In early 2014, Dan Martell, founder of Clarity, tweeted that he was in Halifax for an event and was looking for entrepreneurs to have lunch with. Knowing Dan’s background, I jumped on the opportunity and tweeted back, asking to join. We ended up meeting for lunch later that day with two others.
During lunch, Dan was dropping entrepreneurial knowledge bombs left and right, like
- “Only internalize advice from people who are as successful as you want to be”
- “Invest in entrepreneurs first, then the company”. Using Gagan Biyani, the founder of Sprig, as an example, he said he would invest in whatever Gagan did because he is Gagan; he’s proven himself.
- “As an entrepreneur, being accountable to someone is important”.
Our conversation led to Dan making a “Martell Bet” with me.
Over lunch, I told Dan about my startup — ToothbrushSubscriptions.com. He asked how I was measuring growth, and I told him we were aiming to grow our customer base at the rate Paul Graham recommended — 10% weekly. I talked about our team, our goals, and where I saw the business going in the future. He came back to me with a “Martell Bet”. Seeing my position and my need for a larger team (a full-time designer and developer), he threw out a goal of reaching $15,000 net profit in 6 months time. If achieved, this would give me $5000 in personal expenses and $5000 to the developer and the designer each to come on board short term. I took the bet without much thought.
The wager was that Dan would give me $1000 cash on the day of the bet, and if I reached the goal of 15k in net profit, I would get to keep the $1000. But if I didn’t reach the goal, I would have to give him his $1000 back + an additional $1000 out of my own pocket as collateral. As Dan told me, these bets are not about the money; they’re about holding entrepreneurs accountable for what they do. And it worked.
I spent the following six months trying to grow the company and increase profitability, doing everything I could possibly think of: I released a marketing video, raised prices, added more products, studied growth and marketing daily, implementing what I was learning, and continually testing new growth channels – all with the focus of getting to $15,000 in net profit. In the back of my mind, I knew that this was also a great opportunity to build a relationship with Dan, an entrepreneur whom I greatly respected and looked up to.
As much as I wanted to reach my goal in time, it just wasn’t happening. My team and I struggled to reach any sort of product/market fit (I applied this concept to e-commerce), and we lacked a repeatable and scalable growth engine. Even though I pushed myself hard and (literally!) did the best I could, I soon realized that, even though I enjoyed it, this wasn’t the business for me. So I decided to email Dan and see what advice he could give me. Here’s how our conversation went down:
Me: “Less than a month left on our bet, and here’s the latest:
Our bet has really put me on “death ground*” – that’s a good thing. I’ve probably never been more stressed in my life, but also motivated, too. It’s really held me accountable and made me look at the business objectively. I’ve tried A LOT to get to the 15k in net, but didn’t make it happen. Last resort… I’m moving on from the company… We haven’t reached product/market fit, and I don’t think we’re going to. I want a lot more than a small biz, and my energy is best spent elsewhere.
SO….I’m working on selling TBS to one of our competitors. I think I can still win the bet too (if you count selling the company as net profit :))”
Dan’s reply was simple, but motivating:
Dan: “if you sell it in time / then I’ll take it as a win but money needs to be in the bank.
keep me posted.”
Stressed that my business wasn’t what I thought it could be, and already sweating under the pressure of money, I was still going to owe Dan $2000 (I spent a portion of the $1000 he had sent me on growth) and my business was going to be a failure.
There really was no other choice than moving on and making the best of a “bad” situation. I decide to go straight into the lion’s mouth. I reached out to our main competitor, GoodMouth, and told them about where I stood with TBS. Luckily, we ended up striking a deal. GoodMouth acquired Toothbrush Subscriptions in September of 2014. I didn’t get the cash I was looking for to win the bet, but I retained equity and I’m happy with the outcome overall. The work I put in to TBS lives on and I can now help GoodMouth with their mission of fighting the dental care crisis in America.
After the acquisition, something else happened. RetailKit, the e-commerce platform that Toothbrush Subscriptions was built upon, heard tell I was selling. They’re a small startup in Silicon Valley, and they liked what I did with TBS. They offered me the opportunity to head up sales for them and a place to stay in the bay area of California. It was the fastest decision I’ve ever made.
Being on death ground was an uncomfortable situation, but it turned out for the best. Who knows how long I would have kept TBS afloat, if not for Dan pushing me to my limits. Not only that, the opportunity cost could have been huge; the RetailKit position and my move to California may have never happened. I will never be thankful enough for that.
To my surprise, Dan told me the 98% of the people he makes these bets with actually fail, and that it’s actually a good thing they do. It keeps entrepreneurs focused and accountable. And despite making me feel like a failure at first, the bet led me to my next opportunity and another great chance to grow. When I’m in the position, I will return the favor to others like I was, just like Dan did for me.
*The term “death ground” is from Robert Greene’s 33 Strategies of War. It says: “You are your own worst enemy. You waste precious time dreaming of the future instead of engaging in the present. Cut your ties to the past — enter unknown territory. Place yourself on “death ground”, where your back is against the wall and you have to fight like hell to get out alive.”
*Update: Dan filmed a video telling this story here, and he wrote an article for Medium here. The Laker, my local community newspaper, interviewed me here, and the Chronicle Herald wrote about the story here.