7/22/2007

Short Term Pain...Long Term Gain

Short Term Pain...Long Term Gain
Copyright © Scott Bradley

Has there ever been a time in your life where you took the easy route in the beginning but regretted it later?
How did it make you feel knowing that you could have prevented the disaster just by starting and doing things right to begin with? Why weren't you committed to doing the little things right up front?...was it because they were too "painful?"

On the flipside...

Has there ever been a time in your life where you put your nose to the grindstone in the beginning of a project, doing all of the difficult and time consuming things correctly...which then led to enjoying the fruits of your labor when all was said and done? How awesome did it feel?

During my sophomore year in college, I was introduced to this concept of "Short Term Pain...Long Term Gain" and on the flipside "Short Term Gain...Long Term Pain" in a class I took. As you notice...the words can be switched to read either positively or negatively. Peter Bell, the used to be CEO/Founder of Storage Networks, Entrepreneur, and now Venture Capitalist for Highland Capital Partners taught the class and shared this concept with us.

At the time, the concept came up in class when we were analyzing the WorldCom Scandal.

The way the class ran was we would have 2.5 hour class with the first half being a review of the case we had to go over that week, and then the second half of the class featured speakers in their network that they had awesome relationships with. They would give presentations about their experience and provide us with lots of guidance. If you are able to take this class at Boston College I would Highly Recommend it, the experience was awesome!

So back to WorldCom...Keeping this as simple as possible...Peter spoke about how by WorldCom touching up their books initially, which at the time was not a good thing to be doing with the state of the industry they were in...helped them and their stock price and earnings in the "short term"...but by starting that snowball rolling down the hill, the initial "gain" in the "short term" wasn't worth the effects in the "long term"...which we all know the result of.

The bottom line...The initial gain of fudging the numbers in the beginning wasn't worth the end result...even though initially the "short term gain" seemed worth it at the time...but the "long term pain" was the worst possible thing that could happen for the company.

This concept can also be applied to Enron...Which we all know what happened there...If you don't I would recommend watching the movie The Smartest Guys In The Room

So on the positive side of the phrase "Short Term Pain...Long Term Gain..."
It has taught me, and hopefully has shown you the importance of doing things right from the start, so you don't have to feel the brunt of the negative situation on the backend. Keeping this principle in mind as you go out to do anything you set your mind to is crucial.

Here are a few examples I can think of regarding this issue:
1) If you are looking to build a website...don't just go with the first designer who raises their hands...Take time to search out someone that is right for the job...because initially if you just choose someone up front, without checking out all of your other options...you may end up dissatisfied with your finished product.

2) If you are a business and are looking to promote your product...don't spam people, forums, Myspace, Facebook with your messages because...while on the front end you may get a few sales...your reputation on that backend can be severely tainted...To fix that...instead of spamming people up front, research ways to effectively market your product to your targeted audience, which will open up an never-ending stream of new customers and business…and then take action to implement it.

3) Always be ethical no matter what you are doing, or what you are participating in. You only have one reputation to protect, and while you may scam a person once...and get the short term gain from it...all that person has to do is tell everyone in that industry and your reputation is done, never being able to recover from it ever again. The reason that is, is due to people not being able to trust you…in business this is one of the most crucial elements to creating win/win situations.

You have to consistently think about how the actions and things you participate in today, will later effect you and your reputation in the future. Is what you are doing today giving people in your network an asset to go to for help, or pushing them further and further away from you, making them look elsewhere for help and resources?

In closing here are a couple quotes that embody this ideology that I came across:
"Anything worth doing is worth doing poorly before it can be done well"
"Rome wasn't built in a day"

What are your thoughts on this issue? Do you have situations in your life that you would like to share regarding this topic?

Have a fantastic day!
Best,
Scott Bradley

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I will no longer be posting to this blog.
Click http://www.NetworkingEffectively.com to visit the new blog
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4 comments:

Steve Cadoret said...

Scott,

Great post man. I always liked the quote that we've talked about numerous times regarding reputation and meeting new people: "You never get a second chance to make a first impression". Also, it is interesting how a lot of these important lessons are learned through failure first. Keep up the good blogging.

Your partner in crime,

Steve Cadoret

Read my blog!
http://SteveCadoret.blogspot.com

Peter Bell said...

Scott,
Great to read your blog. Your perspective on short term vs. long term is well thought out. See you on the Heights this fall.

Freddie Sirmans said...

Just browsing the internet, very, very interesting blog.

David Mullings said...

Jamaicans have a saying that "Long cut draw sweat; shortcut draw blood" - simply meaning that the long way of doing something only results in sweat but taking a shortcut often requires blood.

When we see cases like Worldcom, I think we need to understand what drives people to do things like that - my answer is simply greed and focusing too much on Wall Street's expectations (which are also built on greed).

Companies that run their business for the long-term are not preoccupied with their short-term stock price because over time, like Waren Buffett's portfolio, they will grow at a great rate. So my advice is don't be focused on the short-term so much that it consumes you.

You asked for examples in our lives, well here is one, our single biggest mistake that lead us to run out of cash last year.

We had watched our Godbrother, one of our advisors get VC funding of $1.5 million for his web start-up in less than 9 months a couple years before we started ours. When we decided to start ours, the media always focused on VC deals and getting funded - so that became our goal, to get funded by a VC and take the company to the next level.

I asked my Godbrother how to increase our chances of getting funded and he said that we would have to gain traction by getting lots of users. If we could generate income, great, but users come first. He also said that if we built it, he could setup some meetings and also investors would come knocking.

So off we went, negotiating a deal so that we didn't pay for extra bandwidth. By Mayy last year we used 4TBs for the month - yes, 4,000 GBs on a website run by two people, ages 25 and 24. The users were there but no one was knocking and no money was coming in either (you can hardly consider $80 per month revenue).

So June came and we were informed that the hosting company had a new CEO and his first order of business was to charge everyone for bandwidth overages - mind you our limit was 1TB (1,000 GB). The cost would be 75 cents/GB over.

The end of June came and we got the bill - we had used 5TBs so our overage was 4TB which meant the bill was a whopping $3,125, up from $125 for the last 4 years. My American Express that was always automatically billed for hosting had a line of $10,000 so wham....$3000 gone.

We started pressuring our Godbrother to get us in front of some people or invest himself (he runs a private equity firm with $40 million under management) but no luck.

July came - 6TBs this time! When the $3,750 charge showed up on my Amex bill, I cried. Then Amex called me and asked what the hell was that charge for. They then told me that I can't use my personal card for business - I told them I could do what I want with the credit.

July passed and no luck so my brother and I made a tough decision, we would have to get money or stop until we got money.

On Aug. 3 we got a phone call:

"Mr. Mullings, this is your hosting company. We are calling you to let you know that you have used up all your bandwidth. What would you like to do?"

Our answer: PLUG IT OUT! As in, physically plug the server out of the network, shut it down.

He asked us if we realized what that meant and we said "Yes, we won't have a $5000 bill this month!"

The site was shut down from last August until it relaunched the end of April this year (without much money) but with monetization in place, not the drive to build with investors in mind.

Things are going WAY better this time around. Learn from our mistakes - September was the worse month of my ENTIRE LIFE - I have never been so depressed. I kept the Amex bills so I can frame them.

The site is www.realvibez.com