Brothers Reza and Mehdi Farsi turned their love for biking into a business by launching State Bicycle Company. In this episode of Shopify Masters, Mehdi shares how they market their bikes, coordinate sponsorships, and create limited-edition bikes through partnerships with Wu-Tang Clan and The Simpsons.
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From biking enthusiasts to business owners
Felix: So you’ve always had a lifelong passion for bikes. What made you decide to funnel that passion into a business?
Mehdi: My myself and the co-founder here, Reza, my brother, grew up around bikes, cycling. It was just something that we were exposed to as kids like everyone else, just riding bikes around. But then as we got older, we became fans of the sport. Lucky enough to travel to France and watch Lance Armstrong in his prime win the Tour de France. We spent a couple of summers in Europe watching bike racing, and it’s just something that we loved. Right around 2008 we started noticing a lot of our friends were riding fixed gear bikes, and in the process of wanting to get those styled bikes that were really simple, cool, customizable, fun projects to work on, we realized there wasn’t really a lot of options, and the options that were there were not affordable. So we went down the path and a rabbit hole of figuring out how we could start building our own bikes and eventually starting a business.
Felix: Did you both have experience starting businesses in the past?
Mehdi: It was not the first business. Both he and I started a business. We’re just really entrepreneurial by spirit. We initially were doing just printing t-shirts. A lot of people I feel like to get their first business experience printing and selling t-shirts. That evolved into importing and selling the equipment to print t-shirts. We found that that was more lucrative than actually printing the shirts ourselves, so we got into the machinery basically enabling other people who were starting out and wanting to start their own business to get the equipment. That’s what that business evolved into. Prior to starting the bike business, we were importing mid-century style furniture. That business actually was pretty successful right out of the gate. I think we grossed a million dollars in our first year of business, which we were 23 at the time, and that was phenomenal. We were really excited about that. We really started the bike business as a side project, as a passion project. We just wanted to get some cool-looking bikes for ourselves. Once we started, it just snowballed and eventually, we did discontinue selling furniture. And we’ve been focused on selling bikes full-time for just over 10 years now. We really enjoy the business that we’re in.
Felix: Can you share some of those things, some of the biggest lessons that you learned from each business that helped you get things off the ground sooner for subsequent businesses?
Mehdi: I’m sure there are dozens of lessons that I’ve learned from each experience, and we’re still learning. But from the t-shirt printing business, I would think that we learned to be really dynamic. That was our first experience with any type of online business, and most of the sales were through eBay at that time, which was the most predominant third party platform. This predates Amazon’s pinnacle by many, many years. So we were selling shirts on that. We were just really moving quickly. If some kind of topical thing happened in politics or sports, we would make those types of shirts and just learn to be really flexible and adapt to situations, so we could capitalize on whatever was hot at the moment, whatever was currently relevant. Moving on to the t-shirt printing business, obviously, now we’re dealing with more t-shirt printing equipment business I should say. Now we’re dealing with a much higher price point product. It’s not a $20 t-shirt. We’re talking about equipment that is sometimes in the thousands of dollars, and these are customers that rely on that equipment to really power their business, so they can’t afford for something to go wrong with that equipment or any delays when they place an order. They might need that equipment right away because they’re going to an event, et cetera. With that type of business, really, I think the big takeaway was really focusing on quality control, especially when you’re selling a product that people rely on for their livelihood. The quality and reliability of whatever you’re selling need to be top-notch.
Felix: What are some ways that you are able to do quality control on the products that you’re selling?
Mehdi: So on this particular product we did have some hard lessons. When we were selling the equipment, we were importing and very inexperienced at that time. Just fresh out of college. We were going with vendors that maybe we didn’t vet as well as we wanted. There were delays in the product, and then what type of service and support they provided to us after the fact was really not well-investigated. We were just moving quickly in order to start a business without doing great due diligence. That’s a lesson, I think, that we’ve learned and been able to carry over into our current business, State Bicycle Company, where the quality of a bicycle, it’s moving. People use it for transportation. They need something reliable, and that’s a lesson we learned seven, eight years prior to making sure that before we release any product, everything is really well tested, backed by a great warranty, and our suppliers understand what kind of quality we’re demanding.
Quality and its importance for building credibility
Felix: When it comes to quality control, is this something that you define as what is the quality?
Mehdi: With our bicycles, everything is gone through a pretty rigorous testing protocol, and that’s through the factory, directly overseas, and also before any product is released it is tested here. So we work with a variety of riders. Depending on the product, we might be working with engineers in order to not only design but also test in real-life conditions to troubleshoot any particular pain points that might be going on. It really is by a variety of methods that we use, but the testing is rigorous, and that’s why sometimes it might take us two years to release a new bike just because of all the different series of testing, test riding afterward and then later on if we do notice that something needs to be changed, going back and testing and re-testing. That’s where we’re at with the bikes.
Felix: What does that do for your business if you invest in quality control?
