As author and leadership guru Dale Carnegie once said, “discouragement and failure are two of the surest stepping stones to success.”
So, naturally, one of my favorite questions to ask guests on my daily podcast So Money is, “What was your biggest financial failure or mistake?”
Not because I want to embarrass them, but because those missteps inevitably reveal invaluable lessons and, in many cases, pave the way towards big wins.
Since launching the show, I’ve had the honor of interviewing everyone from top entrepreneurs to bestselling authors and entertainment personalities including Tim Ferriss, Ryan Holiday, and Margaret Cho.
Here’s what they — and four others — had to say about a personal financial failure.
David Pottruck: ‘Investing in startups’
David Pottruck, the former CEO of Charles Schwab and now chairman of HighTower Advisors, says that after leaving Schwab, he began investing in small startup companies without any prior experience.
For example, remember Eos Airlines? Pottruck says investing in it was a big ol’ fail.
“… A good idea does not necessarily create a good business and a good business does not necessarily translate into a good investment,” Pottruck told me. “So, you have to look at something in terms of its idea value, its value as a business and then its value as an investment. All of those are different, and so I didn’t know that, and I had to learn that.”
Tim Ferriss: ‘Failing to find my market’
“You should not make a product and then find your market,” says Tim Ferriss. “You should choose your market and then make your product. You should know exactly who you’re making something for and not get stuck as a lot of engineers do, creating something with a bunch of features and then attempting to figure out who you’re going to sell it to.”
The multiple New York Times best-selling author learned this lesson the hard way, confessing that after teaching his speed-reading seminar he was eager to create a product that allowed him to offer seminars without always having to be physically present.
So, he created an audio-book, “How I Beat the Ivy League,” and invested in the project using most of his savings and a lot of his time. Ultimately, he sold only two copies — including one to his mom, he joked.
Margaret Cho: ‘Not buying an apartment’
Award-winning comedian Margaret Cho shared with me that one of her biggest mistakes was saying no to a friend who offered her a really great real estate deal back in 1994.
A friend had offered her the apartment in New York City from the movie “9 ½ Weeks” for less than $400,000. She declined the offer at the time, even though she had the money. Now she estimates it’s worth between $8-9 million.
Although it would have been a great real estate investment, Cho doesn’t look back. She says, “I was really scared to buy a house. And I really remained scared to buy a house until I bought a house … But to me, I live very, very comfortably now and really never took those kinds of risks.”
Rebecca Jarvis: ‘Missing a student loan payment’
“When you don’t pay a student loan, it is a very big deal. And it can, in a very significant way, change your credit and have a major impact on your life moving forward,” ABC News chief business and economics correspondent Rebecca Jarvis recalls.
Jarvis says her biggest financial fail was missing a payment on her student loans. The missed payment not only affected her credit, but her parents’ credit as well.
“Everything ultimately worked out,” Jarvis says, “but to me, that was a pretty significant lesson, and I know it sounds, maybe to some people it doesn’t sound like that big of a deal. It is.”
Dave Asprey: ‘Losing $6 million in 2 years’
By age 26, Dave Asprey, author of “The Bulletproof Diet,” had earned $6 million dollars in equity at his company, Exodus Communications.
It was a $36 billion dollar company, and Asprey was the youngest person to attend board meetings. But $6 million wasn’t enough.
He was eager and hungry to make more. He wanted to reach the $10 million mark, so he pursued investment deals without seeking professional help. By age 28, he lost the $6 million and ended back at zero.
Looking back, he says, “… What I should have done was quit my job, [sell] all of my shares, and [retire].”
Ryan Holiday: ‘Applying for a mortgage while self-employed’
Best-selling author and media strategist Ryan Holiday regrets initiating the home-buying process after he left his post as director of marketing at American Apparel.
“If I had just looked … two months earlier it would have probably saved me the biggest nightmare of my life, which was applying for a mortgage as a self-employed person,” he says.
The process involved mountains of paperwork and was incredibly arduous and time consuming. The bank was very demanding due to the fact that he was self-employed (i.e. “risky”) and they wanted more paperwork than usual.
He goes on to say, “When you’re self-employed … and then when you apply for a loan or you’re setting a business up … all of a sudden now your internal system is now being subject to somebody else’s system and those don’t match very well.”
Dan Price: ‘Not being prepared for the recession’
Dan Price, the 30-year-old CEO of Gravity Payments who raised his company’s minimum wage to $70,000 per year (and slashed his own from $1 million to $70,000), says that in 2008, the small nonprofit he was running was ill-prepared for the financial crash.
This resulted in him having to — ironically — give drastic 80% pay cuts across the board.
“We almost didn’t make it. And so, I promised myself that the next time I faced a recession, I would be prepared for it …” he says.
More from Business Insider:
- How to score clients all over the globe
- Use a 7-day exercise from a financial adviser to stop mindlessly spending so much money
- 25 things to know about investing by age 25
- Here’s more evidence you should always be wary of ‘experts’
- Your do-it-yourself approach to investing might explain your financial insecurity