"A budget to make mistakes" — When Shark Tank's Barbara Corcoran turned heads with her unorthodox approach to success

Shark Tank investor Barbara Corcoran shared her unconventional approach to achieving success during her TEDx talk at Barnard College on December 31, 2013. One of her key strategies, which she referred to as “a budget,” helped her navigate the challenges she faced throughout her career.

Corcoran emphasized that allowing room for error can lead to new opportunities and valuable lessons from failure. The Shark Tank investor explained:

“I always gave my salespeople my sales manager a budget to make mistakes, sounds like a simple thing, but it worked like a dream.”

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Shark Tank's Barbara Corcoran’s strategy for success: The power of a budget to make mistakes

A philosophy built on risk-taking

Corcoran’s approach to business was influenced by her early life experiences. The Shark Tank investor attributed much of her understanding of failure and risk-taking to her upbringing.

“I copied what my mother did with my father. He worked two jobs his whole life to support us, but when he came home, he handed my mother his paycheck, and she always handed him a $20 bill,” she said.

She referred to it as "dad's mad money," a small allowance of $20 that her father could spend however he wished until the next payment came a week later. This system reflected her father's freedom to make choices without criticism, a concept Corcoran later adopted in her management approach.

In business, Corcoran recognized that employees needed the freedom to experiment and fail. She believed mistakes could drive innovation. By setting aside 5% of the operating budget as “mad money,” she allowed her team to make mistakes without the fear of financial repercussions. She emphasized:

“What their job was to spend it before the year ended so that they could discover new things.”

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The key to overcoming rejection

Throughout her career, Corcoran faced constant rejection, particularly in the real estate industry. However, rather than being discouraged, she learned to identify the qualities that distinguished successful salespeople. She explained:

“I made a study my whole life of trying to figure out why I had certain salespeople earning three or four million a year selling apartments and then I had someone on average making $65,000.”

Corcoran realized that the key difference was not in their sales contacts or work ethic but in their resilience. The Shark Tank investor noted:

“The only difference between the people that were hugely successful and those that were not were they took less time feeling sorry for themselves.”

In Corcoran's view, successful individuals did not dwell on failures. Instead, they were able to recover quickly and move forward. She explained that the ability to face setbacks and continue pushing forward was key to reaching success, as those who persisted despite challenges were more likely to reach their goals.

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Turning setbacks into opportunities

Barbara Corcoran also shared the story of one of her top salespeople, Carrie Chiang, who thrived despite a major setback. After the stock market crash in Taiwan, Corcoran feared the worst for Chiang, whose business relied heavily on Taiwanese clients.

“At six o'clock, now this is like what, 20 hours later, she rumbles into my office, she's very put together, hair was a mess, her mascara was smeared like somebody had beat her up,” Corcoran recounted.

However, Chiang’s response was anything but defeatist. She immediately adapted, using the crisis as an opportunity to secure new business.

“What did she do? She talked to everyone she ever sold a listing to. The sky is falling, you're losing your money, you better sell now,” Corcoran shared.

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