A couple of weeks ago I decided to write about my $600 mistake philosophy. It’s the idea that I’ll try something completely risky and unproven as long as the worst thing that happens is a $600 lose. This could be working with a new vender or contractor. This could be trying a piece of software that seems really promising. This could mean advertising in a new unproven way. This could mean buying a plane ticket to meet about a promising opportunity. $600 is my threshold for paying <em>enough</em> to learn from a mistake, but not enough to cripple my business.
I was so concerned with wasting a single dollar to kickoff entrepreneurial ventures before leaving corporate America, that I was often hand tied on making any meaningful progress. When I would attempt to build ideas or work through opportunities with no margin for error, I often failed before I began. I would refuse to pay for a service that I could perform even though it would save critical time. I wouldn’t pull the trigger until I’d found the perfect person to work with on it and considering my prices were lower than market rate, this became almost impossible to find a great partner unless they were a friend (which has its own problems).
I hope I don’t sound like I throw around $600. I really don’t. Talk to anyone that works with me and you’ll find I fight hard on negotiating as well as trying to be fair. On the flip side some people reading this might say that you can’t show any meaningful results with a $600 investment. In some cases/company phases that is probably true. But for a startup you can’t be afraid to take some risks that require small injections of capital. Find the middle ground for learning a hard lesson but not collapsing your company.
On the flip side I’m sure some people are laughing that I consider $600 to be anything at all. I used to have one of those ballon budgets, and I understand when you’re spending $1MM on marketing alone, wasting $600 is small potatoes. But if you have a $1MM budget, you should spend $20k on 5-10 smaller one off projects that may or may not produce something meaning. At that rate if it produces nothing no one will scream for your head, but if it does produce then at a $2k price tag, at best you’ll be the king of the office. At worst you’ll be looked at as innovating and taking risks.
I mentioned that I was going to write this a couple of weeks ago after I’d spent $600 on something that I knew I should cut off. Rather than taking the hard step and killing the project, I let the cost exceed the $1,000 mark (the mental mark where my attitude completely changes). When I test something/someone that produces nothing meaningful that costs more than $1,000 it creates a small tumour in my brain that takes weeks/months to go away. I now have a couple of new tumors when I really shouldn’t have any.
Take enough risks to learn valuable lessons, but be smart enough to cut things off before those errors turn into devastating mistakes.