In this situation I’m the guy on the left
I have a confession to make. I am one of the worst losers you will ever meet. Losing is not, has not, and will never be fun for me. It’s one of my biggest identified character flaws. I (at least I think) am a pretty gracious winner, but losing just flat out sucks. My wife tells me regularly that I’m the most competitive person she has ever met. It has never been meant as a compliment.
Now being extremely competitive has helped on the acquisitions front of our business. When I make an offer I’m playing to win, working twice as hard and doing everything I legally can to ensure we come out on top. But guess what, we still lose deals. Regularly. This post serves in part as a retrospective on a recent stinging loss, but primarily as a reminder to myself–and hopefully an inspiration for all entrepreneurs–that you’re going to lose. Business is competitive and you don’t win them all. But how you react to a loss is the key to long-term victory.
The Loss
So what happened? Last month we lost out on a really great deal. As I mentioned, we lose out on deals all the time, but this one was especially painful. It was an amazing opportunity, right in Wildhorn’s sweet spot. It checked all the boxes we look for–a great value add story, long-term owner, self-managed, off-market, and a thriving location.
Without going into too much detail, the process was 12 days from start to finish. We discovered the deal on a Friday, and spent the entire weekend completing our initial underwriting. Monday we drove down to view the property (which looked great) and placed our initial offer that night. One week later we got the chance to meet the seller and present our business plan, knowing there was one other group involved and the seller was going to make a decision after our meeting. We left that meeting knowing we had built a better connection with this seller (important in this case) and strongly believed we were going to get the deal. Two days later, we heard that a mystery third party had entered into the mix late in the game. They had been awarded the deal.
I was stunned. And pissed. Thinking about it almost a month later still makes me upset. I think it will for a long time to come. This was a big deal for me, the type of deal you see once every 3-5 years. I hustled about as hard as I ever have to make it work. I thought we had this deal in the bag. I did everything right. We still lost.
Rebounding As an entrepreneur, you face loss all the time. A game changing client chooses a competitor’s bid. An investor turns down your pitch for funding. A stellar job candidate rejects your offer. The more often I’m presented with loss the more I’ve focused on what comes next. How do I respond? How do I learn from it? How do I move forward?
Here’s my best stab at putting into words how I’ve been able to make the most out of a hard L, and what we did specifically in this situation:
BREATHE
Take a step back and get some perspective Depending on the size of the opportunity and the amount of time you’ve invested, this could be an hour, an afternoon, a day, or a week. The important thing is to recalibrate and take stock of everything good that’s going for you in your life and your business. A good chance to practice your gratitudes. Luckily for me, we had a vacation on the books already. Spending a week with my family was the perfect recipe to cool down, breathe, and take a step back. It helped me see how lucky I was to have a great wife and kids in my life and that overall life was good. Business was good as well, we had just closed on a 253-unit complex. It’s not like we haven’t been busy! And, if we had gotten the deal I would have spent my vacation working. If that vacation wasn’t already on the books, I would have found another release. Going golfing the next day would take me away from thinking about the deal as much as possible. Diving into a recreational activity, even for a short amount of time, is a great way to recharge, reset and take stock of the good things in your life and business.
Perform a Retro
Review everything that happenedIn the AGILE development framework retrospectives are performed after each sprint to keep the team aligned and performing optimally. As part of that process, they ask two key questions.–What do we want to keep doing? (what’s working) –What do we want to stop doing? (what’s not working)
I think this is a great framework to work through after a loss (or a win) and a practice we do after each deal. For example here’s Reed and myself giving a retro on his podcast with regards to the 192 unit complex we closed on last year.
So what worked in this deal?Surprisingly, a lot. We were competing with a large equity group that was offering all cash. Until the late entrant, we had outcompeted this 800-lb gorilla and were going to get the deal ahead of them. Our presentation to the seller, relationship building skills and overall track record worked. We were also able to create several new relationships that will pay dividends in future deals. We met a great new lender that offers non-recourse bridge lending, and a new investor that was excited to be a Key Principle with us. As we look to the next deal, we now a deeper pool of resources we can call upon. Taking stock of these sorts of accomplishments is so important to remind me that a job done well is never a waste of time.What didn’t work?
Clearly our communication with the broker. Perhaps we missed some signals they were trying to send, or just misread something. But we were pretty blindsided when we learned about the 3rd party. When we got back from vacation, and I had calmed down some, I sat down with the broker to review what had happened and explain my thought process and what I heard during the pursuit. In the end, going through this ordeal will strengthen my relationship with this broker and I learned a lot about his communication style during a deal.
Refocus
Channel energy into the right places Even after our vacation, I told the story of this deal probably 15 times to various people inside and outside our business. I was still processing and venting. But at some point, you’ve got to move on. Take the lessons learned, embrace the positive things that happened and move forward. My coach has a saying: “Where focus goes, energy flows”. After the 15th telling of this story, I just decided I needed to stop. The deal had passed and I was spending too much time and energy reliving it. I had documented the positives and it was now time to put them into action and get serious about finding the next deal.
As the great Vince Lombardi once said, “Show me a good loser and I’ll show you a loser”. While this quote definitely lacks tact, I think it has some worth. On the field, in the boardroom or in the construction site I do not see failure as an option. I like to win, nothing will ever change that. It’s how I respond to loss that I’m still working on.
What’s your best recipe for overcoming a setback?
