The Rock that Wouldn’t Budge and Why Many Great Sounding Business Ideas Fail
Some things in life are ever thus!
Young entrepreneurs often believe that they have found a key to unlock a new industry. Sometimes they will create a Google or a Macintosh, but often they are plain wrong.
The solution is not to stop searching for industry creating ideas, but simply to subject those ideas to rigourous and critical inspection.
In this business parable, we explore why we often fall for a seductive idea that is bound to fail.
Failure to recognise a rock that won’t budge from a sandy beach that yields easily will mean your business destroying itself at the first attempt instead of yielding a long lasting dividend.
The Rock That Wouldn’t Budge
Great Wave swelled far off in Bermuda and began to rise and fall, rise and fall, his way across the great ocean. Each time he rose, he rose a little further. And each time he fell, he fell a little further. On and on as he swirled his way across the great water desert.
“You watch, you watch”, he cried to the little waves around him. “When I land what a splash there will be”.
With the wind to his back and the swell before him, he rose and fell, rose and fell. The little waves around him began to fear him and move out of his way. This pleased Great Wave, for a great wave likes nothing more than for the little waves to clear out of his path.
“You watch me, you watch me” he cried and he fell upon any unsuspecting little waves that chanced across his path.
Great Wave was relentless. Again and again he rose and fell, rose and fell. All the while he felt stronger and bolder, a greater momentum issuing up from the oceans depths. But one Little Wave, one innocent little wave that had never seen a great wave before began to follow him.
And Little Wave discovered a secret. He had been running before the Great Wave for a noon and a night and slowly, inexorably, he had been caught by the embracing momentum of Great Wave and had ducked out of his way just in time.
Little Wave was curious how such a mighty wave might be. So he decided to follow the Great Wave to see where he was going and what was this thing called ‘land’.
As the Great Wave rose and fell and rose and fell just where Little Wave had been just a moment before, Little Wave wallowed behind his back, and hung on to the Great Wave’s shoulders. There he discovered he was drawn along by the momentum of the Great Wave and he could follow him for as long as he wished.
Which, Little Wave did. He followed him and followed him wanting ever so much to see Great Wave land. And, by the by, Great Wave having dispersed all little waves before him, came swinging up and down, up and down to within the sight of land.
“Ah ha”! said Great Wave, “land at last. Just you see Little Wave, just you see”.
For Great Wave had spotted a sharp and rocky promontory protruding from Land. The cheek of it, thought Great Wave, look at that rock standing so proud and pushing himself out right into the midst of the our great ocean.
“See what I will do when I land. See what I will do to that rock”, he shouted.
And with that he headed off on a direct collision course with the rocky outcrop.
Now, Little Wave, fearing the self-righteousness of Great Wave began to move aside. On the one hand, he had never seen land before and on the other he feared what Great Wave might do – for Great Wave had huge momentum and all those before him had dispersed and scattered.
And so Little Wave left the back of Great Wave and headed up the coast to see what he might see, all the while keeping a distant eye on the impending battle between Great Wave and the rock.
“Here I come” shouted Great Wave with such a terrible and fearful voice that even Little Wave could hear it loud and clear.
And with that battle cry, Great Wave lifted himself high about the rock and dashed himself low about the rock. All around the rock everything turned white, foam bellowed up as if from a dragon’s mouth and the birds high on the cliff edge launched into the air with terrified shrieks.
Little Wave held his breath, for a moment all was mist and confusion. First the sound fell away and then slowly the watery shroud descended too, revealing the gleaming rock, the same as before, just shinier and brighter.
But where was Great Wave?
From a far, Little Wave could not see, but the birds high above the rock heard the great sucking sound as Great Wave, battered and bruised, sought to withdraw and rise again. Great Wave gathered himself like a an old dust sheet drawn down off a piece of furniture. And the swell dropped, so Great Wave could rise again. Little Wave could, once more, see the great fearsome Great Wave, but this time, the proud posture was gone, replaced with a foaming and angry look.
Great Wave drew himself even higher than before and with all his might and rage hurled himself down upon the rock. Again, a watery mist exploded as Great Wave’s rage echoed against the cliff wall behind. And again, the Rock reappeared gleaming again, perhaps even smirking as once more Great Wave lay in foam and whiteness around his base.
And so it continued with Great Wave raging, withdrawing, rising and falling upon the Rock until all his energy was spent and the day was done.
Not once did the rock budge. Never did it move, but just held still with a glint or gleam from his rocky crevasses. Little Wave didn’t choose to see the end and sped further up the coast.
By and by, Little Wave found a soft piece of shore. It wasn’t as glamorous as the rock that defeated the Great Wave. Instead it looked gentle and most importantly soft.
And there Little Wave decided to land.
And to his great surprise, the land yielded, and into Little Waves swirls, fine golden grains were thrown and as Little Wave drew back into the ocean he turned and tumbled the golden grains to his hearts content for Little Wave was the only wave on that beach.
And he was the only wave to defeat land and take away its golden sand.
xxx ooo xxx
“It’s just the way it is” Jim Rohn
Some things in life are here for good. There is no reason written into the DNA of the earth that says that estate agents are nearly always needed to sell houses; it is just the way it is.
