The Dip by Seth Godin may be short but it’s message has occupied my mind for months since I’ve first read it. In this month’s book review, I wanted to dive into some of the most important parts of The Dip that have a potential to resonate with any budding entrepreneur.
But first, you should meet Edgar. Edgar is a rambunctious character. He is constantly trying to put his mark on the world around him. Ever since he was a young boy, he had the twinkle of the entrepreneurial spirit in his eyes. He saw opportunity in so many places but unfortunately could never quite apply himself.
He would often work tirelessly for hours but never seem to get anywhere. After weeks of hustling he lost interest and gave up. (Sound familiar?) He once took on this side project that lasted for several months but yet again quit before he could produce any tangible proof of success or failure.
Unbeknownst to Edgar, he was in what Seth Godin calls “The Dip.” “The Dip” represents the time and effort that goes into making a business a reality. Not only that but it is also one of the hardest times to work through and the easiest place to quit. It never feels good to be in “The Dip” (let me reiterate, it’s quite uncomfortable) but what Edgar didn’t know was there were some basic things that he could have done before starting his project that could have helped determine whether to pack up shop or keep chunking.
So, according to The Dip what could Edgar have done? Good question.
Define Success and Failure
In the entrepreneurial world, success is often attributed as running a sustainable business. The idea being that if your business is successful if it isn’t putting you into deep debt. Some people also consider other factors like number of users and number of sales when it comes to defining their success. I don’t believe there are any hard and fast rules but it really depends on the business you’re trying to run.
Failure though, which in my opinion is much more important, should be defined as well. Imagine that Edgar sets his sights on creating a profitable small business selling Knick-Nax. He decides that if he purchased a pallet of Knick-Nax and sell them all that his venture would be considered a success. So, he develops a plan, builds a website and buys the pallet of Knick-Nax with his credit card. The sales start trickling in but they’re not as substantial as he had hoped. Six months later the majority of the pallet is still sitting in his garage unsold and the credit card bill is looming over his head. A guy named Jim-bob reaches out to him over email about purchasing his inventory at a deeply discounted price. Does Edgar keep going or cut his losses?
Without defining his failure, Edgar may suck it up and try to keep pushing his Knick-Nax though sales have been lackluster. He may even try to put more effort into the project because of all the time he had already spent on it. This paradox is commonly known as the sunk cost fallacy. Defining failure, according to Godin, negates the effect that sunk cost (and thus your emotions) has on your decisions related to your business. He states that if we have reached the end of our metaphorical “rope” we should drop it and start anew. Remember, opportunities are like ocean waves, there’s aways another one coming.
Quitting vs Failure
There is a difference between quitting and failure. Quitting is giving up on a project whether or not you’ve learned anything useful from it (or earned any money from it for that matter). Whereas there is always something to learn from failure. Often some of the most successful people in history failed over and over before becoming the successes they are known for today.
Once failure is defined though, quitting is not allowed. Godin expresses that simply there is a ton of hard work in between the start of a project and the perceived success (or failure) of said project. It may be tough but, unless you meet your failure criteria there is not enough reasoning to stop.
Now that Edgar knows to define success and failure criteria around his projects do you think he will handle things differently in the future? My guess is that it will likely influence not only how he runs his projects but also how he chooses his projects.
Finally, stay tuned for another book review in the near future!
There are so many resources related to this topic. Most recently Jordan @ the Art of Charm interviewed Nick Onken. I highly recommend you listen to it as there are so many gems related to entrepreneurship, success and failure.
Also, my previous CEO had written about the acquisition of his company Sifteo. I highly recommend you read because as discussed before there is usually much more to learn about failure than success.