“What Was the Biggest Mistake You Made in Your Business?” Part 2

I had the great honour, on Tuesday of this week, of attending a class in entrepreneurship taught by Prof. Cammie Jaquays at Trent University in Peterbrough, Ontario.

Prof. Jaquays divided the students in her class into six groups, and each was assigned the task of reading my book, “Don’t Let Your Dream Business Turn into a Nightmare”, in conjunction with a book by Prof. John W. Mullins, entitled “The New Business Road Test”, and examining my entrepreneurial venture through the lens, if you will, of the “seven domains” road test for new businesses which Prof.Mullins outlines in his book.

The seven domains in Prof. Mullins’ model include two “Market domains”; market attractiveness as a whole, which is a “macro-level” evaluation of the market, and the “target segment benefits and attractiveness” of the proposed new business, which is a “micro-level” examination.

Similarly, there is a macro-level “Industry domain” - which refers to the attractiveness of the industry as a whole, and a micro-level Industry domain consideration, which is the “sustainable advantage” offered by the proposed new business in that particular industry.

In the “Team domain”, there are three areas of examination: 1) Mission, aspirations and propensity for risk 2) Connectedness up, down and across the value chain and 3) Ability to execute on Critical Success Factors.

As Prof. Mullins points out in his book, there is much that can go wrong in starting a new business venture, and almost any mistake - certainly a critical mistake - can doom the entire enterprise. Hence, the “road-test” is not a check list, and there is no “score card”. Achieving a “score” of 90 out of 100 would not be any guarantee of success, if the missing 10 points were in the “ability to execute on critical success factors”, for example.

Prof. Mullins’ book is a very informative and valuable guide for aspiring entrepreneurs who may be unaware of all of the factors that determine the success or failure of a new business -or the degree to which the odds are stacked against any new business succeeding - and the diligence with which the students in Prof. Jaquays’ class approached the assignment, and the insights which they came up with with respect to my business venture, were delightful, if not occasionally painful at the same time.

There are many mistakes which an entrepreneur can make - especially a first-time entrepreneur - and I certainly made a number of them.

But what was the biggest mistake that I made?

As Prof. Mullins states in his book, investors come in two categories - one is the “Three F’s” - friends, family and fools -and the other is professional investors.

In the case of my business venture, I would say that my investors were in the latter category, which is to say that they invested in my new business concept more out of a desire to make money, than out of a desire to help me, although there was a personal relationship with one of my two investors.

As Prof. Mullins points out, experienced investors know that most new businesses will fail. The statistics tell them that. Hence, they approach every plan for a new business with a hefty dose of scepticism.

Now, consider this: if you approach a basically skeptical investor with a business plan for a new venture which he already knows has a greater chance of failing than succeeding, how are you going to change that skepticism into an overwhelming passion and exuberance?

You might transform that skepticism into a grudging level of cautious optimism, but that is about it.

You are just not going to get your investors to feel as passionate and committed to your idea as you are, in my opinion, and, certainly, in my experience.

And so what happens when investors put up money for a business venture for which they do not have the same level of passion and commitment as the “visionary entrepeneur” whose idea it was to create the business - in other words, you?

“It is all too common for venture capital investors who like an opportunity to tire of the team they back and bring in a new one at the first sign of trouble.”

So writes Prof. Mullins.

And that is exactly what happened to me with The Men’s PowerSpa.

My investors, who never really believed in the concept of the business in the first place, eventually got tired of me and replaced me with - themselves.

Have a look at the website at http://www.themenspowerspa.com/ to see how they are doing.

It is March 12, and they are still promoting Valentine’s Day.

So, what was the biggest mistake I made in my business?

If you read my book and Prof. Mullins’ book, you may come up with your own answer.

But, as you can see, I have come up with mine.

Winning the Battle to Tell the Truth

In my last post, I described the battle in which I am engaged to see to it that the case study which was created by the Ivey School of Business - one of the top business schools in Canada - based upon my book “Don’t Let Your Dream Business Turn Into a Nightmare” remains available to students at Ivey and at other business schools around the world which may have interest in using it in their programs.

