(Note: This is the first blog post that I’ve written discussing my own personal failures. Many people have read about the things that I’ve done that have worked well, but the truth is I’ve made far more mistakes. I’m hoping that by sharing them candidly I can help someone else out there avoid them as well. It’s also good to know you’re not the only one “screwing it up!”)
In 1999 I was working at Blue Diesel, a company that I started in 1994. Blue Diesel was on fire. We were tripling in size every year and were on a cloud. However, it was 1999, the golden age of the Internet, and no matter what you were working on there was someone else that had a bigger, better IPO. I wanted more.
So I made the mistake of splitting my focus between Blue Diesel, my cash cow, and a new venture, Powerhouse.com. Without going into a lot of back story, Powerhouse (we never actually bought the domain, btw) was our attempt to “roll up” 170+ realtors nationally into one $8 billion company within a year. Ambitious.
But the ambition wasn’t the failure – that was a good thing. The failure came with my unrealistic attempt to try to run Blue Diesel through its incredible growth and split my time to launch Powerhouse.
First let’s take a look at why this seemed like the perfect time to do it –
- I was already making money – Blue Diesel was doing very well and I didn’t have to worry about money. In fact, the company had already been sold and I was working through my exit agreement.
- It was 1999 – you could raise venture money in hordes in record time with fantastic valuations.
- Blue Diesel was on “auto pilot” – We had just brought in a new President, the core of the team was already in place, and we already had a bunch of big clients.
- I already had a few “wins” under my belt – I sold Blue Diesel in 1997 and soon thereafter another company I helped start, Kelltech, was about to be sold. It looked like I really knew how to start, grow and sell any company in record time.
If you looked at the situation through my eyes at that time, it looked like it made a lot of sense. In fact, you may have done the very same thing.
But what happened was a complete debacle.
I shifted my focus to Powerhouse, and within that same year people began quitting Blue Diesel left and right, our revenues started to tank, and everything pretty much went to hell. At the same time we got stomped on the Powerhouse idea by the very same realtors who we were trying to roll up (they had no idea what we were talking about).
Here’s how it fell apart and got added to my list of many failures:
- No one was ready for me to leave – Yes, there was a management team in place, but it hadn’t occurred to me that the people that started with me were less than thrilled about me taking off to go do something else. We had a palace revolt, many of my friends left the company and I spent more time trying to retain people than anything else. People often go to work for not just the company, but the people behind the company. I grossly overlooked that point.
- We were on “auto pilot” because I was running it – The reason things were growing so quickly was because I was focused on our growth. As the Founder of the company, no one was going to be more focused on our growth and prospects for the future than I was. I watched our quarterly numbers drop like a rock.
- Powerhouse didn’t get ALL of my attention – Aside from Blue Diesel falling apart at the time, Powerhouse was only getting a portion of my attention, not all of it. Starting a company is wildly consuming. You simply can’t “spend some time” on a startup – you have to invest fully in order to get the maximum results.
- Blue Diesel was successful because it was all I was focused on – This is the most important point. I thought that Blue Diesel was successful because we were a smart company. That was a part of it. We were successful because it was the only thing that I was focused on. I spent every waking moment figuring out how to grow bigger and faster. As soon as I shifted our focus, our “growth engine” (me) was lost.
Ultimately we canned the Powerhouse idea, I went back to focusing on Blue Diesel completely, and our sales, growth and morale shot through the roof again.
Since that happened I’ve tried to run multiple ideas in parallel a few times with almost the exact same results. As I’ve spoken to other entrepreneurs about their own efforts, it’s almost invariably the same result. (Here’s a great recent post from Paul Allen about his own efforts to focus on just one thing).
If you want to increase your probability of success, the best thing you can do is narrow your focus down to just one opportunity. It’s that simple.