3 Principles For When To Give Up
I recently traveled to Las Vegas for a mastermind group meeting. They say “What happens in Vegas stays in Vegas,” but I’ll bend that rule to teach you something that could save your business.
It’s all about knowing when to hold ‘em, and knowing when to fold ‘em. Knowing when to walk away, and knowing when to run.
Now that the Kenny Rogers song is stuck in your head, allow me to share the tale of my rise and fall as a high roller in Las Vegas.
In between events and time with my wife, I went to play no-limit Texas Hold ‘Em and Blackjack. I wanted to see if an Offline Shark could also be a card shark. As it turned out, I got nine Blackjack hands in a row! I’m not sure what the odds are for that, but I noticed myself getting hooked.
Of course, right after that, I lost two big hands and bowed out. The house always wins.
As I walked away and whistled “The Gambler” to myself, I reflected on the art of giving up. How do we know when it’s time to walk away from the Blackjack table?
How do we know when it’s the right time to give up on a product, idea, or project?
This is one facet of what my latest podcast guest, Dan Cockerell, calls “Total Leadership.” Check it out!
Why We Chase Our Losses
I’ve seen businesses slow down or fail because the person in charge couldn’t let go of something that didn’t work. This happens at every stage of a project’s life.
For example, some people present an idea to their colleagues or mastermind, hear that it probably won’t work, and plunge ahead anyway. Other times a product makes it all the way to the market before they realize it isn’t pulling the numbers they wanted …and yet they hang on.
Part of this is professional pride. If my idea flops, what does it say about me? Not much, except that I buy into a narrative that says the failure of my project also makes me a failure.
Of course, if you listen to the best of the best, they’ll tell you that for every good idea they have, there are ten bad ideas they must abandon at some point.
I think the other part has to do with a psychological principle called “Sunk cost fallacy.” This causes us to stick with things we have already invested in, even when the costs far outweigh the benefits.
Say you lose a $5000 treasure chest off the coast of Argentina due to a nasty storm. You hire a $2500 team of divers to search for it. They go down into the depths, and after a while, come up empty-handed.
They say that the chest is lodged in some rocks and you would need to rent a $3000 crane to get it out.
Would you pay another $3000 to retrieve the chest, even though at that point it would cost more than the treasure itself? Sunk cost fallacy says … most people would.
Obviously, the choice to cut your losses and move on seems more rational. But if we always acted rationally, casinos in Las Vegas would go broke.
If we want to make better decisions, we need to reprogram the way we think. Check out my podcast with Ian Stanley for more!
3 Tips For Knowing When To Fold
We need a framework for knowing when to walk away. We don’t want our pride or over-confidence to slow us down, or cost our entire business.
- Overuse MVPs
A minimum viable product (MVP) is exactly what it sounds like. Rather than waiting for a perfect product, a good startup develops something that works and gets it to their market as soon as possible.
They understand that if the MVP works, then they can improve on it. And if it doesn’t work, they can pull it without feeling too attached. After all, it was just the bare minimum.
Develop a fluid and maneuverable strategy so that you can invest in things that work, and let go of things that don't work.
I have a free guide that shows you how to find a market, develop an idea, and then milk it for all it’s worth. You can find it here!
- Maintain High Standards
How much do you think an art gallery would pay for a bad Picasso painting?
I guarantee they’d pay more for it than they’d pay for my best painting.
Even so, it’s extremely hard to find a bad Picasso painting. He got into the habit of destroying anything he made that didn’t live up to his standards, even though it would still sell. (Which is more than I can say for my best paintings.)
Picasso understood that in order to be the best, he had to consistently produce the best work. Anything less had to go.
The parallel in the world of entrepreneurship? Ruthlessly eliminating anything that proves unsuccessful.
There’s a spectrum here obviously. Some people are too quick to destroy things that may end up working. Others (who are more like me) hold on for too long.
- Listen To Your Partners
Sometimes it’s hard to determine what to abandon because we are too deeply, personally invested. This is the time to bring in outside eyes, to see things you don’t.
When a good partner tells you to walk away, trust them.
Here’s a way to know whether you can trust a partner to make this kind of call: they would let you do the same thing for them. When you identify something they need to walk away from, if they listen to you, chances are they’re a good partner.
Insight from others gives us crucial wisdom. That’s why I dedicated this season of my “What’s The Secret?” Podcast to racking up insights from experts in online business.
A good entrepreneur knows the opportunities to seize. A great entrepreneur knows the opportunities to walk away from. What do you need to let go of this week?