Over the course of a long career, I’ve made my share of mistakes, but the dumbest and most damaging ones have always been driven by urgency. Whenever I convinced myself that an opportunity was so great I had to “strike while the iron is hot,” boneheaded decisions inevitably followed, usually ending in some crushing failure.
Of course, nobody ever tells you that because “creating a sense of urgency” is supposed to be a good thing. It leads to action, and action feels good. Deliberation, on the other hand, can feel frustrating and, let’s face it, boring. If you can create urgency, you can make things happen. The problem is that the things you make happen are often the wrong ones.
That was certainly true of the worst mistake I ever took part in. In 2007, our company in Kyiv hatched a plan to dominate Ukrainian-language media. At the time, there were no significant competitors, despite credible research suggesting substantial unmet demand. What looked like a once-in-a-generation opportunity turned into a catastrophe. It nearly killed the company.
The emergence of an idea
Our company, KP Media, was founded in 1995 by Jed Sunden, a 25-year-old native of Brooklyn. It started with the Kyiv Post, which he financed with $8,000 on his credit card. Mirroring the Ukrainian economy at the time, the company grew in fits for the first five or six years, but by the time I joined in 2004 it had become a significant enterprise with roughly 200 employees.
By that time, change was in the air and our Russian-language newsweekly, Korrespondent, became very much a symbol of that change. The Orange Revolution brought not only record foreign investment to Ukraine, but also newfound interest in a free press. Ukrainian citizens—as well as advertisers—demanded accurate, objective news sources.
We dominated that market in print and online. Our business began to grow by leaps and bounds. As Ukraine became a hot market, there was increasing interest in us from investors; in 2007, we went public at a valuation of roughly $50 million, which was an enormous amount of money in Ukraine at the time. Before you knew it, our stock price doubled and we became a $100 million company.
That’s what led us to what we thought was a truly revolutionary idea.
Ukraine had long been a bilingual country. During the Soviet era, Russian had been the official language, even though at home and with friends, most people spoke Ukrainian. But after Ukraine became an independent country in 1991, Ukrainian became the official language. On TV, programming was required to be in the Ukrainian language, but Russian-language media still dominated in print and online.
To us, the opportunity seemed obvious. If we moved early into Ukrainian-language media, just as we had in online news, we could dominate the market.
Devising a strategy
Not wanting to rely just on a hunch, we began to research the market. Historically, the most lucrative areas were in the industrial eastern provinces that were closer to Russia culturally and linguistically. But the western, more European-oriented cities, where the Ukrainian language was more deeply ingrained, were beginning to prosper. We also saw decent traffic on the Ukrainian versions of our websites.
As we delved more deeply into the research, we found that a significant portion of the population actually preferred Ukrainian-language media. It seemed that we had identified an attractive market with pent-up demand. Because we were using publicly available research, we also expected that others would soon be rushing in to take advantage of the opportunity. There were plenty of signs that we were on to something.
So we decided to move forward aggressively. We hired an editorial director from Poland to oversee development of two women’s magazines—a monthly and a weekly. Similar in format and theme to Good Housekeeping, these were designed to appeal to women working to balance marriage, family, and work life. We also began working on a Ukrainian newsweekly to complement our hit product, Korrespondent.
That would mean three major product launches within a year, in addition to the daily newspaper we had already launched recently. If successful, we would essentially double the size of our print media business. We knew that would stretch our resources to the limit, or even past that. Still, it seemed like a once-in-a-lifetime opportunity and we didn’t want to miss it.
Taking the plunge
We started with the monthly women’s magazine. We hired a great team, designed the format, and developed the brand. Our sales operation pushed aggressively to secure advance commitments from advertisers and distributors. Unfortunately, both copy sales and ad sales were disappointing. Many were skeptical about the market for Ukrainian-language print media.
Still, we had seen slow launches turn into successful products before, so we weren’t overly worried. After all, we’d done our homework, were confident in our track record of bringing original new products to market, and, as a major media company, had the marketing muscle to maintain massive promotional activity indefinitely.
So we pressed on with the other two launches, still nervous that someone else would see the genius of our plan and copy it. Over the next six months we built out two additional editorial teams, one for the women’s weekly magazine and one for the newsweekly magazine. We built strong marketing programs for each and brought them to market.
By summer 2008, our confidence began to wane. All three product launches had been flops. We’d also begun to hear strange murmurs about problems with the housing market in the U.S. It all seemed fairly remote to us in Ukraine, but I had some knowledgeable contacts who were beginning to speak in hushed tones about the health of the financial markets.
We expected if there were a major global recession that Ukraine would take a hit, but its economy had been expanding by about 8% per year. We were fairly certain that even if there were a slowdown, growth would continue.
We were wrong.
Hard lessons
Clearly, investing in Ukrainian-language magazines in 2007 was a bad decision. Launching three titles within 12 months in an unproven market was catastrophic. It very nearly killed our company. When the global financial crisis hit in 2008, the bottom fell out of the Ukrainian economy. GDP contracted a whopping 15%. The ad market dropped 85%.
It felt apocalyptic. Every day on the way to work, I would look at the exchange kiosks showing the Ukrainian currency crashing in value. When I arrived at the office, there would be a series of excruciating decisions to make. We closed all the new brands we launched since our initial public offering. At one point, I had to fire 150 people in a day, not because they had failed us, but because we, blinded by hubris and stupidity, had failed them.
The real tragedy was that if we had been more methodical, the cash from our IPO would likely have sustained us through the crisis. In fact, having cash when very few others did would have put us in a great position. But we were sure we were on to the next big thing. We felt a profound sense of urgency to beat everyone else to the punch and moved forward at breakneck speed.
I wish I could say I learned my lesson then, but I didn’t. The same pattern persisted. I would get excited by an idea, convince myself I was on to something important, and rush to move forward. What I learned over time is that we are incredibly poor judges of our own ideas and that we need to take a Bayesian approach, moving forward steadily, iterating and testing as we go.
The truth is that every idea is wrong. Some are off by a little, and some are off by a lot, but they are all, to some degree, wrong. The key isn’t to come up with the “right” ideas, but to make them less wrong over time.