In the early years of my entrepreneurial life, now over 25 years ago, I had the experience of finding out how my ego could both help and hurt me – as a sword it could cut either way! As a young businessman learning the financial planning industry I quickly experienced success by going after the “elephants” – those potential clients whose assets were already well developed and all they needed was to feel confident in who they were receiving advice from. So since my youth was against me – as a 26 year old giving advice to someone in their forties or fifties was not common – I had to be very confident in what I said and how I carried myself. To a large degree this came across as having a strong ego and allowed me to take risks or approach situations that I really should not be in – to be able to wield my sword with confidence. I fondly remember one of my clients, an economics professor at a local university, finally agreeing to do some business with me after I kept sending him info and suggestions for a year. The first transactions he wanted to do was find and purchase discounted Argentinian Bonds – as this was at the height of their economic crisis in the mid-1980’s. Of course I had no idea how to do that, but I confidently told him I would see what I could come up with. After researching the international bond market I was able to identify the availability of Argentinian Bonds at $0.12 per $1.00 face value through a trading desk at Dominion Securities (now RBC Dominion Securities) and let the client know of the opportunity. Since I was not licensed for this type of trade or with Dominion I had to refer the whole transaction to Dominion and they were able to secure the trade – in which I made no compensation. The ability of my ego to help me create this successful trade generated great trust with the client and they proceeded to move a six digit securities account into my advisory services and refer many of their friends and associates to me – which of course all resulted in more than enough compensation to make up for the lost income of that first trade!
As my success grew in the financial industry, resulting in me co-founding my 1st company in 1988 with 4 partners and then buying them all out two years later to control 100% of the firm, my ego grew – and my sword cut a wide swath! My financial firm continued to grow and in 1993 I joined the Young Entrepreneurs Organization (YEO), now EO – the Entrepreneurs Organization. Somewhere in that time period of the early ‘90’s my ego transitioned from a strong ego to a big ego. It was only years later that I was able to recognize and then finally accept that this had occurred. I think part of that transition occurred because as I found success I, or should I say my ego, craved it more and wanted to flaunt it – especially since being in my early thirties and controlling a financial firm doing millions of dollars a year in revenue was unique. Business in Vancouver recognized me as a Top 40 Under 40 recipient and Profit Magazine placed my firm in the Top 100 fastest growing companies in Canada. YEO in the 1990’s was also a rallying cry for many entrepreneurial big ego’s – as the mantra ‘know thy YEO peer” meant that if they were doing “big” things then I had to keep up! Growth was the #1 goal at that time and trumped, sadly, cash flow and profitability. EO has matured immensely since those early years – with a good presence of strong ego to keep the big ego’s in check!!!
So how did big ego manifest itself for me? I leased a BMW 700il for close to $2,000 per month when I should have been paying down my mortgage, or making a RRSP contribution, or building some savings for a rainy day! I attended EO conferences at great locations around the world, but didn’t pay attention to the increasing quality of wisdom being shared at them – being content to flit between sessions and stay out to late into the evening with the rest of the “Bigs”. My big ego overrode the logical, rationale choices in order to feed itself – because it told me I deserved a BMW, or I needed to be at the YEO Lake Tahoe university – but skip some of the sessions to go ski!!! There were many other examples of my big ego feeding itself and as long as the company continued to grow I was able to get away with it – and not see the precipice that my big ego was leading me towards – and the upcoming cut of the sword going against me.
By 1996 we hit $1 billion in assets under administration but just barely broke even – as my big ego had structured the company to attract the top salesman in the industry by paying out 100% of the commission and charging a flat monthly fee. This drove our sales but didn’t allow for the infrastructure, risk mitigation, compliance and of course cash flow & profit to keep up – I could feel the edge of the sword pressing against my neck, it was a sharp edge. I started to figure out what changes needed to be made to drive revenue higher – but the biggest ones meant reducing the commission fee paid or significantly raising the monthly fee charged, both of which meant going back to those salespeople I recruited and explain to them why I was “changing the deal”. Big egos don’t do that and since I hadn’t realized that my ego was big and now controlling me I took the approach of Strategym #16 in The Art of the Advantage, written by Kaihan Krippendorff, and realized that sometimes the best strategy is to retreat. I could not jeopardize my big ego so I sought out a buyer for my business. So strong was my desire to retreat that I took the first offer that came in, did no due diligence on the buyer and accepted terms that included only 10% down and 90% to be paid out over the next year. But my big ego was safe – I didn’t have to face the salespeople and “change the deal” and I could move on in my life, so I thought. I didn’t acknowledge that the sword hadn’t been removed from my neck – just merely repositioned it so the edge of its blade wasn’t nearly as threatening.
Fortunately, at least in hindsight now, the next year beat the crap out of my big ego as the buyer of my business reneged on completing the sales agreement and paying me – resulting in me spending the 10% I did receive to pay lawyers to try and get the other 90% I was owed, but would never see. As it turns out the buyer was a fraudster and the BC Securities Commission realized this a few months after the sale and within a year found a minor offside in the company I sold. They determined that the net free operating capital was offside and shut it down. Their auditors were in control within a week and with over $2,000,000 of cash in the company’s bank accounts (mainly the salesman’s commissions) at the time, the auditors billed just over that same amount in the next year to clean out the company. Hard for an ego to stay big with that type of bloodshed – lives disrupted, salesman commissions usurped, and some would never recover.
The sword had swung the other way and there was nothing I could do but learn from it, lick my wounds, realize the role that my ego had played and accept it. As I said, it is only in hindsight that I can say that now, because at the time it was unfortunate – but that was just the representation of the pain my big ego was being dealt. That process took a couple of years, but the last part, accepting it, finally allowed a new strong ego to start emerging within me. A strong ego that every entrepreneur needs to grow their business, take the risks and persevere through the tough times. Since that company I have founded, co-founded or been the majority shareholder in 4 subsequent ones, each better than the last and have tried to keep my ego strong and ever wary of the big ego being around every corner! I want to continue to use my entrepreneurial ego in a strong fashion and avoid the double edge cut of the sword that a big ego can cast.