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Ten Business Mistakes That Broke Neil Patel — and Also Made Him Famously Rich

by Maddy Holup

Oops, made a mistake? Not to worry, you’ve just put your finger on one of the key drivers of business success. Not only does everyone make mistakes, but missteps are essential to the long term viability of any venture. Without failing every now and then, there is little to learn from and less incentive to make what can amount to dramatic improvements or key course corrections in a company’s future.

Serial entrepreneur Neil Patel, who first grew his roots in Seattle as the founder of Crazy Egg and KISSmetrics, has profited immensely from the occasional blunder. In his recent keynote presentation at the Seattle Interactive Conference, Patel bared it all, leaving the audience with a number of instructive insights based on his own “expensive” setbacks. Not in spite of the friction, but because of it, Patel has managed to prosper.

Here’s how you can profit by example, seeing not only what mistakes to avoid, but how mistakes can better inform your business decisions as an entrepreneur:

Mistake # 1: Do You Have the Right Business Partner? Patel related his experience with partners who were often selected for precisely the wrong reasons: an Ivy League education, a “too cool” attitude, a willingness to “fall into line.” Patel’s “School of Hard Knock’s” mistakes gave him a greater appreciation of  the truer attributes to look for in a partner: Loyalty over Brilliance and Stability over Style are two. Patel urges fellow entrepreneurs to be picky about whom they choose to work with — write a good contract with shares that vest over time (just in case), and make sure your partner is financially stable to avoid straining the company.

Mistake # 2:   Time Isn’t on Your Side. The software industry moves fast so when you’re ramping up for market entry, you have to move just as fast.  Take too much time and other companies will “beat you to the punch.” Remember, launching your product and gaining a foothold in your market space is much more important than perfecting a version for launch. Getting the product into “distribution” as fast as reasonably possible is key, something Patel first learned from a slow-poke partner, when it cost him nearly a million dollars after taking twelve months to move the prototype to market. To avoid losing out, Neil suggests setting firm deadlines and creating smaller, incremental milestones along the way.

 Mistake # 3: Lack of Focus! Patel urges entrepreneurs to focus on one business at a time; taking on two can overwhelm you. When Neil tried to tackle several new projects at once, he ended up neglecting what was actually making a profit and lost revenue.  How can you avoid our generation’s ADD tendencies? Work on improving your offering as it is before you diversify. While innovating, the focus should remain on your core business.

Mistake # 4:  Not Building for your Customers, But Yourself. Patel related his personal experience working on a product that he dearly wanted to create, but that customers didn’t actually clamor for or desire. He learned that creating “minimal, viable products.” referring to the “Lean Startup” method, is a more efficient, and effective, approach. Patel emphasizes the importance of the product-to-market timing and fit.  “Perfection is overrated,” he emphasizes. “Getting your product to the market should be the top priority.”

Mistake # 5:  Not Keeping A Clear Mind. Patel advises, “Don’t make decisions based on your emotions, base them on your bank account.” He urges entrepreneurs to avoid burning bridges with companies, even if you feel burned or short-changed. Former allegiances can often surprise us.  Neil was once fired by a company just days before his stock had vested. He was miffed but kept his cool.  Soon after, his former employer intoduced him to a $500,000 account that he won. If he had lashed out after being fired, he would have spurned the relationship and never been offered the new opporunity. Patel says that taking a day or two to cool down and think things over  is never a bad idea.

Mistake # 6: Fogetting About Loyalty. Patel is adamant: Loyalty matters. Hiring good employees isn’t enough, you need truly loyal employees that will stick with the company through tough times. Work with people who fit within your culture and make sure everyone has similar short and long term goals.

Mistake # 7:  Missing the Sale.  The seventh piece of advice: Sell when you can. Don’t be overly picky with offers. Patel describes an experience where he was hesitant to accept a buy-out offer because he thought he could get a better deal. His position backfired and he lost a good deal of profit because of it. Neil learned that excessive amounts of money aren’t necessary. Don’t get greedy. Instead, take the fair opportunity when it presents itself; you never know what could work out.

        Mistake # 8:  Forgetting to Savc.  The eighth lesson Patel taught: It’s easier to save money than to make it.  Neil’s wake-up call came during a few reckless moments (trying to buy a Maserati sports car), when he discovered how saving your money and being more certain about what you’re spending it on is extremely important. He will cut his own salary before firing employees, understanding that respect and loyalty go both ways.

Mistake # 9:  The Meaning of “No.” “No” should always be temporary, never permanent. It means not right now. Why? There are too many times when a “no” can and should turn into a “yes.” Neil advises business startups, when being turned down by investors, to ask “Why?” The investor might not have a good enough reason to say no, and they might end up changing their mind. Patel confides that feedback from investors can be very useful, which leads him to his next and final point.

Mistake # 10: Not Keeping an Open Mind. Neil humbly admits that when first starting out he was overly defensive and didn’t know how to take constructive criticism. Today he advises fellow entrepreneurs to ask for criticism, not to wait for it. It’s imperative, and honest, to admit that everyone is still learning. Remaining open to other people’s advice is an important step to becoming a better businessperson.

   To err is human, to err and profit from the experience, divine.  Neil Patel has clearly grown from his mistakes. He’s a bigger person for admitting his foibles, and letting others learn from lessons where he paid the “cost of tuition.”  You get the course credits!  [24×7]