Lyle Berman's Lucky 13

There are certain characteristics, strategies, and behaviors that most successful entrepreneurs share. In fact, many of these same characteristics, strategies, and behaviors are common to high-achieving individuals in all walks of life. I’d like to share them with you, and at the same time, give you a glimpse into the kind of work life I lead and business philosophy I follow. To that end, here are 13 bits of wisdom that will help you become a successful entrepreneur.

1. Have a passion for your profession.

First and foremost, have a passion for what you do. If you want to truly maximize your potential, apply this philosophy to everything you do. Friendships and marriages endure because both partners bring passion to the relationship. Great artists, students, humanitarians, athletes—they excel when they are passionate about what they are doing.

It’s the same with business. If you want to be successful, you have to enjoy what you are doing. It has to be more than just a job. If you don’t see it as a way of life, you just aren’t going to do that well.



2. Choose work that satisfies your particular needs.

Different people have different passions. I have chosen the entrepreneurial life because it offers me the opportunity to create and build businesses, activities that satisfy my particular needs. If those are things you desire, then the entrepreneurial life might be for you; on the other hand, if you find the greatest satisfaction in teaching or healing the sick, then becoming an educator or a physician might be your best bet.

3. Being an entrepreneur involves taking risks.

If you’re the kind of person who likes as much certainty as you can get, whose attitude is “If it ain’t broke, don’t fix it,” and feels uncomfortable taking chances, then the entrepreneurial life is probably not a good choice for you.

A willingness to take risks is at the very heart of the entrepreneurial experience. I’ve been a risk taker all my life, which is why I enjoy gambling. From playing marbles as a kid to playing poker as an adult, I have always enjoyed taking chances in the pursuit of winning, especially when I have a positive expectation of coming out ahead. Of course, there is no such thing as a sure thing. I have taken risks and won, and I have taken risks and lost. But I have never run away from risk—in fact, risk is an elixir that stimulates me and makes my life interesting.

4. Develop the discipline to bail out of a bad investment.

I know some poker players who cannot get away from a hand they are playing. They sense they are beaten, yet they continue to play out the hand, betting and losing more money, instead of folding the hand and keeping their losses to a minimum. The same is true with business projects. At one time or another, all entrepreneurs have invested in a business that sputtered. What separates successful entrepreneurs from the rest is that they know when to pull the plug and stem the flow of red ink.

I remember one situation where I had invested in a company that sold natural pet food for dogs and cats. We set up the business so [that] we were the middlemen. All we had to do was receive orders, pass them along to the manufacturer who filled them, and then we’d ship the food to the various distributors who, in turn, would sell the product to their customers. We never touched the product—we just took the orders and shipped them out. The venture looked like a “can’t miss” investment. The problem was, the guy who started the company never got the number of distributors he had expected. I had to pull the plug and was lucky to get most of my investment back.

The point is, if the risk-to-reward ratio becomes too great, you can’t take things personally. You just don’t go forward. It does no good to stand idly by and watch your investment crash and burn. At that point, anyone can step away from their money because there’s nothing left to salvage! The trick is not to wait until the house floods to turn off the faucet.

5. Learn all you can about potential ventures before making a decision.

I’ve been burnt a number of times by investing in businesses I know little or nothing about. If I lack adequate knowledge in the area, I probably won’t be in a position to answer the basic entrepreneurial question: “Will it work?” One time I was approached by a filmmaker who wanted me to provide financial backing for a feature-length comedy. It sounded like great fun, but I didn’t know anything about making movies, so I passed on the offer.

Sometimes not knowing about an investment can cost you money in a different way. Many years ago, a broker called me about buying into a cell phone company. Cell phones were just becoming popular and he wanted $30,000 to make me a partner in the company. I said “okay” and received 1.5 million shares at around five cents a share. A few months later, the broker tells me he’s going to take the company public, pricing the IPO at ten cents a share. When I get the prospectus, I find out I’m the second-largest shareholder in the world! Over the next two years, the shares went up, and I gradually sold my holdings. My last shares sold for 25 cents. Not long after I sold my shares the stock price soared to over $20. Had I held on to my shares and sold at that price, I would have made about $30 million.

My mistake was not selling my shares too early; it was that I never went and met the people at the company to learn more about what they were doing. Perhaps if I had taken the time to do that, I might have acted differently and held on to my shares. The point is, I didn’t take the time to learn about the company I was investing in, and I paid the price for my ignorance.