I was recently at a meeting with a group of investors who are all solid people. They are each very successful in their own right and have made vast sums of money investing in early stage companies over the years. We all got together to go over three particular companies we were thinking about investing in. We talked about the pros and cons of each deal, with the intention of picking the best one to place our capital into.
We all agreed the first deal on the docket was probably something that would be best to pass on, for an assortment of valid reasons. However, the second deal we talked about was not so clear-cut. One of the gentlemen at the lunch meeting (I’ll refer to him as negative Nelly) was adamantly against even considering investing in the company because the founder’s last deal had basically fallen apart. There was significant capital raised for that deal and it ended up going broke (this happens often with startups).
The negative Nelly at the lunch meeting, who is typically a really nice guy, kept on saying that the founder was a ‘failure’ and that he wouldn’t consider ever backing him on a venture. The word failure kept coming up. Yet, it was only about 7 years ago when that same founder started another company (before the so-called failure) and ended up getting bought out for more than $130 million. His new deal has a ton of street credit and includes a stout board of directors. Somehow that didn’t matter. Negative Nelly seemed to ignore the merit of this new deal and completely disregarded the founder’s past success. He could only focus on the one failure. It really pissed me off.
People make mistakes, take uncalculated risks and lose money; they can even temporarily lose touch with reality and get sidetracked into terrible situations. This stuff happens everyday. But it is my philosophy in life that, aside from murderers, child abusers and rapists, everyone deserves a second chance so long as they can own up to past mistakes. And the same goes for entrepreneurs.
As an entrepreneur, I’ve failed numerous times. If you’re an entrepreneur you likely have too. But just because we make mistakes along our journey doesn’t mean we can’t bounce back better than ever. After all, we learn more from our losses than our wins. Losses make us more savvy and give us the ability to identify red flags in the future – while wins can sometimes make us sloppy. We should remember this when dealing with others in business or evaluating investment opportunities. Failure is an event; it doesn’t define a person.
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We hear the word ex-con frequently and most of us have formed some sort of opinion – one way or the other – about the term and the people who have been labeled as such. For me, the term use to bring to mind the vision of those perpetrating heinous crimes and unspeakable acts against humanity.
Subconsciously, many people look down on those who’ve broken the law, whether the crime was committed last week or 20 years ago. We may do the same with people who have publicly failed in their careers, had a drug addiction, or filed for bankruptcy after a failed business venture – pretending to ourselves that we are above failure. But, let’s place in doubt, just for a moment, our concept of failure and look at things from the other side of the equation. What if we encouraged second chances? What if we started to place a high value on someone who has gone through tough times? Could that attitude in itself change our own destiny? Could it make us more successful as investors and entrepreneurs?
A couple years ago I was on a flight from Toronto to Vancouver. Boarding the flight I took my seat beside a well-dressed man who had a unique disposition. He looked familiar but I couldn’t recall why. Immediately upon sitting down he made a point of introducing himself: “Brian O’Dea – we’re temporary neighbors so I hope it’s nice to meet you.”
I chuckled and introduced myself. I thought he looked familiar, and that name rung a bell, but I still couldn’t piece it together.
After takeoff we started to chat. He was a very well-spoken man who loved talking about his family and asked many questions about mine. He’s an articulate guy who after speaking to for just a few minutes you know is extraordinarily intelligent and a deep thinker.
We got to talking about our careers. You all know what I do, so no need to explain my part, but it was his former career that took me by complete surprise, and this is why he was so familiar. I had watched a TV special about him a few years prior…
“I was a drug smuggler for many years. Now I’m a writer and film maker” he said. “You shitting me?” I replied, in total shock. “No” he said in the most matter of fact tone. “I served many years in jail for my idiotic decisions and it taught me a heck of a lot. I paid the price for my addictions and greed. But serving time made me a pretty darn good writer” he said as he reflected on that comment.
After hearing that I started probing with questions about his career as a drug smuggler. Turns out he was not just any smuggler; O’Dea was the equivalent of a Drug Kingpin. The story he told me about his drug smuggling days was just insane! The guy pulled off a $300 million international dope deal all the while fighting his own substance addiction and being tracked and investigated by the DEA. He had his own fleet of smuggling boats that crossed international waters. He had millions of dollars stashed in boxes in his house and he explained how his life was falling apart.
O’Dea’s story as a drug smuggler makes The Wolf of Wall Street a snoozer. Undoubtedly, there will be a film made about his life.
You hear a story like that and without knowing Brian O’Dea you’d probably want to stay as far away from him as possible, right? That’d be a mistake. The man is incredibly innovative – so much so that he was offered a major role with the CBC and Kevin O’Leary (one of the wealthiest and most successful businessmen in Canada) in creating a reality show similar to the Apprentice. Since getting out of jail he has been on various TV spots in the US and Canada. He has written a book about his life titled High, worked on various film projects, speaks across the continent and now splits his time between Toronto and Santa Barbara.
Michael Milken was a financial guru who ended up becoming an infamous white collar criminal. He was eventually pursued and charged by the ambitious Rudy Giuliani and was convicted on several counts of securities fraud. He paid one of the largest fines ever levied and was sent to prison. He had also been barred, for life, from ever taking part in the securities industry. His career, the one he had spent a life building, was over.
Would you ever consider investing in a company ran by Milken today?
Would you trust him to run a charitable organization?
You’re probably laughing at the absurdity of those questions right now.
Once released from prison, Milken was diagnosed with prostate cancer. He fought the disease and successfully beat it. He then went on to advocate the cause and set up charities to increase the public’s awareness of prostate cancer.
With two devastating events behind him, Milken was full steam ahead and set course for his next achievement, which he is currently pursuing. He set up a global education foundation with his brother, known as Knowledge Universe, that seeks to engage students through the Internet. It encourages learning at early childhood, primary and secondary education as well as higher education. He has grown Knowledge Universe worldwide, but it is most prevalent in the United States.
Would you consider Milken a failure?
Milken paid his debt to society, and he is now a major positive in the lives of hundreds of thousands of children, employing 30,000 teachers and professional staff in the process.
I’m not here to justify criminal activities – not at all. I am trying to impress upon you the importance of giving people second chances, provided they own up to past mistakes.
In life, mistakes are a way of learning. They can make you quit or make you even better. In business, mistakes are the ONLY way to truly learn the craft. Stereotyping a potential employee or investment opportunity based on past failures could make you miss incredibly valuable opportunities. So long as someone is willing to take ownership of their mistakes they are most certainly worth giving a second chance. Failure is an event, not a person.
“We are all failures- at least the best of us are.”
– J.M. Barrie