The other day I had an entrepreneur come to my house with $2000 in cash to give me, and here’s why…
Every time I go to an event I like to collect 4 or 5 entrepreneurs that I don’t know, and if I feel like they have good energy and are good people in general, I invite them to lunch.
This particular day, I was having lunch with 5 entrepreneurs and we were talking about different parts of their business, what they were passionate about and how they were doing in general. One of the entrepreneurs David, was telling me about his online toothbrush subscription company. Since I had invested in a similar company Manpacks, he was interested in my feedback.
He was telling me about his challenges and asking me for my feedback. I told him, “There’s probably one reason that you haven’t achieved your goals yet,” (and he’s all ears and listening) and I replied, “Number one, you haven’t decided. You haven’t decided what your goal is for this month, this quarter, or for this year… once you have that, you work backwards. But you haven’t decided!”
And he was like, “Well, I do have goals!” And I was like, “Yah, you may have a yearly goal, but you probably don’t have a monthly goal and you haven’t broken that monthly goal down into weekly goals. I don’t say this to be confrontational, but that would change everything.”
For years I’ve been doing this thing called the “Martell Bet.” Basically, the Martell bet is when I meet an entrepreneur at an event or a conference, they’re excited about their business and are telling me about what they are going to achieve, etc. And if I feel like they need just a little bit more accountability… I will make a bet with them (Don’t get me wrong, every time I bet – I hope to lose!).
So I made a bet with David and said, “Let’s pick a number. In three months what do you think you can achieve (his business was a SAS business, a subscription)? How many subscribers do you think you can obtain?” He gave me a number, and I said, “Perfect, now how much do you want to bet? $100? $500?” And he was like, “$5000!” I was like, “Whoa dude, like, you’re not even making any money yet, and you’re like 19 or 20 years old, I don’t want to take all of your money.
How about $1000? Are you cool with that?” He was like, “Yes, $1000!” “Ok, cause if you lose, that’s a lot of money!” And he was like, “Yah, yah.” (I also had his word that if he lost, he wasn’t going to put it on his line of credit!)
So I opened up my calendar, set the terms of the deal there, invited him to the calendar and then – expecting to lose – actually transferred, via paypal, my $1000 loss. I said, “Look, I’m going to give you the money now, do what you want with it, you can put it in your bank and hold on to it, you can spend it, whatever… but I want you to know that I hope to lose this bet. So here’s my money, I hope to lose and in three months, we’re both going to get an email reminder and I expect to hear from you.”
What Happens If They Lose?
It’s simple and I get them to commit before making the bet. Actually, since sharing this with my friend James Altucher, I’ve decided to record them in the future as well :).
- They have to pay me – and I always take the money.
- I get to write a blog post about it or a video and tell the whole world about it.
- I always let them know that if they lose, I am going to be helpful, regardless.
The Reasons Why I Make These Bets
It holds people accountable and gets people excited. You know, when you think about it, in business, people joke that you have your customers and your team to hold you accountable, but the truth is – you don’t. There’s nobody that says, “Ok, what are your goals for the week, the month, the quarter, etc?” That doesn’t usually happen. I also do these bets to get people excited – and sometimes people are just excited to have me involved in their business. So together we set a goal and they are now accountable.
It actually teaches them how to set goals. It blows my mind that in 2014 there are people in business who still don’t know how to set goals… and make them S.M.A.R.T. It’s not just about having more subscribers, for example, it’s determining that you want to have “x” subscribers, by “this” date. And even beyond that, it’s with “these” profit margins (because if you have to spend $10 to get $1, then you’re not building a business!). So helping people to define smart goals is something else that they will learn from this process.
It gives them an opportunity to stretch themselves. They get to feel what it’s like to have a “stretch goal” and do things that are exciting and kind of crazy. They may not know if they can accomplish the goal – but if they did – it would be amazing! It’s not a layup or a “knock it out of the park” goal… it’s a stretch goal.
I feel like people need to be asking themselves if there is more that they can be doing, if they can grow more or if they can push further. Apple is known for this. They set their initial goals, then they have stretch goals, and I believe it’s with the stretch goals that their managers get compensated.
So I made this bet with David and unfortunately, three months later he showed up at my door with $2000 in cold hard cash. He lost. But instead of emailing me the money, he asked if he could meet in person – even though that meant driving over 2 hours.
So I invited him over to my house for lunch because obviously I was a little disappointed that I won the bet – which sounds weird – but I wanted to make sure that I was still helpful to him, as I committed to earlier.
Here’s the neat part. It turns out that by going through this process, and really working hard to hit his goal, he realized that his business wasn’t that exciting, that the numbers would never really work the way he envisioned and there were a lot of other challenges with the business.
It wasn’t a bad business – it was just challenging – and it wasn’t something he really wanted to do anymore.
After realizing this, he ended up finding an acquirer in Silicon Valley for his company, moved from Eastern Canada to Silicon Valley and joined a new startup. It was the most amazing thing to see his excitement and to have him come and tell me that story in person.
I’ve probably made about 20 of these bets over the years and guys have either knocked it out of the park and told me it was the best thing they’ve ever done, or they failed but admitted that it helped them discover something deeper and more meaningful.
As an example, a friend of mine, Sam Rosen, ended up shutting down his business after “losing” his bet. His business didn’t work out, but he quickly moved on to his next business which is called MakeSpace. It’s an INCREDIBLE idea. Sam is an amazing entrepreneur and I hate winning, but I am super proud at how quick he moved and started building something HUGE!
The way I see this approach is that money only accelerates the inevitable. Either it works out, or it doesn’t.
Maybe the next time you meet with someone that you like, you’ll challenge them to a bet as a way to motivate them to reach a goal. It’s not about setting them up to fail, or because you think their ideas are overinflated. It’s about challenging them with the intention of motivating them by having more skin in the game.
To me, this is a neat idea and I will continue to do it. I usually do one per event that I am speaking at. I am obviously super passionate about other people’s success in business and I hope this inspired you to consider making bets in the future.
How have you defined goals for your business and life and kept yourself accountable? Leave a comment below with your answer.