During the 1986 stock market crash, Steve Jobs found himself running out of money. He had been kicked out of Apple in 1985, sold his shares and spent most of the money he had on founding NeXT computers.
Instead of sulking over Apple or struggling with NeXT, Steve decided to double down by buying George Lucas’ animation studio with his last $10m. The studio was renamed ‘Pixar’, which then made a $26 million deal with Disney 3 years later and eventually sold to Disney for $7.4 billion in 2006.
During the Dot-com bust of 2001, Jeff Bezo’s Amazon lost 90% of its value. Instead of shutting down like most of the other dot-com companies at the time, Jeff focused on generating cash from his business instead of from investors.
He focused on one metric: Amazon’s Cash Conversion Cycle.
The Cash Conversion Cycle is the time it takes a retailer to turn cash to stock and back to cash when they sell the stock. Macy’s has a CCC of 71 days. Wal-Mart has a CCC of 12 days.
During the crash, Jeff managed to turn Amazon’s CCC into a negative 24 days – by getting cash upfront from buyers and then paying for stock 28 days after it was already sold and shipped. This became the secret sauce to Amazon’s growth. The faster they grew, the more they generated cash instead of stock. Today Amazon is worth $865B (after this week’s market crash) and Jeff Bezos is the richest man in the world.
2008 was the year the Global Financial Crisis hit and Elon Musk says “This was definitely the worse year of my life”. He had run out of money, spending the entire $180 million he had made from selling PayPal on SpaceX, Tesla and Solar City.
He says “I remember waking up the Sunday before Christmas in 2008 and thinking to myself, ‘man, I never thought I was someone who could ever be capable of a nervous breakdown. I felt this is the closest I’ve ever come. Because it seemed pretty, pretty dark.”
Instead of closing one or more of his companies, he made a commitment that he was either going to see them all achieve success, or he was going to die trying. That commitment and taking action one day at a time led to a call on 23rd December: Elon recalls: ”NASA called and told us we won a $1.5 billion contract. I couldn’t even hold the phone. I just blurted out, ‘I love you guys!’”
Two days later, Tesla’s investors added more money, and all three companies have since grown to make Elon worth $34 billion today.
All three of these entrepreneurs had their defining moments during the same crises that had others in a panic. The decisions they made shaped their world, and shaped our world.
During today’s crisis, are you looking outside?
Are you making this an excuse for mediocrity?
Or an opportunity for excellence?
We are living in a once-in-a-decade disruption.
What you do today will not only define your year,
It will define your next decade.
So take the time to choose.
Then take action.
“Crisis doesn’t create the character. It reveals it.” – Denis Leary