Mehdi: I think there’s probably a lot of young companies listening. If you want to be a brand that lasts 5, 10, 15, 20 years, quality and reputation go hand-in-hand. So your brand is really only as good as the reputation and the quality of your products. And we’re not looking at our customers in the sense that they’re going to buy one time from us and we’ll never see them again. We want to bring people in that buy a bike from us, they buy their next bike from us, maybe one day they buy a bike for their kid from us, and then they’re also out on the streets and they’re highly recommending our product through word-of-mouth, et cetera. I think it all starts with the quality of your products. If your website looks great, if your pictures look great, if the product looks great but the quality isn’t there to support it, you’re not going to go very far, especially with a product like ours with a bicycle. And that word-of-mouth and that trust and that customer experience that you build is so crucial to companies, especially when starting out. It’s very expensive to attract new customers through digital marketing. It can be expensive, but one of the easiest ways to get your company off the ground, your product off the ground is by developing that word-of-mouth, and it is essentially free as long as you’re putting in the work to make sure that you are delivering or exceeding the promise you make to your customers when they click that buy button.
Felix: What gave you an accelerated path towards success when you started State Bicycle Company?
Mehdi: We did have a background in importing and with the way that the bicycle industry is. Most of the manufacturing is done overseas. So being able to navigate supply chains, whether that would be in Taiwan or China. We do use both here at State Bicycle Company. That was really, really crucial. Having that experience was great, but then just on the marketing side of things, all of the other businesses I mentioned were online businesses as well, so knowing some dos and don’ts, learning what kind of revenue is good revenue, what kind of revenue is bad revenue. With the furniture business I mentioned, we were doing a million dollars per year right out of the gate, but there were times where our advertising budget was not in a great place to where we were spending money and losing money many months because just the customer acquisition cost was high. So just learning about keeping your costs in check and all those things and how to best utilize certain marketing channels, as we went was a good lesson we learned prior to going live with State Bicycle, which has by far been our longest business thus far.
Felix: What are some other hidden costs that entrepreneurs might not be aware of?
Mehdi: Another big lesson we learned with the furniture business. It all bundles in with quality control, but with the furniture business, we were dealing with a lot of really particular clients. There were a lot of real estate people, for example, that were using our furniture to stage houses. There were customers that were spending quite a bit of money per cart. If you are dealing with a little bit of a more affluent clientele, typically speaking, I find that their standards are very high. Some of the ways you can really cut into your margins and cut into your profit is making sure that, especially when you’re shipping a large item, making sure that the packaging is really done well, everything is tightened up so that when the product gets there it isn’t damaged. That was probably a specific lesson to the furniture, but minimizing any type of return or replacement cost because things are missing or things get damaged through shipping. That’s a quick way to eat into your margins if that stuff isn’t all buttoned up.
Felix: State Bicycle company started as a passion project, when did you guys start taking it more seriously?
Mehdi: We got our first batch of bikes in March 2010. It was 140 bikes. At this point we had decided we were going to move forward and start selling these bikes, it was just a response to how quickly we’re able to sell them, the enthusiasm we were getting from the local community around Tempe when people would see our bikes, inquire about them and just how interested people were in the product. That first set of 140 bikes sold out very quickly, and at that point, I think we realized that this could be a really viable business and also something that we could really enjoy. So we kept reinvesting and getting more bikes and again repeated the process. They were selling out. We were building a website and every shipment dedicates more and more resources to it to the point where we realized we should be doing this full-time. I would say about a year and a half, two years in was when we ultimately phased out of the furniture business.
Felix: How much time did you have to dedicate towards it to get it off the ground?
Mehdi: I did mention that we did get our first shipment of bikes in March 2010. We were initially looking at different samples of bikes. It started with just wanting bikes for ourselves back in 2008. It was a two-year period between getting the bikes then realizing that this is something that we could potentially start selling and marketing and designing and developing to then really starting to go back and vet the factories and meet with component suppliers and handpick all the different parts that were going on the bike, placing more samples. All of that was about a two-year period, so it wasn’t something quick. But it was something we were able to balance while running our own business. And in fact, the fact that we did have our own business probably allowed us to have a little bit more flexibility with how we were to dedicate our times versus if we did have to be at a different workplace or school during periods of time. And also, we were young, so both of us were single, unmarried I should say, no kids. I know that it is possible obviously to start a business when you are older and wiser and have more experience, but oftentimes it’s good to just act on your ideas when you’re first starting out just because there is a little bit less responsibility on your shoulders, and if something doesn’t work out, you have very little to lose when you’re first starting out. I always say when you’re young and you have very little responsibilities it is a great time to dip your foot in the water in entrepreneurship.
The channels to generate interest and initial sales
Felix: How were you selling those in the initial run of bikes that you guys purchased?
