I lost $50,000 back in 2013 to a business with a “friend” (let’s call him John, he really has a more Latino name).
John and I had known each other since college, back in 1997. We both had amazing corporate careers in Venezuela, where we grew up, me as a Financial Planning Manager for McDonald’s and, John as a Controller for a mining company.
We met again in Miami, FL, in 2013. A few months after our first reunion, John called me and offered to partner with him in a mechanic shop. His business was booming and expanding to a bigger, better shop. I trusted him and knew he had a passion for cars and 4x4s since our days in college, so I jumped in without hesitation. The investment, $50,000.00, was paid full in cash.
Little I knew that going into business with John would cost me money, friendship, family problems, and almost an eviction record.
When my friend offered me the investment in his business, he already was deep underwater and he was looking for fresh money to keep going. Today, an investigative report from a Venezuelan newspaper found that he had done the same with over 30 people and, there’s a trial going on for the same reason here in the US.
Anyone reading the above story would think “Wow! John was a scam artist! He took advantage of his friend Alejandro” and “this is not Alejandro’s fault; he knew him for so long!”.
Well, let me tell you, the responsibility is 100 percent mine, and that’s what this article is about.
But before going into why the responsibility is all mine, let me tell you a little about how I learned to learn from mistakes.
As I mentioned before, I was at some point, Financial Planning Manager for McDonald’s. However, I didn’t start at that position. My journey with that amazing company started in 2001, as an administrative assistant in one location.
During a training course called Basic Management Skills, there was a segment called “peeling the onion”, that had a great impact on me, and that I still apply today.
Imagine you have an onion on your hands; after you remove the exterior yellow-brown layer, you face a round whitish ball of tear gas. If you start pulling away each layer with your hands, you will find a smaller onion each time, until you get to the core, which is very hard to tear by hand.
This process of “peeling the onion” is basically the same principle you can apply to almost anything that happens in life (especially mistakes).
So, going back to the beginning of the story, we have Alejandro investing $50,000 to his friend’s business. The result was a complete loss of money, friendship, time, etc.
Who’s responsible for the outcome? Let’s peel this onion…
- Start with a descriptive sentence, don’t include any conclusions or adjectives.
- Ask “why” to that first sentence, get an answer and then repeat until you have at least 5 cascade answers.The key here is to dig deeper on the previous answer.
- Start each answer with “because I”.
- After the 5th answer, take your time. It doesn’t have to be immediate, so think hard about it, and then ask yourself “What can I use this for?”
Let’s run my example:
Start: I say “I lost $50,000 in a bad investment with John”
Peel 1: Why? Because my so-called friend, spent all the money and I wasn’t aware
Peel 2: Why? Because I wasn’t there everyday at the shop
Peel 3: Why? Because I had a more interesting job and I didn’t want to leave it
Peel 4: Why? Because I don’t know anything about cars, so what was I going to do there?
Peel 5: Why? Because I saw the opportunity for easy money and took it, I wanted to believe his offer and never validated his assumptions.
Can you see how easily I went from putting the blame on John, to realize I saw an opportunity for easy money and wanted it so much to be true, that I blinded myself with the image I had of John 15 years before, and didn’t do any due diligence of his situation?
Truth is, I lost that money because I didn’t do my homework, period.
There’s a saying in Spanish, that translated would say “everyday a fool goes out, whomever finds him, owns him”. I became John’s fool the day I went into business with him, without checking his situation.
Disclaimer: it’s not always 100 percent responsibility of one part of the equation, on this very particular case it was.
Before we continue, do you feel this apply to you? Don’t forget to comment this article.
Now that you know how to peel the onion, let’s dig into how making mistakes will improve your life.
Here are 5 ways making mistakes will improve your life. The easy way to do it is by peeling the onion!
1. Making mistakes and failing will give you knowledge.
There’s no way to know success if you haven’t known failure, because you need something to compare to.
Don’t punish yourself if you make mistakes; learn how not to do the same mistake again! That’s the difference between knowledge and information.
If you know going into business without checking your partner-to-be situation is risky, you have information. If you have this information and you check your partner-to-be situation before going into business, then you have knowledge.
That’s why it is absolutely possible to learn from other people’s mistakes. Learn from mine; don’t go into business without checking numbers, even if it is an old friend.
I won’t tell you the Steve Jobs’ and Apple story, but I can tell you, that I recovered from that bad investment and now run a consulting firm, and I’m successful.
2. Learning from mistakes will boost your confidence.
When you gain this kind of power, you start seeing clearly. You learn almost automatically how to be careful on similar situations, and how to avoid doing the same mistakes so you can improve your life. That becomes a great confidence boost, because know you know that you have the power to control, or, at least, influence the outcome.
3. It’ll help you find justice, instead of revenge.
This is very important, because “an eye for an eye” and the whole world will go blind very soon.
Most of the time, when we feel aggravated or taken advantage of, our first emotion is anger. But anger leads to the dark side (Star Wars®), which means, seeking revenge won’t make you feel complete. That’s because two partially-destroyed won’t make one whole of anything, especially individuals.
Instead, when you realize that you had your share of responsibility, and that you demand and seek justice, when it arrives, you will feel much fuller and hopefully, redeemed.
4. It will help you avoid over-punishing yourself.
This is important, because the only remedy for failure is resilience. Resilience is the ability to recover from bad times; it is the capacity to get back on your feet. Have you seen how grass remains the same after a storm? That’s resilience.
Having the tools to learn from mistakes makes it easier to find a way out of misery. It will give you the will to try one more time, to improve your life – and that’s what creates successful people.
5. It will help you reduce scrutiny from others.
There’s a tendency to point fingers and overload on someone’s back when things go wrong. Why did this happen to you? How could you not notice? Why didn’t you do something?
These are questions that everyone seems to think they have the right to ask. Although it is impossible to avoid them completely, having done this peeling the onion exercise will give you valid, strong answers that will shut the subject rapidly, without much unrest.
A final benefit: it will give you the image of an expert.
So, how do you think this peeling the onion process will help you improve your life?
It sure improved mine. Shoot me an email if you want to talk privately. I’d love to hear your story.