Entrepreneurs and Luck...

In a thread below dealing with "The Pampered Chef", Dien gave his viewpoint on the factor of "luck" as it applies to Doris Christopher and dynamic growth of her company "The Pampered Chef". I have to agree with him--there was a certain amount of "luck" involved in the success of the venture. I think the same thing could be said of any successful venture. "Luck" has to play a certain part right?

So the question comes in where does "luck" come into play and where does it not? And in her case how much did luck factor into the equation and can we find something similar for ourselves?

Lets turn the clock back to 1980 when Doris started her business. Here she is with an 8 year-old and 5 year-old and she wants to be a stay-at-home mom. No problem there. The fact is the economy was much worse than it is today. Higher unemployment, higher prime lending rate, higher rate of inflation.

On top of that the stock market had yet to start its miraculous accent. Was she lucky starting a business in 1980? Probably not, it may have even hurt her to some extent.

Doris took inventory of her skill sets and her most important skill was that she was a teacher, an economics teacher by trade. She understood the proper use of kitchen tools. That was her skill set. That's a good skill set but is it "lucky"? Heck there are thousands of people trained as Economic's teachers. Then consider all the other folks out there like cooks, chefs and just regular folks that could do what she did and that was just having a good understanding of kitchen tools.

People remarked to her that they were impressed with her ability to use those tools. I'm sure there are skills each and every one of us have been complimented on from time to time, just like Doris was. Really not much luck there. We're all skilled in one area or another (if not multiple areas).

What about the idea of selling kitchen products through a home party environment? Not really lucky there. That type of direct selling has been around for ages. Maybe the format she used for the party was lucky or did that type of presentation just make good sense considering what she was selling and to whom she was selling it to?

There might have been some luck (or was it perseverance?) to actually go out and have her first Kitchen Party? I could see someone posting a message like this on a forum like this forum:

"I've got a great idea for a business and I just want to get your opinions on if you thought it would work. What I want to do is go into people's homes and show them how to use kitchen gadgets like potato peelers and spatula's and Wisk's more efficiently. And in the process I'll sell them better quality gadgets than they have now. What do you think?"

There might be some encouragement but there might not also. I could easily see someone writing in response:

"Most people already know how to use potato peelers and what-not, why would I waste my time listening to someone on how to do it better? Plus my potato peeler works fine why do I need a fancy-smancy potato peeler anyway?"

Yeah, there probably was some luck and intestinal fortitude in going forward with her concept. I think most people would have had a negative view of her business opportunity. (A "Key" direct marketing concept here--quite often people are looking for universal approval on their ideas before they go forward, but you aren't selling "most" people. You only have to sell a very, very small percentage in order to become rich). And while I do not have documented proof that Doris' idea was panned by most I'm sure there were an ample supply of naysayers telling her it wouldn't work.

Her first Kitchen Party was profitable (she sold $175 worth of products) and it encouraged her to keep going (she signed up to do 4 other parties because of that first event). Was it lucky her first party was profitable and she signed up to do 4 other parties to boot? Or was it because she had spent a considerable amount of time preparing for that first party? Or was it because her skill set helped elevate her chances of success (remember she was a teacher, she knew how to show others how to do things).

Was it lucky it poured the night of that first party--drenching her, which probably threw her off some? How much better would she have done without being soaked from head to toe? Again was it luck that caused her to persevere or her training and preparation?

Now remember Doris had no initial thoughts of recruiting others to sell kitchen tools. That would only come later when another woman asked her if she could do the same thing. I do think some luck came into play here in the form of her husband. It was Doris' husband that pushed her into bringing aboard others. I realize many of us aren't lucky enough to have a significant other or a friend to push us into going ahead, being aggressive. I see this as a potential shortcoming for many entrepreneurs (i.e. being aggressive).

One thing to keep in mind, "The Pampered Chef" was not a huge moneymaker at the beginning. It took several years to get it to the point Doris was making a good living off of it. In 1990, Doris only had 300 (today there are 75,000) Kitchen Consultants. If you take today's sale's figures and apply them to those 300 consultants in 1990, the company was making $3,000,000 per year. A good amount but not earth shattering by any stretch of the imagination. I don't think it took a great deal of luck to grow it to $3,000,000 per year (after getting through the start-up stage).

So that leaves us with the period of super-sonic growth for the company, the 1990's.

What caused it? How much was luck involved?

Yesterday I came upon an article that appeared in Fortune Magazine in the fall of 2002, during the time the company was being purchased by Warren Buffet. And in that article it talks about a very "key" moment in the history of "The Pampered Chef".

The company was growing but not a huge amount. Doris realized that her comfort zone was holding her back (as it does most of us). She knew that for her to grow the company she would have to recruit consultants in far away places like St. Louis and Milwaukee. In her world those areas were far away from Chicago. She wasn't use to driving to those places and putting on seminars to recruit others. She wasn't use to spending nights in motels. But she did it and the company grew at an exponential rate. Is this luck or is it her just having the skills to make a good decision?

In my mind the important points of her story are:
1. Realizing what she wanted. She wanted to earn income while being at home.
2. Realizing what her skill set was. She was a teacher. She knew how to use kitchen gadgets better than most.
3. Preparing for and doing her first party.
4. Having success at her first party. At least enough for her to keep going.
5. Adding additional Kitchen Consultants through the prodding of her husband.
6. Getting out of her comfort zone and traveling to areas of the country she was not familiar with in order to spread her dream.

Where could luck factor in? #4 to a certain extent and number #5 because she married someone that pushed her to "raise her bar". But how much was #4 due to preparation and the successfully merging of her skill set with the opportunity and how much was luck? That's where the line blurs.

I asked the question at the beginning "How can we find luck similar to what Doris Christopher did?"

I think we could find our own "luck" most easily by succeeding at #4. But it's #4 that causes us the most problems. Why? Because most never get past #4. They never figure out what they want (#1). They try to create or invent skill sets instead of doing what comes naturally (#2). They either under-prepare at #3, which leads to failure or they feel they're never prepared enough and don't progress to #4.

Yeah, I think luck does come into play with the story of "The Pampered Chef" but it isn't the type of luck that couldn't be duplicated (resulting in some amount of success) by millions of others.

I'll tackle the Multiple Streams of Income comments brought up by Dien in a future post

Take care,

Mike Winicki