Locust plague in Africa and the Middle East, unknown photographer
“Little did I know that all the times I thought I was good, I had only been lucky.” That’s a quote from “What I Learned from Losing a Million Dollars,” which I’m currently reading before I go to bed. Alas, it is too tempting for a businessman to mistake Fortune's whim for his own merits. In any market, as in the savannah, periodically there comes a period of long and generous rains. Then all emerge from anabiosis, even old poles put down roots. In terms of fecundity, all plants and animals break records. Certainly some grow slower and some grow faster, but there are no bankruptcies in the market at this time, as the abundant cash flow and high profits cover up all the sins. A businessman doesn’t have to make an extra effort; all he has to do is answer incoming customer calls.
But everything in nature is cyclical, so a period of drought is inevitable. Recession, war, revolution, hurricane, locust infestation or pestilence - for any one reason, the water of life disappears. Now the majesty of chance changes its sign to minus and pulls any business to the bottom with a heavy weight. Like a finicky auditor, force majeure exposes the company’s vulnerabilities, which the founder was always vaguely aware of, but was in no hurry to eliminate. Customer omnivorousness, cost-based pricing, an imbalance of responsibility and authority, team conflicts, bloated overheads, lack of decision-making processes, an unformulated business vision-these and other mistakes add up in a hostile environment, increasing the devastating effect on business many times over.
Such experiences will open one founder’s eyes to the extent to which his past successes owe to luck, not his IQ. And someone else will blame the sorry state of the business solely on the toxic context. That’s convenient - when things are lousy, the environment is responsible, and when they are spectacular, the businessman is credited. Not surprisingly, collapse teaches us better than triumph. There are many ways to get to the top, but only a limited number of ways to fail. In fact, this is why in any risky activity, whether skydiving, stock trading or entrepreneurship, the first thing to learn is the safety manual, that is, how to protect yourself from devastating risks. Fortunately, everyone is capable of accumulating this kind of expertise. In business, a compound interest works for the entrepreneur, provided that, firstly, the term is long enough, and secondly, he retains the right to participate in the game.
Yours sincerely,
-Alexander
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