When Not Taking a Risk Is the Riskiest Path for Your Company

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That is an excerpt from “Crossing the Desert: The Energy of Embracing Life’s Tough Journeys” by Payam Zamani. On the age of 16, Zamani fled spiritual persecution in Iran and made his strategy to America as a refugee. At 28, he secured a billion-dollar IPO. Right this moment, he’s redefining what it means to be an entrepreneur.

Again in 1997 once we employed a CFO at AutoWeb, I had change into the manager vice chairman. Not precisely a satisfying title for the cofounder of an organization, however I didn’t care a lot. My brother Frank was the CEO, and we had a fantastic partnership. It doesn’t matter what my title was, I used to be all the time the primary gross sales and advertising and marketing man at AutoWeb, and I beloved it. We knew our roles, and we made our partnership work.

Coincidentally sufficient, at some point, in the midst of numerous sweeping change and development, Frank got here to me and stated, “I don’t need to be the CEO anymore.”

I can’t say I used to be stunned. I may see that the tasks of the CEO function had weighed on him. It was all simply extra weight than my brother was curious about carrying.

So I turned the CEO.

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And the primary choice I made was a giant one; a choice primarily based on an thought I had, which the board had stated no to from the second I pitched the idea of adjusting to a lead-gen mannequin. Extra importantly, it was an concept that my brother wasn’t enthusiastic about, both.

As a enterprise, we have been dropping $500,000 a month in the summertime of 1998. We have been bringing in about one million in income per 30 days from promoting leads, however we have been dropping half one million bucks. That’s a giant a part of the explanation why we needed to preserve elevating cash. To treatment this, and in addition to make AutoWeb a greater expertise for customers, I wished to present prospects the chance to ship results in multiple dealership; to permit them to get a number of quotes on the autos they have been curious about; primarily to get the dealerships to compete with each other for his or her enterprise.

(As much as that time, when a buyer would ship the lead, it could go to the dealership that was closest to them, by way of bodily distance. One dealership, which generated a single lead-gen charge of $29.95 to us. That was it.)

My brother’s response to my thought was, “For those who do this, you’re decreasing the worth of the lead for the dealership; as a result of now that lead goes to a number of dealerships and that can routinely scale back the worth of our leads.”

So I stated, “Nicely, we’ll restrict it to 2. Let’s say you can’t ship to greater than two, at the least originally.” I famous that some customers made a behavior of going to multiple dealership to get a number of presents anyway. “So, if we permit them to get what they’re after from our platform, then we preserve them inside our platform.”

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Now, as CEO, the choice was mine and mine alone. So I launched my thought—and our income doubled in a single day.

That was one other life second: It modified the trajectory of our firm.

The corporate went from dropping half one million {dollars} a month to creating half one million {dollars} a month. And for essentially the most half, the sellers didn’t complain.

After all, Autobytel complained: “You possibly can’t do this,” they shouted into the wind of the enterprise press world. “They’ve decreased the worth of their leads. Sellers will go away—and can come to us!”

The sellers didn’t care. “It is smart. Nearly everybody needs multiple quote earlier than they buy,” lots of them informed us. “It really works for us.”

No matter introduced them extra leads with a fairly shut charge they noticed as choice. It was as much as them to shut the offers, and the extra prospects that they had, the extra negotiating they might do. As soon as once more, it was a win-win.

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And so, we turned worthwhile by the autumn of 1998. Second to eBay, we have been the one different worthwhile web startup at that cut-off date. Everyone else in Silicon Valley was dropping cash.

We introduced ourselves to profitability by “taking dangers,” folks stated. However once more, I ask, what did we actually threat? If any of the modifications we made didn’t work, we may have gone again to the subscription mannequin, or one thing else.

Not taking dangers would have been the most important threat of all.

We had solely raised $12 million, which was nothing in comparison with a lot of the different web corporations. That allowed us to be nimble.

When creating one thing new, all the pieces is a threat—together with the act of staying put in a lane you created, however which can not have been examined or questioned for a while. It’s necessary to assume ahead. To assume larger. To behave with out pointless hesitation.

Reprinted with permission from “Crossing the Desert: The Energy of Embracing Life’s Tough Journeys” by Payam Zamani (BenBella Books, 2024).