I must've liked it at the time :)

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What I Learned Losing A Million Dollars is a great read.

 

"One paradox I often pose to my audiences in talks about the elements of successful trading concerns the dichotomy in human thinking as it relates to trading versus everything else. Specifically, I use the following example: No sane person would walk into a bookstore (assuming you could still find one these days), go to the medical section, find a book on brain surgery, read it over the weekend, and then believe he could walk into an operating room on Monday morning and perform successful brain surgery. The operative word here is “sane.” Yet how many people do you know who would think that it is perfectly reasonable to walk into a bookstore, go the investment section, find a book with a title like How I Made a Million Dollars Trading Stocks Last Year, read it over the weekend, and then start trading Monday morning and expect to beat the professionals at their own game. Why this dichotomy in thinking?"

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Gerald Ratner, the former CEO of British jewelry company Ratners Group. He ran a successful family business that later went public. At some point he made a speech at a conference and said this:

 

We also do cut-glass sherry decanters complete with six glasses on a silver-plated tray that your butler can serve you drinks on, all for £4.95. People say, "How can you sell this for such a low price?", I say, "because it's total crap.

 

And about a pair of earrings that were

"cheaper than an M&S prawn sandwich but probably wouldn't last as long."

 

It was all said jokingly and he basically meant that people shouldn't expect too much when they buy very cheap jewelry. He said this at the Institute of Directors in the UK and his audience consisted of company directors and entrepreneurs. I think there was not supposed to be any press coverage of the event.

 

Unfortunately for Mr. Ratner there was a newspaper reporter present and he produced a story that Ratner called his products "crap". It became a huge story nationwide and the entire jewelry chain was tainted. People began calling it "Crapners", customers left in droves, it was a total disaster. In the end he was forced to leave the business and the Ratners name had to be dropped, because the stores could never become successful again with him or his name attached to the business in any way.

 

It's a great example of how one dumb statement can completely screw you when your business is strongly dependent on customer perception of the products.

 

He has written a book about his experience called "Gerald Ratner: The Rise and Fall...and Rise Again": http://www.amazon.com/Gerald-Ratner-Rise-Fall-Again/dp/1841127868/

 

I thought it was an excellent read and felt he was pretty honest about the whole thing. He really had a passion for the jewelry business and worked in the family business as a young kid, helping out his parents and starting at the bottom. The book is just as much a business history as it is about the speech and its consequences. I did feel a little sorry for him after reading the book and I didn't expect that would be possible when I first read his story on the web. He made a dumb statement / bad joke, but the consequences for him were enormous at the time. Also, it will never be forgotten.

 

Another lesson I got out of it was that if you are a well-known person, if you do fail, it is best to blow up spectacularly. Ratner was able to get back on his feet financially by making speeches about the whole affair. People were interested to hear his story and he was paid nicely to give speeches at conferences. If he had failed in a conventional way nobody would have cared. He would not have had the negative attention, but also no way of monetizing his failure.

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What I Learned Losing A Million Dollars is a great read.

 

"One paradox I often pose to my audiences in talks about the elements of successful trading concerns the dichotomy in human thinking as it relates to trading versus everything else. Specifically, I use the following example: No sane person would walk into a bookstore (assuming you could still find one these days), go to the medical section, find a book on brain surgery, read it over the weekend, and then believe he could walk into an operating room on Monday morning and perform successful brain surgery. The operative word here is “sane.” Yet how many people do you know who would think that it is perfectly reasonable to walk into a bookstore, go the investment section, find a book with a title like How I Made a Million Dollars Trading Stocks Last Year, read it over the weekend, and then start trading Monday morning and expect to beat the professionals at their own game. Why this dichotomy in thinking?"

 

I understand what you are saying, but this is a bit of a crooked reasoning in some cases.

 

Would I buy a book on performing surgery on the spine, read it over the weekend and perform an operation on Monday ==> absolutely not.

 

Would I read a book on investing, read it over the weekend, and place an order for EUR 1 mio on Monday ==> absolutely not. But Joe Average his investing portfolio is probably fairly limited (maybe EUR 5000?) to start with en thus it can make (more) sense to start trading on Monday while learning.

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It probably has something to do with "barriers to entry" as well. No one thinks they can walk into a hospital and become a doctor. They know they need to go to school, get trained, etc.

 

Those barriers do not exist in some fields like gambling, and investing. Anyone can walk into a casino. But I guess that is somewhat the point. To do something professionally, people should have the attitude that it takes years of study and training to do.

 

Also - I don't think most Average Joe's are trading a little money to learn. They think they can win right away. It's a big psychological difference.

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