Ninety Percent of Experiments Fail
Seconds and Cents, Episode 20 Episode 20. We're going to talk about something it's a Tuesday, I didn't record one on Monday. And this is something I was thinking about over the weekend. It's something that kind of is pervasive in my life. It's a mindset, I found. It's not a capability set. It's not something necessarily for somebody who has money. It's not something for somebody who doesn't have money that's trying to get money. It's not for somebody who has a team or doesn't have a team, it's just purely a mindset. And that is experimentation. Today, kind of it's gonna be a lot of personal stories, a lot of how is experimenting done in my business, how are we experimenting? What's our mindset towards it? And kind of once we have something that's successful, right, what happens? So my goal for the listener, my goal for you out of this is to really understand well, what is my mindset around that experimentation how has it been successful for me? how might it be successful for you? And ultimately, what's your risk tolerance? So I'm not going to say do the experiment or don't do the experiment or take the risk or whatever it is. But what's your risk tolerance? Here, I have a very high risk tolerance. It's something that I'm known for in my kind of social circle. And so my hope here is that my successes, my failures, help kind of prime you into understanding a bit more about yourself help you think about your own thinking. And ultimately, as you see the world a bit differently, as any entrepreneur does, you
really kind of have a language to think about experimentation with so what's the first thing that I think about here? Well, it's that I think nine out of 10 experiments fail. And not only do nine out of 10 experiments fail, but they fail really, really hard. And so in my world, the way that I treat it is that success
One has to pay for the other failures. And then it has to propel our business forward. What's that mean? Well, that means that I'm taking higher risks I'm taking, I'm doing more experiments, I'm doing more experiments, as my capability sets grow, I'm doing more experiments with those capability sets. As my cash grows, I'm doing more experiments with my cash. But ultimately, I only need one 10th of them to succeed. It's just that the one 10th of them that succeed have to pay for the rest in the event that the one that succeeds, doesn't pay for the rest. It's an interesting learning experiments, experience. It was an interesting experiment. But it probably didn't work looking into the long run. It's not something that I necessarily want to work through. So here, one thing that's interesting is in this mindset, that mindset that 90% of these things are going to fail. 90% of the things that I do are going to fail, and anything that I do in my business, as an experiment, from marketing, to sales to product development, to hires
We're going to talk about hiring Tamra and how that in itself was an experiment.
But anytime a failure is painful, so what I found in, in doing experiments, what I found in kind of having a mentality of, we're always experimenting, we're always looking to find something better to try something new, is that if failure is going to be painful, it means that I'm over leveraged in that area. So I have some current areas in my life where, hey, if I have to write this down as a failure, it's going to be painful. And what that tells me is that tells me that somewhere in my business, I'm over leveraged somewhere in my business, I am kind of not hedging my bets enough or there's a negative experience that I'm trying to avoid. So instead of running towards abundance, I'm running from a negative experience that could be in the future. But what I want to talk about my kind of example here is with a line mindfulness so my first ever client, my first ever consulting client,
I am so grateful to mind body align for giving me the opportunity to do align mindfulness with them,
which I would consider overall to be a long term success. So commercially, was it viable? No. Did we monetize it? Well, we did not. Did we drive a lot of app downloads? That turned into customers? We did not. But was it a success in that it accomplished the goals that we wanted to accomplish? Which was we wanted to bring mindfulness into people's everyday life. Yes, that was a success. Was it a success in that mind body line has a product that they're able to sell that they're able to bundle? Yes, that was a success. So here, however, the experiment was in itself aligned mindfulness on mindfulness was not in the core business of Mind Body align. They were my largest consulting client.
And they were paying my payroll. And ultimately, it was just me and it was one other person but I knew
If we lost Align Mindfulness, there was going to be a serious problem. And I was gonna start to have cashflow issues from day one. It's just how it was the time, I was just starting out, I was pouring all of my energy into a line, I wasn't able to take on more consulting arrangements. And so what I really needed to do was I really needed to diversify the business. Well, I knew that in the experiment that was align mindfulness as a product as a business.
It was gonna be really, really painful if a line failed. And so what that told me was, hey, in my business in my entrepreneurial life, I'm over leveraged right now. So as I think about this mindset of, well, nine out of my 10 experiments will fail, which is true nine out of the 10 experiments that I run, well absolutely fell.
