What Not to Do: 5 Lessons From Failed Unicorns

The name unicorn — a burgeoning company valued at over $1 billion — turns heads in the business world, but in actuality is far from a guarantee of sustained success, or even survival.

Many companies with the requisite amount of passion, planning and smarts have fallen by the wayside due to hazards, both internal and external. When you run a business, you must constantly learn from the mistakes of others, even those outside of your industry. This is a unique time to build a business, and even though you may not be in the tech sphere like most of these companies, there are real lessons for enterprises of every stripe to learn from, and hopefully, avoid.

1. Don’t overpromise.

Lofty goals are an important thing to have, but your business can’t be based on something you’re not ready to deliver. One of the biggest stories to come out of Silicon Valley last year was the startup Theranos, which promised a quantum leap forward in blood testing technology. Their tests, Theranos claimed, could perform a number of health assessments far beyond what was already possible. People are always eager to find the next big leap in tech, and one tied to the field of healthcare carried extra attraction.

Unfortunately, the facts of the tech didn’t bear out their lofty promises, and the company is facing the ire of investors and even Congress in order to answer for their false promises. It’s not impossible to imagine that Theranos might have been a successful company if not for the blind ambition that led them to overstate what they were truly capable of. Desire is a powerful fuel for any company, but you can’t let it drive you off a cliff.

2. Value your workforce.

The public’s trust is just one of the many intangible assets of your venture whose value can’t be overstated. One slightly more tangible one would be your workforce. Whether a startup with a handful of employees, or a massive conglomerate employing thousands, the people on the payroll are the ones who keep the engine moving, and to abuse them only hurts you.

The coworking spaces run by unicorn startup WeWork (52 locations in 16 cities worldwide), a glittering lure for young businesses, were the subject of some serious labor disputes from cleaners looking to improve their working conditions. The company responded by firing everyone in one fell swoop, showing a drastic misreading of the situation that caused irreparable damage to their image. In the drive to expand, the company sadly neglected to properly value the people who helped make it great, and they continue to pay a heavy PR price.

3. Be realistic.

After receiving huge valuations, it’s understandable that many of these companies have gotten carried away with their optimism. The temptation to spend like you’re already one of the big boys can take you down if you’re not quite at that level yet. Growing realistically and incrementally gives you and your organization the strong foundation necessary to avoid toppling over as you grow. Patience is a virtue, and a lack of it can bring you to the end.

Fuhu was a fast-growing children’s tech outfit which successfully made the leap from software to hardware but went off running a bit too far when their revenue projections outstripped their accounting department’s more realistic estimates. The pressure to meet these predictions was too strong, and new products aimed at bridging the revenue gap flopped, leaving them $100 million in debt to their supplier. After declaring bankruptcy, they were bought out by Mattel at a tiny fraction of their original valuation.

4. Honesty is paramount.

Your customers and clients are the most valuable assets of your company. If you’re not honest with them, you’ll inevitably come to regret it. Just a few years ago, the daily fantasy sports companies DraftKings and FanDuel, two competitors selling a virtually identical product, blasted sports fans with advertisements featuring people who had won huge amounts of money from their services and promising that these riches were well within reach of every user.

The fact, of course, was that a small minority of obsessed players were making the big bucks, while the casual users that the ads were aimed at ended up being taken for a ride. Not only that, but employees were using internal information about playing patterns in order to win money on the competitor’s site, showing a grievous top-down failure to police company culture. Not to mention the negative attention for their pseudo-gambling practice that drew ire from multiple state attorneys general. This fundamentally dishonest business practices gave these companies some astronomical success in the short term, but their influence and reach has dwindled today, less than three years later, to nearly nothing.

5. Get ready for serious competition.

You can have a great idea, but when you’re beginning as a startup, it might not occur to you that you’ve got enormous potential competitors in your future. As you get bigger, you must be ready to confront the entrenched interests that are already in your field. Don’t be surprised when they strike back in a big way.

This lesson was learned by Evernote, famously called “the first dead unicorn” by Business Insider. Their business software products gained them heaps of attention and venture capital, but stagnant growth meant that by the time they were on most people’s radar, their products were already being undercut by new offerings from Google, Microsoft and Apple. Even in tech, where a small organization can establish themselves among the bigger players faster than most industries, name recognition goes a long way, and now Microsoft’s OneNote and Google Docs have overtaken Evernote’s product suite and left them behind.

