FOMO

We live in an age of acronyms. I guess they are a form of shorthand. LOL, YOLO, DIY, IMHO, SMH, MTFBWY, FUTAB and ROTFL. If you guessed them all correctly you are in the mainstream of cool. And for those of us who are a bit more advanced in years, here’s the translation in order – Laughing Out Loud (LOL); You Only Live Once (YOLO); Do It Yourself (DIY); In My Humble Opinion (IMHO); Shaking My Head (SMH); May the Force Be With You (MTFBWY); Feet Up, Take a Break (FUTAB), and Rolling On the Floor Laughing (ROTFL).

There’s another acronym I’d like to explore today – FOMO. Give up? It’s the Fear of Missing Out and it can be deadly for entrepreneurs. One of the best examples of the FOMO concept is the crypto currency craze and more specifically, Bitcoin. It’s not important to understand the basics of Bitcoin. What’s more instructive is to understand what has happened in the marketplace. On August 15, 2010, the value of one Bitcoin was $.07. By August 1, 2015, the value of one Bitcoin had risen to $283.04. On November 9, 2016, right after the Presidential election, the value of one Bitcoin had increased to $726.36. On August 1, 2017, a single Bitcoin was worth $2,787.85. By December 20, 2017, the “value” had jumped to $18,486.51, and by February 4, 2018, the value had plummeted back to $8,922.61. Riding a roller coaster at Cedar Point would be considered like a leisurely stroll in the park compared to the volatility of Bitcoin.

Unfortunately, there are hundreds of thousands if not millions of individuals who have jumped into Bitcoin worldwide. Some have used their life savings to buy a stake. Many think they are investing. Most hear the siren song of making a quick buck without truly understanding the risk profile or even the basics of how a crypto currency functions. What drove some people to plunk down $18,486.51 for a single Bitcoin on December 20, 2017, and within 46 days, see their position shrink to $8,922.61? When examining the case studies, it’s apparent that many people were motivated by the Fear of Missing Out.

FOMO is dangerous because it’s an emotional reaction. We work hard to build our businesses, and much of our success comes from analyzing data and making decisions based upon fact – even when it comes to understanding consumer sentiment (which may be emotional in itself). FOMO is impulsive in nature and flies in the face of logical decision making. We face this dilemma every day in one of our business units that is focused on acquiring market-rate apartments across the country. Apartment investments have been hot for the past few years and the fundamentals have been strong. As a result, prices have been driven higher and returns are lower. Press releases abound announcing acquisition after acquisition. It’s easy to feel the pressure to adjust our investment thesis to keep up the pace of our own acquisition initiative. But experience has taught us to resist this temptation.

The first step in avoiding the pitfalls of FOMO is recognizing our susceptibility to it in the first place. This can happen if we have a clear set of standards that guide our approach to the manner in which we operate. Without these standards we are very vulnerable to being tugged or pulled to follow whatever hot trend happens to emerge at the moment. With standards, we can test against that trend to see if there is alignment. If there’s not, we must have the discipline to resist pursuing it.

The second step is to carefully analyze the risks associated with pursuing the trend. This should be a rigorous exercise that identifies all the possible ways things could go wrong and what sort of impact would be felt. Take Bitcoin for example. I’m positive that many Bitcoin buyers have done no risk analysis and really believe they are “investing.” In reality they are just gambling. It’s one thing to speculate with money that one can afford to lose. It’s another thing to put half your life savings on Red 32.

Finally, FOMO can be avoided when we eliminate the emotion of envy. I doubt many Bitcoin investors believe they have been driven by envy. But when they see others “making” huge amounts of money on their Bitcoin “investments” they want to get in on the action. When I was 10 and another kid had ice cream, I wanted ice cream too. I secretly envied the other kid with the cone. FOMO to some extent is the same thing. When others are doing well, let’s rejoice in their good fortune without having any feelings that we are somewhat inferior if we don’t experience the same good fortune.

You can also listen to a weekly audio podcast of my blog. What you hear will be different than what you read in this blog. Subscribe on iTunes or wherever you get your podcasts. You can also click on this link – Click here to listen to Audio Episode 85 – Liars.

This blog is being written in tandem with my book, “An Entrepreneur’s Words to Live By,” available on Amazon.com in paperback and Kindle (My Book), as well as being available in all of the other major eBook formats.

F-

I’ve had many aspiring entrepreneurs express frustration over their inability to gain traction in the marketplace with their products or services. Sometimes they tell me that others in their organizations won’t take them seriously. I can remember my early days in business – especially during my twenties – when I was treated like a little boy and being patted on the head periodically. I would work my tail off only to have the client want to talk about his property with our CEO and not me. At times it felt downright condescending.

I finally (and painfully) realized that everyone at my age was experiencing the same thing and much of this treatment was simply a function of youth. But the other lesson I learned was that of credibility. While there are many elements to credibility there is a primary formula that I discovered.

Results + Consistency = Credibility

Let’s break this down further. Results do not necessarily correlate with effort. Yes, I like members of our team to work hard and make a great effort but that doesn’t mean the job gets done. There were times in the past where it was difficult to terminate an employee because I knew that person had given his all and no one had worked harder. Unfortunately, even with all of the blood, sweat and tears this person still wasn’t getting the necessary results. It was kind of like studying diligently for an exam in school and still getting an F. The professor really didn’t care about the three all-nighters; only that in the end the answers were wrong.

Results are produced through a combination of skill, perseverance, creativity, timing, risk management, training, attitude and yes, effort. If any aspect of this combination is out of whack we might fail or barely produce an acceptable outcome. This leads us to the second factor in the formula – consistency.

Here’s an obvious statement. When we are hit or miss with our results we are thus inconsistent which damages our credibility. The goal is always to produce high quality, consistent results. How does McDonald’s turn out the same identical hamburger no matter what store we visit? It’s accomplished through a fanatical adherence to specific standards and delivered through comprehensive systems and processes. McDonald’s uses the very same equipment at every location. They purchase in bulk the ingredients used to make the hamburger and are extremely exacting in their specifications for the quality and composition of these ingredients. Employee training is intense and standardized. Quality control measures are baked into their culture. Everything they do is geared to providing a consistent high quality customer experience.

When we can “McDonaldize” our operations we greatly improve our chances to achieve consistency. But it’s not enough to just be consistent. There are some companies that are consistent . . . they are just consistently terrible. For example, why is it that so many of the cable television providers receive consistently terrible customer service ratings? Ditto the U.S. Postal Service? When I send a document via FedEx or UPS I know that it will arrive exactly when it is supposed to. But a similar delivery by the USPS has always been consistently inconsistent for me. I speculate that this may have something to do with business models and customer focus. A business model that is designed around selling a product or service – i.e. cable TV or overnight letters, is less likely to generate consistent quality results. By contrast, an enterprise dedicated to delivering an amazing customer experience is more likely to far and away be the winner.

Our credibility is built on a foundation of producing consistent high quality results. Implementing strong systems and processes focused on wowing the customer helps maintain our hard-earned credibility.

This blog is being written in tandem with my book, “An Entrepreneur’s Words to Live By,” available on Amazon.com in paperback and Kindle (My Book), as well as being available in all of the other major eBook formats.

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