And they'll fail really hard. If I think about that failure and it's painful. It means I'm over leveraged. There are some aspects of my business where I could fail. I could lose
$10,000 and I'm probably not going to be all that brokenhearted about it. But there are some other areas where I could lose a lot less or in fact, in shutting down an experiment, I'm actually going to make more money in the short term. But that failure is, is a painful experience. And so what we're doing right now is we're iterating to make sure that the possible failure turns into a success. So that's number two, let's talk about failure for a second. Failure is just tuition if you think about it as a learning experience, so it's just the price that you pay in order to learn the price, the price that you pay in order to grow. My example here that's really interesting is the pizza app. We had a business unit that was building apps for pizza shops, we had a pizza shop approached us. They said, Hey, we need apps that people can order through the app and then they could come pick it up. Then I'm a delivery service. So we weren't working with delivery although with a future customer. We work
They said, We'll pay you to build it. Well, what I thought was an interesting opportunity was this idea where I could build one pizza app. And I could just change the menu and sell it to all sorts of different pizza restaurants. And this app was a colossal failure. I mean, colossal failure. I ended up getting two clients, one of them never actually launched one of that the one that never launched, they just stopped talking to me, they paid their first invoice for the year, and they just did not want to do the pizza app anymore. I'm the only invoice that I've ever really written down before. And so because we had one that was outstanding, but I didn't like building the product, I didn't like servicing the product. I didn't like serving that client. It just wasn't the right clientele. For me. Every business has clients that are great clients for them and bad clients for them. And some people, some clients that are bad clients, from your great clients for other people, but I didn't really
Like any aspect of the business, and I just wrote down the thing I lost, I lost several thousand dollars minimum, which at the time was heartbreaking because I didn't have a lot of money, several thousand dollars was quite a sizable percentage of my overall net worth. And so for me, that was a painful experience. But it taught me so much about those types of businesses. It taught me about those types of clients. And it taught me what I liked about those types of businesses and why I didn't like those types of businesses. Now, the successes and experiments so the successes, these this 10% of experiments that hit the 10% of experiments that pay for all the rest of those I consider in a qualitative perspective to be successes that are problems solved once and for all. So once and for all these problems, I will never have to solve this problem again for the rest of my life. I have figured it out. My example here is Tamra
Hiring an assistant. Hiring an assistant was an enormous experiment for me. We had originally agreed to a 30 day and then a 90 day option. And then we were going to just see where we were from there. And after 30 days, I was feeling like we had a really good, we had a really kind of good rapport going. And after 90 days, she'd already gotten a raise. And from here forward, I know what great assistance looks like, I can teach other people what great assistants look like I hope Tamra continues to work with me for a very very, very long time. And ultimately, I will never go without an executive assistant again, because I've realized just how valuable they are to the business. I've realized just how valuable Tamra is to my life and making sure that my life runs well. And so that's a problem that's solved once and for all if Tamra leaves my business or if Tamra
just is no longer my assistant I will hire another assistant because ultimately
I have done the experiments to know is a good assistant worth what you pay them? And the answer is yes. So third kind of what's interesting is, this is something that I learned early. And this is not something that I originally knew. But it's something that really changed the way that I viewed experiments, which was, it was important for me to set an indicator for what it meant to continue investing into the experiment. So we're going to run an experiment. I'll give you an example. We're going to run an experiment where we're going to have a team of people that submit contact forms on websites as a way to do outbound sales. And a side note, if you are somebody who's listening to this or reading this blog, and I reached out on your contact form, and you weren't happy about it, I'm very sorry. It was an experiment that failed miserably. And we've stopped doing that. So we set an indicator how our photo meant to continue investing and that indicator was
How many people signed up for a free trial of search how many people started working with us with search and after about 30 days, we knew this is not going the way that we thought it was going to we're not getting a good, a good hit rate. In fact, it didn't feel good. It didn't feel like we were doing something that was Noble. It didn't feel like we were doing something that was really adding to people's lives, even though our product does add to people's lives. That was an experiment that we stopped very, very early. The other example for like, what's it mean to continue investing? That was what I mean, like stop investing, we stopped for 30 days. What's it mean to continue investing? Well, to continue investing? We had surge and surge from a very early point we knew was going to be a very interesting business that had a lot of potential. And that was because people jumped on the idea very early. So we told people, hey, we think that we can drive a lot of website traffic through Pinterest, and people were interested immediately. We had more clients
In the first 90 days of search than we had in the rest of our business effort. And so we were really interested in search and we just continued to put money into it. We continue to put time and energy and effort into it. And because we had indicators that could be really big, we had a lot of clients that were very interesting. We had clients that were signing up again, that was something that was really interesting. So they were staying with us for multiple months. Wait something that was interesting, which was reoccurring revenue. We were making reoccurring revenue for the first time and this was great for us because it was Predictable Revenue for us and for our clients. They weren't getting massive surprise invoices. That was something that I thought was really key was we weren't going to invoice our clients for work done. The reason why we weren't going to invoice them for work done is because a client's can sometimes forget that they're going to receive an invoice and now that invoice is a surprise. And B we didn't want it to be something where the client felt like they had to be in the contract. We wanted them to pay month to month or pay quarter to quarter or pay
Usually, but ultimately, we wanted them to feel like it was a more informal arrangement because it was, we weren't looking for them to necessarily be signing away their life to us or needing to get lawyers involved. And so we just said, Hey, we'll do this on a month to month basis, we'll actually go through credit cards, even though it's a radically different type of arrangement for consulting, which is really what surges, which is consulting and execution. It's a radically different type of arrangement. Because most of the time, people who are doing consulting or they're doing marketing services or digital services, they are invoicing versus doing it on a flat rate, reoccurring revenue basis. We saw early signs in the number of customers and then the number of customers that were coming back that hey, this could be a really great business unit.