In the spring of 2009, I submitted a copy of my book to the Ivey School of Business at the University of Western Ontario, with a view to having it added to the curriculum of their courses in entrepreneurship. In May, I received an email from the Executive Entrepeneur in Residence at Ivey, expressing interest in adapting my book - or my story as I told it in my book - into a case study, as Ivey is one of a number of business schools that uses the “case study” methodology. The case study was written in the fall and posted on the Ivey Publishing website in November of 2009. In December, I received an email from Ivey informing me that my former friend and associate, who is now the president of The Men’s PowerSpa, had lodged a complaint, on the basis that the majority owners of the company did not give their consent to use the case study that bears the name of the company.

My book is a very personal account of one man’s entrepreneurial dream that turned into a nightmare. I wrote it as a cautionary tale to warn other would-be entrepreneurs of the dangers of starting a business - especially a “dream business” - with someone else’s money. Someone who may not share your passion or vision.

I did not expect the majority shareholders of the company that I founded to like my book because it is not a very flattering portrait of the way that people can behave when money is on the table. The lesson of my book is that when money is involved, a number of values which we cherish, such as fairness and even “niceness” can go out the window. You might think that all is fair in business, but I don’t, and that is why I wrote my book.

Prior to self-publishing my book, I consulted with several lawyers, and was advised that as long as my book was truthful, I could defend myself against any claims of libel. Since my book was truthful, I went ahead and published it. And the Ivey School of Business deemed that the story that I told in my book - the story of how my “dream business” turned into a nightmare - was of value to the students at Ivey and at other business schools around the world.

But in December, because the majority owners of the business had not approved of the use of the case study, they pulled it.

This, to me, is analagous to a newspaper pulling a story about the problems at Toyota becasue the owners of Toyota don’t like it. Talk about freedom of the press.

The upshot of all of this is that, as of this week, I was informed that the case study will go forward, in a disguised version, so that readers will not be able to recognize The Men’s PowerSpa.

So, somewhere in the future, students of entrepeneurship at Ivey and other business schools around the world may get to read the story of an entrepreneur who had a dream, and saw that dream turn into a nightmare.

It won’t be my story the way I told it in my book. But it will be as close as it can be, thanks to the majority owners of The Men’s PowerSpa.

A couple of guys who should be ashamed of themselves.

What Do You Make of This?

My book, “Don’t Let Your Dream Business Turn Into a Nightmare” is an honest account, from my perspective, of my experience in founding one of the first day spas for men in the world called The Men’s PowerSpa.

When I had finished my book, in late 2008, I submitted it to one of the leading independent publishers in Canada, and the Managing Editor, who loved the book, and called it “the most original business book he had ever read”, said that it belonged on the syllabus of every M.B.A. program in the country.

That was a “light bulb” moment for me, as I had written the book as a cautionary tale for would-be entrepreneurs, to help them avoid the misfortune that I experienced. I had not thought of the book as an educational resource to be used in college or university entrepreneurship and business courses.

Based upon the comments of the Managing Editor, I decided to publish the book myself, and to send it to university and college instructors, to see if it might be of interest for their graduate and undergraduate courses. One of the most thrilling responses that I received was from the Ivey School of Business at the University of Western Ontario, not only one of the top business schools in Canada, but my alma mater, as I have a Master’s degree in English from Western.

In short, the Ivey School of Business adapted my book, which is the tale of a first-time entrepreneur with the dream of creating one of the first spas in the world for men, into a case study. The case study was completed in the fall of 2009, and made available on the Ivey Publishing website.

I did not have any financial interest whatsoever in the use of the case study at Ivey or in the sale of the case study to other business schools, but I did see a benefit to me in the association with a prestigious academic institution like Ivey and in exposing my story to students of business around the world, some of whom might have interest in reading the complete story as I told it in my book.

I should also point out that in writing my book, I was as honest as I could possibly be about my actions, my decisions and my mistakes, and those of others involved in the story. I was guided at all times by the truth, and the advice that I had received from several lawyers, that as long as I told the truth, I could defend myself against any legal challenges that might arise. I also felt, and I am going to admit this openly, that as a citizen of Canada, I had the right to tell my story my way - and that is what I did. I refused to allow myself to be cowed out of doing so by anyone.

And, what happened to the case study that was created by the Ivey School of Business?

Shortly after it was published, they received an email from someone associated with the business who complained that the majority owners had not given their consent to use the case study.

The case study that was based upon my book.

The book that was an honest and truthful account of my experience.

