Why you mustn’t fall into the trap of learning the wrong lessons

 
Richard Farleigh
CONFESSIONS of a SERIAL ENTREPRENEUR

YEARS ago, a world-renowned musician took a yellow cab to his New York hotel, placing his 18th century cello in the boot. Upon arrival, he grabbed a receipt from the driver and hopped out. Soon after, he realised that he had accidentally left the multi million-dollar Stradivarius behind. Fortunately, he had the receipt. The driver was contacted, and the instrument returned to him later that day. He was delighted, commenting: “Thankfully, I’d taken the taxi receipt. Always take the receipt.” Wow, I thought, perhaps you should have focused less on the receipt and more on the priceless bloody cello sitting in the boot!

For me, he cited the wrong message. Similarly, in the overwhelming press coverage after Princess Diana’s death, very little attention was given to the fact that she and her boyfriend hadn’t been wearing seatbelts. I was amazed that anyone could sit in a car, apparently swerving left and right at over 100mph, without belting up. The bodyguard – sitting in the more dangerous front passenger seat, but wearing a seatbelt – survived. So any conspiracy theory about Diana’s death has to explain how the perpetrator knew in advance that she wouldn’t buckle up. And a real opportunity was missed by safety campaigners to tell the public that if a princess can die not wearing a seatbelt, so can you.

Two very common, flawed approaches are often taken towards business and life: the emphasis on winners, and the neglect of randomness. The world is awash with books about successful people, with the message that you can learn from and imitate them. As a parallel, if you analyse the winner of the lottery, you learn the technique is to buy a ticket and wait to win the prize. This rarely works (sadly), which we know because of the huge number of losers.

In business, I am very cautious. I want to know how and where money is being lost as well as made, otherwise I cannot really know what is a successful, high-probability behaviour or sector. Perhaps behaviour such as being aggressive (like Steve Jobs) or slightly eccentric (like Richard Branson not wearing shoes), or coming from a deprived background (like many entrepreneurs, including me) actually causes far more failures than successes.

Similarly, high profile sectors may not have a good win-loss ratio. Smart-phone apps and social media websites are all the rage at the moment. But I baulk at getting involved, because with the high number of quiet failures, the return on investment may be poor.

Randomness is also misunderstood. Successful entrepreneurs prefer to dwell on their talent, and think luck is a dirty word. But I see very few successes where skill and hard work are not matched by a dose of good fortune. The real lesson should be to plan for a range of possibilities, especially bad luck. Watch the spending and make sure you’re cashed up, even if you’re diluted by fund-raising. And always try to remember your seatbelt.

Richard Farleigh has operated as a business angel for many years, backing more early-stage companies than anyone else in the UK. www.farleigh.com