Many investors and would be entrepreneurs have bet on the web too. But web businesses don’t make money, Simple, fact. Nothing that neither you nor I will do will change this.
Like the rock in our story, it isn’t going to move no matter how big Great Wave becomes or how angry or how determined.
In our world, for nearly all of us, you need to pass your school exams if you want to get into University or stand a good chance of getting the first job you desire. Are exams a fair way to assess people? No. I used to be terrible at exams as are half my family. But is the world going to change to fit us Lewis’s and will we be like Great Wave wasting our energy and talent on a rock that isn’t going to budge? I’ve learning to budge before the rock does.
Like WC Fields said
“Try, try and try again. Then give up. No point in being a damn fool about it”.
Websites don’t make money. Don’t let anyone fool you into thinking that they do or persuade you to sit up half the night for two years on a dot com dream. Now, what about Google you may say? Ah yes, Google is a great search and advertising business. It distributes itself over the net, but it isn’t much of a website – given the massive size of the company.
Saying Google is a website business a bit like saying Mac User Magazine is a computer business.
The key here is that online databases or downloads of free content all use the web because it enables;
- cheaper and better marketing
- cheaper and better distribution of product
- cheaper and better service (ie being able to check the status of your Amazon book delivery online is better than ringing a free phone number and waiting 20 minutes to speak to an operator).
So, the web is great for making an existing business or even a new business model work more efficiently and deliver a better service. But a website is not a business in and of itself.
Some businesses, such as a property listings website might be pure internet plays, meaning that they only deliver and distribute on the internet, but you can be sure that they have an office and a sales team who meet their top clients face to face and without whom the website would not last.
So, would be successful entrepreneurs, if you present business angel investors with a website and ask for £100,000 for a 20% stake, you’ll be turned down flat UNLESS you can show
- a back office business which is already set up and delivering sales, and
- a soft market where you can easily make sales – like Little Wave
The point is that anyone can have a website set up and running for less than £5,000 and perhaps as little as £500. This means that a website is little more than an electronic business card.
Is an investor really going to pay you a £100,000 for a 20% stake because you managed to create a digital business card?
Now, dear reader, you may think I am joking here, but half of all business plans that come forward for investment are no more than a website or more accurately, a digital business card.
If your business has landed on the best part of the cost – on the soft golden sands – then the evidence will be that you are already making sales. If you have not yet made any sales then the investor doesn’t know whether you are throwing your effort against a rigid and unyielding rock wall or whether you’ve arrived at the golden beach but not bother to land.
This is why investors treat investment proposals in each of these different stages, differently
- not making any sales – very high risk, cash investment amount will be low for substantial stake
- making sales – risk remains high but easier to measure and stake offered will be smaller
- making profit – lower risk but stake offered may be smaller or larger depending on the reasons for seeking more cash
If you are asking an investor to back a ‘not making any sales’ business, then his risk is that you have mistaken a golden sandy beach for hard rock.
Given that you, dear would be entrepreneur, are the expert on your market (that is why you are asking for the money, isn’t it?), it is reasonable that the investor should expect you to be able to tell a rock from a golden sandy beach.
After all, to carry on the analogy, you know this island best, don’t you? And the investor might never have visited your island.
So, to really get the investor’s interest, start making some sales. Then come and ask for money. You’ll find raising funds much easier this way.
But, dear would entrepreneur, perhaps this is the first time you have visited the island? Perhaps you are a little unsure whether you are facing a coastline of rock or sublime sandy beaches?
Well, unfortunately, much of the time, we entrepreneurs end up on slightly muddy beaches with a good bit of shingle about.
In business, as in life, things are rarely black and white.
So, the question that both the investor and the entrepreneur will be asking is
- how good is the rest of the beach?
- And how much of it is there? Or how long will it last? And when it runs out, as it must eventually do, will these entrepreneurs be able to find another gold sanded beach?
But before we ask these questions, we need to look up for a moment and be sure we are not hurling ourselves against a rock.
The way to know this for sure is to deliver some sales, quickly and easily. If the initial sales are not quick and easy, be sure that the sales that follow will only be harder. Try and try again, and then if not successful, give up; you’ll be beating yourself against a rock.
Of course Great Wave was not only foolish but also arrogant. You might say that it was his foolishness that brought him to the wrong place but his arrogance that kept him there.
All great entrepreneurs and not so great entrepreneurs like me have made bad decisions and foolish errors. On this we would ask not to be judged too harshly. However, to not realise your error and persist whilst expending your limited resources against a rock that will not yield is a sign not so much of foolishness but arrogance.
For Great Wave’s true mistake was not that he started in the wrong place, but that he did not withdraw earlier and go and seek a more yielding landing before he spent all his energy. And what would it take to do this? Honesty and a self-confidence to admit a mistake, publicly, and then to move on in the search for the golden sands.
As an almost successful entrepreneur, I have on occasions been honest and admitted my mistakes. But other times, my anger or frustration has kept me at the same place again and again. Often, it wasn’t until a wiser head drew me away from the scene of the unyielding battle that I was able to see that I was hitting my head against a rock.