Posted By Sheryl Thai On 1 February 2017
Today I want to share two stories, I hope you enjoy them.
Imagine this game. Someone is auctioning off a crisp green $100 note and bidding starts at $1.
The rules of the game: If you’re the second highest bidder you still have to pay the amount you bid but you don’t get the $100.
Bidding starts. $1, $2, $5 – hell yeah getting $100 for five bucks, why not, I’m in.
The bids keep coming in and I bid $51, awesome I’m going to profit now.
Bidding reaches $90. Hmm ok, there’s still reason to stay in.
$99 comes around. I offer $98. Shit, I don’t think the other person is going to back down. Well better to raise the bid to $100 so I’m not the 2nd-highest bidder and lose $98.
But now the other person that offered $99 raises their bid to $101. Better to lose only $1 than $99, right?
Soon the bids reach $110, $130, $180. The game could go on for eternity.
So moral of the story? The real problem was this: not thinking it through at the beginning.
When the game starts, it’s easy to get excited and think short-term, “Ooh yay, I could get myself a good deal”.
Then when it’s too late, you start to realise, “Shit, what have I done? How do I get myself out of this mess?”
The game was clearly rigged against them, so the smart choice was not to play the game at all. We should always ask, “How will this game end?”
That’s why many business books, mentors and experienced entrepreneurs urge you to think about your exit strategy. It’s hard to do it because you don’t want to think about selling your business when you’ve barely just started it.
We need to step back and think about the long-term effects of everything we’re doing now. Being an entrepreneur requires you to think bigger picture, it requires you to do the hard work to know how the game will end. Otherwise, everyone will lose.
How does your end game look? Have you thought about it?
Another story I want to tell you about is about the Fisherman and Investment Banker, a fable that puts things into perspective.
An investment banker was at the pier of a small coastal village when a small boat with just one fisherman docked. Inside the small boat were several large yellowfin tuna. The banker complimented the fisherman on the quality of his fish and asked how long it took to catch them.
The fisherman replied, “Only a little while.”
The banker then asked, “Why don’t you stay out longer and catch more fish?
The fisherman said, “I have enough to support my family and their needs”
The banker then asked, “but what do you do with the rest of your time?”
The fisherman said, “I sleep late, fish a little, play with my children, take siestas with my wife and stroll into the village each evening where I sip wine, and play guitar with my friends. I have a full and busy life.”
The banker scoffed. “I have an MBA from Harvard, and can help you,” he said. “You should spend more time fishing, and with the proceeds, buy a bigger boat. With the proceeds from the bigger boat, you could buy several boats, and eventually you would have a fleet of fishing boats. Instead of selling your catch to a middle-man, you could sell directly to the processor, eventually opening up your own cannery. You could control the product, processing, and distribution,” he said. “Of course, you would need to leave this small coastal fishing village and move to the City, then Los Angeles, and eventually to New York City, where you will run your expanding enterprise.”
The fisherman asked, “But, how long will this all take?”
To which the banker replied, “Oh, 15 to 20 years or so.”
“But what then?” asked the fisherman.
The banker laughed and said, “That’s the best part. When the time was right, you would announce an IPO, and sell your company stock to the public and become very rich. You would make millions!”
“Millions – then what?”
The banker said, “Then you could retire. Move to a small coastal fishing village where you could sleep late, fish a little, play with your kids, take siestas with your wife, and stroll to the village in the evenings where you could sip wine and play guitar with your friends.”
What is it we’re wanting to achieve with our lives? Is it driven by ego or is it fueled by our purpose and passion? I constantly remind myself as this since it’s so easy to be swept up by the current that is life.
Sheryl Thai, CEO
League of Extraordinary Women