The experience that belongs to me, which is part of my life story, and which I told as truthfully as I could.

And, what did Ivey Publishing do? They immediately withdrew the case study from their website, with the intent of revising it so as to completely disguise the name and the identity of the business.

In other words, to completely alter the story that I wrote.

And why would they do that?

I was told that their case studies are not based upon individual stories - like the story of an entrepreneur whose dream business turned into a nightmare. Their cases are based upon businesses, and unless everyone signs off on the case study like a happy little family, they won’t use it.

Wouldn’t want to risk controversy in the academic world now, would we?

Someday, there may be a case study that bears some vague resemblance to the story that I told in my book.

The story of how my dream business turned into a nightmare.

There are always going to be cowards who are afraid of the truth, and those who lack the courage to tell the truth.

And, hopefully, others who aren’t and don’t.

If you want to know my story, read my book.

Does Fairness Belong in the World of Business?

On March 2, 1995, at about 2 in the afternoon, I was “downsized” from the television station in Toronto at which I had been working since August, 1980.

Damn right I remember the exact date and time, as it changed my life.

In the 14 1/2 years that I had worked at the station, most of it as a Writer/Producer, I had received several awards for my productions, but when I was “let go” (as if I had been trying to escape) I was informed in a letter that, due to economic conditions, the company was being forced to downsize. That was complete and utter twaddle as within months or even weeks, the company had hired hundreds of new employees, and over the past 15 years, that number has grown into the thousands. But I, along with hundreds of my former colleagues, was lied to, and fired simply because the majority owners of the company had brought in a new C.E.O. and given him the freedom, if not a mandate to “clean house”.

Was that fair?

In my book “Don’t Let Your Dream Business Turn into a Nightmare”, I recount the experience that I had in launching one of the first spas in the world for men - and, specifically, how my “dream business” was turned into a nightmare because of my relationship with my investors who acted in a way that I do not believe was fair.

In a recent discussion about my book, a friend asked me what made me think that the world of business was fair. “Didn’t you know”, he asked “that business is a jungle? What made you think that people were going to be fair? How could you have been so naive?”

I have an answer for him.

The answer is “yes”. Yes, I expect people in business to be fair. I expect everybody to be fair, and I try to be fair to everybody - in business and in other areas of my life.

I do not believe that we can draw a circle around the world of business and say, “This is the business world . There is no such thing as fairness here”, and then expect there to be fairness in other areas of life.

Once we begin to erode the fundamental values of society - ( if you don’t believe fairness is one of those fundamental values, get arrested for a crime that you didn’t committ and see how quickly you start begging to be treated fairly) - once those fundamental values are eroded in one area, we begin to lose them everywhere.

And that is exactly what I see happening in our society right now - the fundamental values of decency, honesty, fairness - being eroded every day. Pepople like Bernie Madoff don’t fall out of the sky. They are products of a culture. A culture which we create for ourselves.

Should you treat people fairly in business? Or do you believe, as my friend does, that the concept of fairness doesn’t even come into play in business?

I believe that we live in the world we create.

If you want fairness in the world, be fair. In your business dealings and everywhere else.

Can You Afford to Love Your Small Business?

In the summer of 2005, I was in love.

Yup, I’ll admit it.

Truly, madly, deeply.

I was in love with the small business that I had founded.

It was one of the first spas in the world for men, called The Men’s PowerSpa.

And why shouldn’t I have been in love with it - I had created it just the way I had imagined it.

It was slick, sleek and masculine, with a bit of swagger.

But it didn’t only look cool, it had taste - man, you weren’t going to hear any wind chimes and pan flutes in here - you were going to hear Sinatra, Darin, and Bennett - real guy music.

And it had a mission - a serious mission - to help men look and feel their best.

Because looking and feeling his best confers benefits in every aspect of a man’s life.

That was the core belief of my business.

I loved having created one of the first spas in the world for men, I loved being the self-proclaimed world leader in the men’s personal care industry and I loved it when guys came in and left - looking and feeling their best.

Because I loved my small business, I believed in it, and defended it against criticism, expecially if the source of the criticism was people who had never set foot in the spa.

Like my investors.

Love conquers all, they say. But they also say that love is blind.

Was I blind to some of the problems in my small business?

I really don’t know.

If you have a small business, can you afford to be in love with your business?

Can you afford not to?