These companies are, of course, only a small sampling of the many highly-valued firms that have popped up in the past decade. The “unicorn” label doesn’t have to be an albatross for growing businesses to wear around their necks, but it does provide an unwelcome spotlight when they slip up. By not letting your revenue-based dreams interfere with smart business practices, you can ensure you’ll stay alive and relevant, unicorn or not.

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Stop Glorifying ‘Winging It’ and Make a Plan

Staying focused on whatever is the next thing gets you nowhere without a plan. Preparation and analysis are key for any business leader.

This past spring, the Fyre Festival was touted as the most luxurious music gathering ever put together, featuring five-star chefs preparing lavish meals and high-end lodgings. What attendees got instead were cheese sandwiches and disaster tents. The culprit of this high profile fiasco, as discussed by one employee who abandoned ship early, was a top-down failure to adequately plan the proceedings. The dangers of faulty planning were put on embarrassing display to the entire world.

Any pursuit carries some risk.

Any worthwhile pursuit will carry some amount of risk. That’s a fundamental truth both inside and outside of the business world. While there’s no shortage of motivational appeals to jump right into a new endeavor with both feet, that approach will frequently result in disaster. With all that’s on the line, why take those unnecessary chances? Without proper planning and preparation, you’re setting yourself up for failure more often than not.

The hard numbers will tell you the truth.

Preparation in a business environment means acknowledging the importance of crunching numbers and truly diving into detailed analysis of the potential pitfalls and benefits of any new endeavor. When you plan things out properly, you’re building the framework for success. When you fail to do so, you’re already starting out in the negative.

Facing fear for a change in your opportunities.

Of course, this doesn’t mean being afraid of change or opportunity. What it truly means is having the mental equipment to take a great idea from a thought to a reality. Whether opening a high-rise apartment building or running a mom-and-pop shop, any type of ownership will require an understanding of the importance of getting into the nitty-gritty of numbers. It’s the essence of truly being prepared to put your thoughts into action.

How will you research?

In order for numbers to be crunched, you’ll need to gather them first. Research, in a business context, can refer to a number of different methods. There are a multitude of ways that you can gather data for your company: from focus groups and customer surveys, to web analytics to measure your online presence, to the budget numbers in your internal books. Depending on the decision to be made, proper and thorough research must be performed accordingly.

Read publications online about your subject.

There may be other businesses with experience in whatever venture you’re trying. While you’re not always going to be the first to try a particular idea, you can be the best with intelligent and comprehensive research. Even a cursory Google search can offer a wealth of information about the strategy you’re considering. Business publications both online and off are so numerous that there’s a good chance at least one of them has written something on the subject. You’ll be remiss if you don’t make the time to take a solid look.

There’s so much to be gained by thoroughly assessing your ideas and the environment you’re going to be working in that it should be a key aspect of every move you make as an entrepreneur. All decisions affecting the bottom line need to be up to your personal standards of rigor. Running a business means knowing every aspect of what’s happening within it, from top to bottom. If you don’t have that knowledge, you’re not doing your job, no matter what industry you’re in.

The importance of data analysis shouldn’t be lost on any business owner. Your organization might not have the need for big data gathering and software, but you will still need to be able to assess the information at hand in order for your company to perform at its best. Every piece of data, from sales numbers to office supplies ordered, should be informing the way your business is run for the most efficiency.

Business data, in its many forms, will provide a thorough understanding of the numbers that make up your company’s comings and goings. When you’re preparing your business plan, those numbers are what your investors are going to be looking for. When selling your ideas, you can always expect to hear the question “what do the numbers look like?” You might remember from school that math truly underlines all of life, and this wasn’t just something your teacher told you to keep you quiet. It’s incredibly true, especially so in the business world.

The major thing you’re looking for when you crunch those numbers are the patterns that will define the direction your endeavor goes. They might not look like much to the untrained eye, but they can spell out a business’ future to a properly prepared one. Pattern recognition is one of the fundamental aspects of learning and understanding, and one that you should be looking to master if you want to put your great ideas into practice.

A full grasp of this skill set means that you’ll see things that others won’t. In the data, you’ll find the indicators of a promising venture or a doomed disaster. Knowing how to ascertain the meaning of the hard data that you’ve gathered means the life of your enterprise. It’s about seeing the truth buried within all the numbers.

These skills are more valuable than ever. A study performed by GlassDoor to assess the top jobs in America based on satisfaction, salary, and openings ranked data and analytics-centered positions in 3 of the top 5 spots. What that means is that more and more businesses are coming around to the idea that you need to be able to crunch the numbers and assess your data to get to the top (or remain there).

