Saturday, March 21, 2020

The Two Shoe Salesmen (The Rest of an Entrepreneurial Myth)

One of the most famous motivational stories on the entrepreneurial circuit is that of the two salesmen from competing companies who are sent to a foreign country to assess the market for shoes.

Salesman One scouts around for a few days and then heads for the telegraph office to contact company headquarters.  He writes:  "Research complete.  Unmitigated disaster.  Nobody here wears shoes."

Likewise, Salesman Two does his research and heads for the same telegraph office.  Once there, he composes the following: "Research complete.  Glorious opportunity!  Nobody here wears shoes!"  

The point, of course, is that Salesman Two is the real entrepreneur, the person who sees opportunity where others do not.  It's a story designed to motivate us all to find hidden potential, take risks, and turn obstacles into opportunities.

The question is: Should we bite?  Does fate reward the visionary risk-taker?

In the spirit of Apocrypha, it seems there's more to the story of the two salesmen.  Last year, a librarian at the British Museum discovered a short manuscript in a long-forgotten file.

The Rest of the Story

I had a chance to read a copy of the manuscript sent me by a friend who works at the Museum.  Here is "the rest of" this classic story, captured by the daughter of one of the salesmen.  (For privacy and clarity's sake, I've stuck with the designations "One" and "Two" and done a little paraphrasing.)  
Salesman One returned on the next steamer to London.  He was an aggressive young man who had seemingly saved the company from a disastrous venture.  His reward was to oversee a newly-formed sales territory in France.  Sober, realistic Salesman One built a booming business in ladies’ dress shoes.  He became wealthy and influential, mentoring dozens of young executives.  He met and married one of his best customers, a French heiress.  Though wealthy enough to have retired young, he never lost his love for selling shoes, concluding his career well into his 70s. 
Salesman Two built an office and warehouse in that far-off land, ordered a boatload of shoes from his home office, and trained a team of hard-charging local salesmen.  He estimated the sale of 2,000 pairs of shoes in his first year of business.  The home office was ecstatic to have such an aggressive and far-seeing entrepreneur on their team.
The end of the first year came and Salesman Two and his team had sold less than 100 pairs of shoes.  The home office ordered expense cuts and threatened to abandon the market.  The local staff, always behind budget, was anxious and depressed by the periodic firings Aggressive, optimistic Salesman Two could but conclude one thing: He had made a serious mistake.  This was, indeed, the worst market in the world for shoes.
This story about hope and seeing the possibilities, about being truly entrepreneurial suddenly sounds way too much like real life.  What happened?

Since the time of these two salesmen, of course, we have convinced ourselves that perseverance is the indelible quality of successful entrepreneurship.  It turns out, however, that the indelible quality of successful entrepreneurship is a profitable business model.  Perseverance in the face of a lousy business model leads to, well, read on:
Salesman Two had not met his first year forecast, but, after a year of unsuccessful selling, he knew more about the market than any person alive.  For example, he knew that some of his potential buyers liked the idea of protecting their feet but felt hot and silly in shoes.  So he imported a small number of sandals to test.
Salesman Two had also concluded that some significant part of his market would likely never wear shoes, at least in his lifetime.  But they all still hurt their feet occasionally on rocks and debris.  So, he found a lotion made by a German firm that, applied to the soles, soothed and toughened them up.  He imported cases of it.
Finally, Salesman Two discovered that most everyone, shoes or not, walked long distances during the day.  All got hot and many got sunburned.  So, he imported a line of wide-brimmed straw hats and walking sticks. 
Meanwhile, he continued to send encouraging messages to the home office, never giving up, and managed to secure funds to continue.
The hats were an immediate sensation.  The sandals and walking sticks did less well, but gained a niche following.  Salesman Two could not keep enough of the lotion in stock.  In year 2, he sold 225 pairs of shoes—still a small number, but better than his volume in year one. 
Year 2 was breakeven, thanks to aggressive cost cutting.  Year 3 got better.   
After seven long years of hard work, trial and error, sleepless nights, staff turnover and one ulcer, Salesman Two purchased the local business from his company--which never sold many shoes in the market and had come to consider their promising entrepreneur more of a backwater distraction.  He had an asset that, at least on paper, could make him comfortable, though far from a millionaire.  He thought from time to time about what he had given up to take on this venture but, being an optimist, didn't dwell on what might have been.  
The story of the two salesmen turns out a bit different than we might have expected, more in line with what often happens in real life.

And there's another lesson.  Salesman One--who appeared woefully shortsighted in the original story--spent a career expanding his product into new geographies, launching new styles, and developing new market niches.  From well within the confines of his large, stable company, he was a bona fide intrapreneur, far surpassing the innovation impact of his "more entrepreneurial" competitor.

Which reminds us that entrepreneurial myths are just that, frothy stuff for motivational lectures and pop business books but rarely grounded in reality.  Not that lightning does strike occasionally.  We're just better off not making the outlier an instruction manual or a motivational speech.  

At the very least, when an entrepreneurial story comes along that's just too visionary and wonderful to be true, we might check around for the long-lost (or well hid) manuscript that explains the rest of the story.

P.S.--Two peanut-butter salesmen land in the U.K.  Complete the story.

(First published April 2010)