So number four here separating the idea that everything that you must do must ROI. This is huge, returning your investment. One of the things that allowed me to really experiment freely This was
About the freedom to experiment. This is not necessarily about kind of
how to think about paying back the experiment was separating the idea that everything that I do must return my investment on a dollars and cents basis. Meaning that every single thing that I do if I put in $1, I expect to get $1 10 or $1 50 or $2, right. And in a mindset that is that nine out of 10 experiments will fail. You have to separate I had to separate the idea that everything I did had to return its investment. Here's an example we had hired a digital marketing group to help us with email marketing and to help us with kind of landing page marketing. This was back
back several several quarters ago, and to be quite honest, to get to the bottom line. I lost $8,000 I lost three months of my time.
I will never return that investment. There is no way
I will return that investment on a dollars and cents basis. I will absolutely in forever know that with this collaborator that I had hired, and it was not a good hire. For me. It was very good hire for other people, but not for me with this collaborator that I had hired, I have lost $1,000. And that's it.
Now, let's talk about what I gained. I gained a huge understanding of the fundamentals of digital sales funnels, I gained a huge understanding of SEO, again, enormous understanding of email marketing, when originally hired them do email marketing. And I'll tell you what, I mean, I learned more about email marketing, what I liked and what I don't like from this collaboration than I thought I could no and I great. I met a great collaborator, I met a couple of great collaborators through this and so
really, while I lost $8,000 in the experiment, what I gained was something that will help me in future experiments. It
We'll help future experiments go from maybe one out of 10, succeeding to two out of 10 succeeding, or from two out of 10 to three out of 10 succeeding. So I did return my investment in this experiment, but I will return it on a dollars and cents basis later on in my business career. For right now, it was just a knowledge basis. Overall, was it a good experience for me to have at this age? Yes, it absolutely was. Was it painful to write down $8,000? And three months of my time? Yes, it was. But I learned so much, but over time, it'll be really useful. And then lastly, it's important to recap the experiment. So you didn't experiment what worked? What didn't work, work? What would you do again? What would you not do again? So what are the things that really are kind of tend to propel you forward in future experiments? What are the things that you learned that you didn't know before? My example for this is when we're doing the pizza app.
Which was, again, a colossal, colossal failure. I spent at the time, all of the cash that I had to go on the sales trip to Las Vegas to the international pizza Expo. I got to the pizza Expo set up my booth. That was like one of the worst days of my business career, but just I think because I was tired. The Expo starts, and I am not a pizza shop. I'm a I'm an app, right? I'm a service I want to sell to pizza, pizza shop owners. And
I have this thought early in the morning, that is that everybody's going to be eating pizza all day. They're gonna need something to drink. So I buy like 150 bottles of water. And I just started giving them out to people one by one and we were one of the most popular boats at the entire Expo. That's the good news. The bad news is I only signed one client at the entire Expo. Why? Probably because I didn't really like working in that business.
So I didn't like working with that type of a customer. And ultimately, it just wasn't for me.
So what went really well? Well, if I'm ever going to a trade show again, which I did go to a trade show again, and we did do some things based off of this, like kind of water bottle idea, what's everybody else gonna need? Because of what everybody at the booth is serving, right? what went well be really creative at a trade show. What didn't go well, I didn't close deals, I lost a bunch of money on the trade show. What I do that trade show again, absolutely not. When I do any trade show again, I'd be hard pressed to. But that's because I'm the one who's in charge of it, and I shouldn't be in charge of it. What would I not do again, that what would I do again, be really, really, really creative, and continue to experiment even inside of the experiment, right? So let's kind of recap this here. Because this is an interesting concept. It's a concept that I hope that all entrepreneurs are thinking about, which is primarily a failure in any sense. It's
You learn from that failure is just called tuition. It's not lost money. It's not a lost investment. It's just tuition, you learn something that will help you in the future. And everybody has more time than they think they do. Whether you're 65, you probably still have 20 years. If you want to do business, if you're 55, you have 30. If you're 25, you have like 90 years, right? So any failure here is tuition. And so the idea that you can experiment as an entrepreneur, whether you're experimenting with $100, or $1,000, or $10,000, or $100,000, or more, right, you can experiment as an entrepreneur with and assume that 90% of these things are gonna fail. Ultimately, they will. But if the 10% that succeed, pay for everything else, you're really in business and over the course of 10 or 20 or 30 years, you're gonna have so many successful experiments and you're gonna have so much tuition under your belt, you're gonna be absolutely unstoppable. At least it's the bet I'm making on myself.
So I hope you have a great day. We'll chat again very soon.
The above is an AI transcription of Evan’s Seconds and Cents podcast.