By placing a high priority on data collection and analysis, you’re giving yourself a major leg up on the members of your competition that don’t. You might not necessarily have a dedicated research or analytics department, but if you can find it in your time to gather as much information as possible before making major financial decisions, you’ll see the benefit in short order. The numbers won’t lie.

This One Habit Makes You a Most Productive Entrepreneur

This post was originally featured on Entrepreneur.com

What I love about the real estate business is that each new property presents unique challenges to learn and grow. This is especially true in New York, where every building has its own way to inspire.

Sometimes it’s just marveling at a beautiful piece of architecture. Other times, it’s digging up the history and understanding how the builders overcame the special challenges within the building. Often it’s pragmatic — figuring out how to creatively modernize a new condominium. No matter what the situation, there’s always an opportunity to learn.

Self-education is the one habit you need to cultivate, because it drives your productivity, pushes you to new heights and lights a fire underneath your feet as you carve your own path. That commitment to continuous learning leads you to everything else.

Here are five tangible ways self-education gives you the golden ticket to success as an entrepreneur:

1. It saves you time and money.

Twenty-four hours is never enough for an entrepreneur. A commitment to self-education could potentially save you weeks of time — and your bank account.

Case in point: Alibaba founder Jack Ma rode his bike 45 minutes everyday to an American hotel just to improve his fluency in English by talking to English-speaking foreigners. Ma did this for nine years starting at the ripe old age of 12. He ended up speaking English so well, he became an English teacher at his local school in China. His eagerness for self-education is no doubt the reason Ma is now worth approximately $35.7 billion.

For the entrepreneur building the next billion-dollar app, this means gaining a basic knowledge of coding and user interface design beforestarting a project. While it may take a little time and investment up front, it will ultimately save hours and thousands of dollars because you have a basic understanding of these worlds.

The smart entrepreneur understands that his or her investment in education will reward them with both short-term and long-term benefits.

2. It builds confidence.

Being an entrepreneur is one of the most challenging jobs, especially if you want to stand out in New York. There are constant hurdles, and you’re never short of opportunities to throw in the towel. On top of that, it’s easy to fall victim to your own doubts.

Learning a new skill and using it to push through a challenge can give entrepreneurs a massive boost in confidence. It’s been shown that there is a strong link between education and confidence. It gives you the motivation you need to push through the humps that come with being an entrepreneur.

3. It opens new opportunities.

One of the projects that challenged, but inspired, me the most was installing solar panels on the Atelier Condos. It forced me to learn everything I could about solar and renewable energy. On top of that, I got involved on the design side as we went through revisions trying to perfect and refine the use of the panels to add an efficient, yet modern element to the building.

By undertaking that project and learning about the future of solar, it opened so many new doors for me personally and professionally. And though the idea-to-implementation period was longer than I would’ve liked, it is by far one of the most rewarding projects I’ve tackled. In fact, I’m planning to install solar panels in other River 2 River properties.

I’m now able to talk fluently about solar technology and renewables, which has afforded me the opportunity to speak and write about sustainability and the non-profit space.

As an entrepreneur, you simply cannot predict what new business and personal opportunities you could unleash by learning something outside your comfort zone. Through it all, Atelier stands as a beautiful step forward for integrating alternative energy and modern aesthetics in New York City.

4. You’ll be sharper and happier.

I love real estate, particularly New York real estate, because it changes so fast. I have to stay abreast of current events, market shifts, etc., because the environment, neighborhoods and tastes of my clients evolve constantly. If I stop learning or if I stop reading, my business will suffer because there are people out there waiting to “eat my lunch.” I’m telling you, NYC real estate is not for the faint of heart.

Investing in your self-education keeps your skills, your brain and your outlook sharp so you have the ability to adapt. And the bonus is that constant learning also makes you a happier human being. Even amoebas get bored and unhappy when they keep getting hit with the same stimuli over and over again.

Not to mention, keeping your skills sharp will ward off things like Alzheimer’s. In other words, an active brain makes for a happier brain.

5. Your gray matter makes you better at business.

There is something to the old saying that “variety is the spice of life.” Entrepreneurship can be a grind. It’s easy to lose yourself in the constant responsibility and busywork. That’s when you start to get complacent. You develop blind spots and become vulnerable to your competition.

That’s why self-education is so important. Discovering new ideas that are unrelated to your business can release your creativity and give you perspective on your business that you would otherwise miss. Trust me, this can be the difference between life and death for your passion project.