Firstly, I’m rounding down. It was actually closer to $3.5million.
There are so many lessons from this loss about business, leadership, strategy and people. But the biggest lessons were what I learnt about myself and are now core to how I think today.
So, setting the scene…
In early 2008 I founded a business with some friends I’d known for about five years. We’d met through other business and had a very rare opportunity presented: to acquire a license to be global exclusive supplier of FIFA-branded bags and outdoor lifestyle equipment for the FIFA World Cup 2010.
We could see the first part of what became the Global Financial Crisis starting, and an exclusive monopoly license for the biggest sporting event on the planet (outside of the Olympics) looked pretty good. It looked like a license to print money.
Our team was experienced. We had experts in manufacturing this category of product, we had experienced finance people, and we had experienced marketers and commercial managers for licensed intellectual properties. We also had a base in China (for manufacturing) and plenty of international experience in the team.
What else did we need? Cash, and plenty of it to pay minimum guarantees on license fees, to build the design team, to fund overheads and deposits with our factory partners. We didn’t need to own the factories, but there was an upfront and ongoing large cost for the license. That cost couldn’t be avoided. The license was our key asset and would evaporate if we didn’t make payments.
So, I built the business model, wrote an information memorandum (an “IM”), and together with my other founders brought on investors who also wanted to work in the business. We got on with things, but no plan survives first contact with the enemy.
The experience was a roller-coaster ride, and I’ll cover more in other posts, but the business didn’t survive. Two and a half years and a lot of lessons in business later – I call it my MBA – we closed the doors and liquidated the company.
It was a depressing, cold, rainy evening walking home that final night. We lived in a lovely tree-lined suburb of Sydney, full of beautiful old homes and architecture, but I couldn’t see the beauty in any of it.
I was angry, depressed, defeated and defiant, but at the same time resigned to the fact that we had run the course and closing down the company was the only and final destination. My wife was home looking after our two young kids, stressing along through the process with me. We were almost at rock bottom, living in one of the most expensive suburbs in Sydney with four mouths to feed, no income, a chunk of debt we didn’t have when we started, and it was the bottom of the GFC.
As I kicked rocks, sloshing through puddles, I dawdled and seethed, putting off getting home and facing the worry and disappointment my wife was feeling because we didn’t have solutions for our financial problems. We’d hugged the business as it sank all the way to the bottom, putting good money after bad.
Who was to blame? All their names were going through my head. If only that person had put their money in as promised. If only that other person hadn’t done this or that. If only that person had been more honest. They all took advantage. Blame, etcetera.
I was half way home along Belmont Street when a slim light of realisation cut through the dark mood. If only I had done my due diligence.
Do due diligence.
It was on me. It was my choice to start the journey back in 2008, no one forced me. There was no one to blame but me, and I needed to own it. And if I didn’t own it then I was instead choosing to be a victim. I’d miss out on all the amazing lessons that came from the experience. The lessons weren’t all clear yet, but they’d become clear over time if I could take responsibility, not taking the easy way out and blaming everyone else, and embracing the reality of the situation.
Coming out the other side was also on me. That was the first step.
Be responsible.
It was only another five minutes home through the wet night. It was cold, but it was warm at home with Michelle and kids. Even though we were not quite at the bottom yet we could see it. We could lean into all the hard stuff ahead knowing there was a path out, and the people who relied upon me needed me to be responsible or their lives would be terribly affected. They had no choice in the matter so I needed to choose responsibility, and we could get through together.
Over the next few weeks and clear of the wreckage of the business, with some perspective the key lessons started to show. Before I started the business I had made a lot of money, young. I was a millionaire when it wasn’t made by just waiting for your property value to increase through inflation. But it came easily and was a trap that made me not see the risks in the new venture.
Two lessons are now key fundamental principles for all leadership, strategy, innovation and creativity work. They reduce risk and create opportunity, and the bags business I lost and the consequences of the loss are the reminders of their importance every day.
Humility. No one person has all the answers, and no one can tell the future.
and, the corollary…
Diversity. The value is in the diversity of perspectives.
In all the leaders with whom I’ve worked that enable people and create successful organisations, and in a whole bunch who I’ve watched from afar, these are two of the principles that seem to be fundamental. Practicing humility is admitting you don’t know all the answers and is about actively embracing uncertainty. And seeking diversity of perspectives is the key to seeing what you cannot see and learning what you do not know from your own experience and education.
Responsibility, humility and seeking diversity of perspectives are some foundational virtues of leadership, and essential for anyone who develops strategy.
More on Part II… (subscribe to be notified when it goes live).
Ben.