When I was in college, I was reading about one guy in particular who was buying houses on contract, fixing them up and selling them for the gain. He’d become a rather prolific entrepreneur with a formula to succeed in rapid wealth creation and I subscribed to his newsletter just to learn all I could. Even though he was a bit simplistic in his explanations, some of his lessons stuck with me. One of the most important things he said was that you don’t make your money in the transaction, you make your money in the homework leading up to the transaction. It was his view that you can’t do enough due diligence and that there was always something to learn before you do any deal.

I thought about that over the years and as I pursued one adventure after the other, he was completely correct, that if you dig enough, you discover if you’re heading in the right direction or not. I thought back about events in my life and those with the best outcome were those I researched the most.

The best advice I’ve ever received, and it changed my life, was when someone advised me to, “check my assumptions” when I thought I was backed into a corner in negotiations. It was checking my assumptions that led me to discover that a broad assumption I’d made about a transaction was completely the opposite of the reality of the situation. Specifically, a sale I thought was closed, was not, and that I was still a viable bidder. Had I not been given that tip, I hate to think of the opportunities I would have missed over the years.

When considering a new venture, so many make the mistake of not properly vetting their concept. They don’t do their homework. They often start with a solution to a problem, assuming the problem actually exists. Instead, it’s important to verify that the problem is a real problem in the first place. Often, it’s not that easy.

When we did our focus group and telephone polling to determine how many people would use Cravings as a home food delivery service, respondents told us what they thought we wanted to hear. Their opinions often reflected what they wanted us to believe about them. We didn’t know enough to challenge their opinions at the time and ultimately our sales didn’t at all match the survey results.

 When we described the business, that we were delivering things people craved, we scored off the chart. People would repeatedly tell us they would use the service. What the polling didn’t tell us was two important things, one, that they would only use our company if they remembered to use it and, two, sustaining that top of the mind awareness was ultimately very expensive. We also learned that the customer that actually used our service was someone who needed the convenience and was willing to pay for it.

We never thought about how each market values convenience differently as a result of individual time limitations relative to income. Convenience matters more to those who are busy. Convenience also matters more where traffic is worse.  While the business still produced the right results, the numbers were not as expected.

The other bit of data not obtained from our telephone polling was the dynamic between the caller and the survey participant and that they in fact wanted to make an impression on the caller. As an example, we were testing eating habits and we’d name some things we thought would be appealing in various food categories and we’d forever get answers that indicated the survey participant ate a healthy diet. Yet, when we compared survey results to actual behavior, the results were completely different. People demand that McDonald’s offer healthier choices, yet these same people don’t buy those choices when they go to McDonald’s. What people say they do and how they actually behave are two different things.

Just before I acquired control of Open Interface North America, there was a lot of press reporting that Bluetooth was a dead technology. There were articles everywhere and none more famous than this blather of total nonsense.[1] Yet this colossal pile of crap reporting is what set me up to acquire OINA because so many believed the author. Without the numerous declarations that were spin-offs of this article in the press, I don’t think the company would have ever come up for sale.

I had friends who worked at Microsoft who had access to the weekly chip sales and all they saw were a steady increase in the number of chips sold. Never a decrease. I kept thinking the press had to be wrong and the more I spoke with experts, the more I was convinced that Bluetooth had a bright future so I bet on the company. Some say I was just lucky and while that played a part in our successful exit, the real story was our homework and willingness to dig very deep into where our technology was going.

I continually find opportunity when I don’t accept conventional wisdom about anything and actually seek answers on my own.  I often find so much of what’s regarded as the truth or fact to not be accurate at all.  To make the point, I suggest reading Wikipedia’s List of Common Misconceptions.[2]

The lesson remains the same. Careful research can make all the difference between success and failure and it’s so often overlooked. I’ve learned through mistakes to constantly cross reference data to see if it triangulates to a common answer. It gets tricky when entrepreneurs pursue a concept without doing any work to assess the needs of the solution. They could save themselves incredible heartache by simply doing the homework and constantly checking their assumptions.

[1] http://www.eetimes.com/document.asp?doc_id=1147339

[2] https://en.wikipedia.org/wiki/List_of_common_misconceptions