A tip for entrepreneurs: Don't be afraid to fail
Fargo businessman Mike Marcil is currently the CEO of an investment company that has expanded its assets from $2 million to $100 million in the past three years.
By any standard, that would be a success -- but as Marcil told a room full of students, business people and other interested listeners Friday at Minnesota State Community & Technical College in Detroit Lakes, "I really don't get up in the morning feeling like I'm very successful."
Instead, he often feels sick, anxious, and worried about the future. Such is the life of an entrepreneur, Marcil said.
Part of the reason why he doesn't feel like he's on top of the world right now is probably because Marcil's current success has been built upon a series of failures -- some of them fairly spectacular ones, he admitted.
But it's those failures that provided Marcil with the knowledge to help other prospective entrepreneurs avoid some of the pitfalls he experienced on the road to success.
"My definition of success is how many people you positively impact in your life," Marcil said.
And so he focused his presentation as part of M-State's Business & Entrepreneurial Services Speaker Series around talking not about his business successes, but his failures -- and the lessons he's learned from them.
When Marcil was in high school, he struggled with learning challenges that included being both dyslexic and ADHD.
"I graduated high school at age 20," he said. He failed both accounting and English before he did, Marcil added -- which is ironic because today he spends much of his time working with complex financial statements and writing legal documents.
But by the time he did graduate, Marcil had already managed to make quite a big of money as a shoe salesman at Dayton Hudson (he lied about his age to get the job, he admitted).
"I made about $15,000 a year," Marcil said, adding that it may not seem like a lot, but for a high school kid, it was enough for him to be able to own his own car.
Though he himself struggled with learning difficulties, Marcil said his parents were both very well-educated.
"I just didn't have that level of academic interest or fortitude," he admitted.
Still, as soon as he graduated high school, Marcil enrolled in college at the University of North Dakota in Grand Forks.
"They (his parents) made me go to college, and made me go to UND," Marcil said.
Unfortunately, while he did better academically in college, and made a considerable income in the summer by selling encyclopedias and Bibles door to door, "I was miserable."
So miserable, in fact, that he became suicidally depressed, and was hospitalized for a time.
"I had a nervous breakdown," Marcil said -- which just goes to show, he added, that "money does not equate to happiness."
Fortunately, he was able to work through those early difficulties, and graduated from UND.
"My dad was so proud of me, because I was a salesperson," Marcil said.
That's the first lesson for any entrepreneur, he added -- "you've got to learn how to sell."
Marcil's dad wanted him to use that sales training to go into the lucrative field of insurance sales -- but he wasn't very enthusiastic about that idea.
"I want to open a contemporary art gallery," he told his father.
In this case, however, father really did know best, Marcil added. "I lost my ass on that one."
The reason? He invested the entire $40,000 he had made from selling books every summer directly into the business. When the business failed, he lost all of that money.
"Next summer I had to go back to selling books to pay the bills," Marcil said.
Meanwhile, he moved into the basement of his father's house.
"I love my dad," Marcil said, "but I didn't want to live with him."
The year was 1995, and when his dad asked him again if he wanted to go into insurance, Marcil still said no. Instead, he told his father, "I'm going to start an Internet company."
Together with some of his friends, each of whom invested about $100 of their own money (none of them were wealthy), Marcil did just what he said he'd do.
The company made $2 million in its first month of operation, $18 million the first year.
At just 26 years old, Marcil had enough money to buy himself a Ferrari -- a life changing experience for him, he admitted with a laugh.
Marcil was making roughly $100,000 a month. "That was rockin,'" he said with a smile.
What followed, however, wasn't. A New York investment firm offered them $26 million for the business that each of the partners had invested just $100 in just a scant year earlier.
"We turned it down -- we wanted more money," Marcil said. The result? The company went bankrupt.
Thus came another lesson: "Never get in the way of your own success."
"We misjudged our product," Marcil explained.
One hundred people lost their jobs, and the partners had to sell everything -- including that Ferrari -- to cover their losses.
"I was totally broke," Marcil said. But there was one thing he kept -- a Rolex watch, which he pawned to cover the cost of moving from Fargo to California. (Marcil eventually recovered the watch, which he still wears today.)
His ego more than a little bruised, with two business failures under his belt at just 27 years of age, Marcil then hooked up with an old acquaintance who was starting another Internet company in the Silicon Valley.
"He said, 'We don't hire anyone who hasn't gone through a big failure,'" Marcil said.
Marcil was put in charge of a business known as Food.com, with a $20 million budget to build a sales force. Within 18 months, the company had built up $18 million in revenue, just by hooking up restaurants with the capability to take Internet orders.
At one time, the company received an $800 million offer from AT&T. With just a 6 percent stake in the company, Marcil had an estimated net worth of $48 million.
Two years later, that company was bankrupt too; the patent was sold to Motorola for $125,000.
"It doesn't matter how much you put into the company," Marcil said. "What matters is how much it's worth."
After that experience, Marcil said, "No more startups."
He was hired as the senior vice president at Valassis, a communications company, to start an Internet division known as Save.com.
Eight months later, that division received a purchase offer of $100 million; and this time, they took it.
At that point, Marcil changed his career path, and went into commercial real estate in the San Francisco Bay area (where he lived at the time).
That enterprise eventually grew into the Marcil Group, which he successfully moved from San Francisco to North Dakota in 2006. The Marcil Group is not associated with businesses run by William C. Marcil, chairman and CEO of Forum Communications Co.
"I got really nervous about what the (real estate) values were in San Francisco," he said. "I sold all my commercial real estate there, at the height of the market, and moved everything to North Dakota."
The result? The bottom fell out of the market in San Francisco -- while North Dakota began experiencing "the best years the state has ever had."
"That was (good) timing," Marcil said.
So what lessons have all these ups and downs taught him? If you are looking to invest in "an entrepreneurial venture with infinite risk" -- such as starting up a restaurant with no prior restaurant experience, Marcil noted -- "you do not borrow money for that."
Instead, you need to "put in your own time, your own effort" -- and find investors who are willing to put money into the venture, but "are OK with losing it" if the business doesn't take off.
"The less risk there is in the business, the more you can borrow," Marcil added.
Another lesson? "Do the things that you know," he said.
If the business isn't taking off, "know when to quit," he added.
And lastly, when you have success, know when to take the money and get out -- "Don't be greedy," Marcil said.
In other words, Gordon Gecko was wrong: Greed is not good.