The Thin Line Between Persistence and Stupidity

In my last post, I talked about the importance of mental toughness as a key to profiting from this recession.

I guess I struck a cord as many of you emailed me your comments. Thanks Danielle, Brandy (Portland, OR), and Gustavo (Buenos Aires, Argentina), for your comments.

Given the interest in this topic, I thought I’d elaborate further on this topic.

Being absurdly persistent in the face of adversity and change is essential to surviving and even thriving in the face of adversity.

However, it’s equally important to realize there’s a very thin line between being absurdly persistent and being absurdly stupid.

Let me explain.

Absurdly persistent is about never giving up on your goal.

Absurdly stupid is about never giving up on HOW you achieve your goal.

The right balance is simple. Never quit on your goals, but be willing to be flexible on how you reach your goal.

This may seem like a subtle distinction (and it is), but it’s a profound distinction.

If you are determined to have your business survive and grow in this recession, that’s persistence.

But if HOW you run your business is clearly NOT working, it’s frankly a bit stupid to stick with an approach that clearly isn’t working.

If you have the wrong approach, it’s an incredible waste of precious resources (time, money, energy) to be persistent. It’s smarter to conserve resources, re-group, and take a different tack instead.

As one famous American General said in World War II, we aren’t retreating. We’re charging ahead in a different direction.

What makes this difficult for many people is the emotion turmoil that comes from the harsh realization that what you’re doing is not working. It takes being brutally honest with yourself to come to that realization.

Let me share a personal story.

The very first company I started in 1998 failed.

It was the middle of the dot com boom, and I had this idea to create what today would be known as a social network website.

It would allow people to connect with old classmates, family members, and friends. You could meet new people, automatically identify common interests, share updates, photos and more.

If this sounds a lot like Facebook, that’s because it was virtually identical to facebook except I started the company 11 years ago.

In the first 90 days, the site grew like crazy with 0 users on Day 1, and 60,000 people using the system on Day 90.

One of my competitors, a company called eGroups had just gotten bought by Yahoo — and would become what is now known as Yahoo Groups.

All the other big Internet sites bought up my competitors, with one exception – a company called

They had noticed our rapid growth and we started conversations about having them buy out me and my partner. We were probably 24 years old, and neither of us had ever cut an 8 figure deal.

So we brought on a professional negotiator to negotiate for us. He used to negotiate trade deals for 4 different US Presidential administrations (Nixon, Carter, Ford, and Reagan). He was also the former CEO of a billion dollar company.

In short, he was a heavy hitter.

We floated the price tag of $10 million in front of and they didn’t blink.

We got so excited by all the zero’s involved in that deal. Keep in mind, this was before I learned the lesson that a deal ain’t done until the check clears the bank (and you can guess when I learned that lesson).

The deal ultimately fell through and boy were we depressed. It was naive of us to get excited, so when the let down came, it came hard.

When the dust settled, I took a brutally honest look at our business (which was a pretty generous term for it).

Without out of the picture, and all the other big Internet portals having already bought up our competitors, there was nobody we could sell our fledgling business to. So, we had to make some tough decisions.

Internet advertising was in its infancy and not a very viable revenue stream for a small company. We had no revenue (this was back when no revenue didn’t seem to bother anyone… LOL).

There was no obvious buyer in sight.

We didn’t have the funding to continue forever… certainly not for another 10 years until Social Media would become the rage.

And after several sleepless nights, I realized this this particular approach to achieve my goals was not going to work.

I remember my thoughts, feelings, and emotions in making that decision.

The first emotion was complete and utter DENIAL.

How could our “business” be worth potentially $10 million dollars one day, and the next day not be worth anything?

While the facts were pretty clear, I remember not being able to see the obvious objectively. I was massively and overly emotionally involved. I had given up a six figure job as a 23 year old to start this business.

I worked until 5am in the morning every day for over a year.

My wife and I cut way back on our living expenses. We were so frugal that we didn’t buy fresh vegetables at the grocery store, we bought canned ones.

But, we couldn’t even afford to buy Del Monte canned vegetables and bought the store brands instead to save that extra 5 cents per can.

In short, we sacrificed a lot to make this business work. And I have to tell you, it was not easy coming to terms with the fact that the business was not going to work.

Once I realized this, it took me over a week to tell my wife the bad news. I was too chicken to tell her that after all her sacrifices, I had let her down. That wasn’t a good week for me.

But despite the emotional turmoil, eventually logic kicked in and I realized it was irresponsible and stupid to continue down a path that wasn’t going to work. And I shut down the company and ultimately moved on.

Looking back on that experience, I realized that going through the entire emotional cycle of denial, anger, feelings of failure, and finally acceptance would become useful later in my career.

I now recognize the emotional signs that invariable come about when one hits a major setback in business.

Not many people have the opportunity to go through this process, and having gone through it early in my career has allowed me to handle “near death” business setbacks in my own business and those of my clients in stride.

I remember two years after that experience, I was running a $20 million division of $100 million a year public company. I remember when the company hit one of these unexpected “death blow” caliber setbacks. The CEO at the time was pretty much shell shocked by the setback.

Rather than taking immediate action, he spent nearly 6 months in denial… before realizing serious action was required. Once he took action, he took meek action, rather than the bold action the setback required to deal with it effectively.

In hindsight, I realized this otherwise very successful executive had never dealt with and mastered the emotional turmoil that comes from such a traumatic and unexpected set back.

This is a mistake that I hope you won’t make in your business. In the face of major problem in your business, the solution required is often equally dramatic.

If the recession has delivered a near death blow to your business (or parts of it), I can tell you right now that doing more of the same probably isn’t going to cut it.

Dramatic problems, often require dramatic solutions.

The key is to realize that your emotions WILL creep into the decision making process. And to be aware enough of this trend, so that you can keep your emotions from negatively influencing or delaying making the right decision for your business.

There’s a thin line between being persistent and being stupid. Just make sure your emotions don’t push you to being on the “stupid” side of that line.

2 thoughts on “The Thin Line Between Persistence and Stupidity”

  1. We have a family owned specialty store.After 28 years, we are tired and out of money. But,there is no one who would buy it. We’ve got to stick it out past this recession.What do you suggest we do? 4th Qtr. is critical to sales.

  2. Kim,

    Your question is an extremely complicated one that can’t be answered properly without several hours of analysis. So let me make some assumptions and provide some general rules of thumb.

    In general, the kind of businesses that people buy are ones that fit two criteria: 1) profitable, 2) easy to operate. In some cases, a buyer may be an unprofitable business if he/she thinks the business can be fixed easily.

    So if your business is not doing well, I think and you’re tired of it, it seems unlikely that someone else would want what you don’t want.

    If the business has some fixable problems, then your best course of action is to fix it.

    If the problems are too massive to fix, or aren’t worth fixing (given the cost to fix and the financial benefit of doing so), then the only two other options are a) scaling back the business to a point where you can survive (and possibly grow in a different way/direction), or b) shutting down the business.

    Which one is too hard to tell given the limited info. Also emotionally, my guess is you’re dealing with picking the “least worst” option. If that’s the case, just be mentally prepared for it.

    Finally, if you do have to take drastic action in either scaling back or closing shop, best to take these actions quickly and aggressively. Waiting rarely helps.

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