Mehdi: Right out of the gate it was eBay, Craigslist, word-of-mouth. It was friends and family. These are the people that helped and supported us. Most of it locally. We weren’t really shipping because we hadn’t even built out a website for it. That was the initial push and then next then it became a website. Also, message boards. There’s a ton of fixed gear and bike message boards that we’d go on and, “Hey, we are coming out with this bike. Here are the details. Send those PayPal if you want something.” Yeah, it was just hustling and selling bikes in any way possible to just get it off the ground.
Felix: What was the goal of selling those bicycles?
Mehdi: I think we were just curious to see if this was a viable revenue source on the side of everything else we were doing. I think the initial idea was like, “Hey, we’re making a decent living selling furniture, but let’s supplement our income selling bikes and see how it goes.” But we didn’t necessarily foresee it being a full-fledged company I think until several months or even years after the initial batch.
Felix: Do you remember how much it was priced for in the early days?
Mehdi: The first set of bikes we have are now known as our 4130 Line, and they were $429. Now they’re $459. So in 10 years we’ve made a ton of improvements and kept the price relatively the same, $30 more than it was before. Yeah, that line of bikes has been a staple in our lineup since inception, and obviously, now we have a lot more offerings. But the very first style bike was our 4130 fixed gear bike.
Felix: What do you credit to keeping that price stable over the last 10 years?
Mehdi: As we scale, we’re obviously able to make some efficiencies in our supply chain, whether that’s instead of ordering 200 cranks, we can order 2,000 cranks at once, and that tends to drive the price down and plan orders for the whole year in advance, and again, committing to larger numbers helps bring the pricing down. That’s really the way. Any bike that we put out we want it to be of good value. Ultimately, we want to be affordable for our customers so that we can get more people on the road, so providing affordable options has always been one of our missions. That’s the genesis of the company. My brother and I wanted to get fixed gear bikes and we couldn’t find a place where we could just go in and buy an affordable good-looking fixed gear bike. Everything was piece by piece, and by the time you bought the frame, wheels, crank, et cetera, we’re looking at well over $1,000 to get into a project that we didn’t know how long we were going to stick with it or whether we were going to enjoy these type of bikes or whatever it may be. And we were in our early 20s, so we didn’t have a ton of money to spend on that type of thing. That really was the genesis of the company. Still to this day most of our customers are the mid to late 20s, a lot of college students. So we understand people who want something that is nicer than what you would see in a big bucks store, but also, they don’t have the type of money to spend on some of these other bikes that are out there that are $1,500, $2,000, $3,000 that when you go into a bike shop you might see.
Felix: How did you get people to give you guys a shot and purchase your bicycles?
Mehdi: Initially, it was difficult. The first batch of bikes was purposely unbranded just because we didn’t want to put a logo on there that people they didn’t know or maybe they didn’t trust. We really tried to translate our quality and our details through what we like to call visual communication, which is basically photos and videos. I think our attention to detail on those particular methods of communication translated really well for people, and they understood that, “Hey, this bike looks great. It’s checking all the boxes in terms of specs that similar bikes might be, but the price is really good. Maybe half the price of a normal one. We’ll go ahead and try it.” But you’re right. We didn’t have a brand name. We were relatively unproven. I mentioned forums, Reddit, message boards. There were a lot of people that were questioning us and questioning the quality, so just being able to, as an owner, go on and talk directly to customers and answer any hesitations or any questions that people had and being really active. I wouldn’t even let one comment on a social media post or one comment question on eBay, whatever it be. Nothing went unanswered. Being really active and really transparent I think was really critical. And then the second thing, which we actually did pretty early on, was in 2011 we connected with a couple of local riders here who were really active in the fixed-gear scene and really talented racers, and we sponsored these guys, so they were riding our bikes. At that time, there was a big race in Los Angeles, and it coincided with the L.A. Marathon, which is right around Saint Patrick’s Day in March every year. These guys are called the Wolfpack Hustle. The night before the marathon at 2:00 AM, while all the streets in L.A. are closed for 26 miles, they’re setting up the barricades for the marathon early the next morning. They would throw a bike race and crash that course, and you would get 3,000 riders out at this on fixed gear bikes just doing this illegal street race at two o’clock in the morning. And it was great. You could ride your bike in L.A., no traffic, barricaded streets. We went there in 2011 and basically relatively unheard of maybe outside of Tempe, and we took first, second and third place that year, which everyone was just like, “Who are these guys?” And I think that was another way that put us on the map because at that point you can’t really knock the product. We swept the podium with an unknown bike brand, and I think we started seeing a lot of momentum after that. For this type of product, any type of endorsement, obviously influencers, ambassadors, people that are out and using the product, and showing the performance, improving the performance I think that can be really critical for this type of product and for probably a lot of other products too.
Sponsoring athletes and building long-term relationships
Felix: Is this still a strategy you take today to sponsor athletes?
Mehdi: Actually, to this day, one of those three guys is still on our team 10 years later. He turns out he’s one of my best friends. We use him in a ton of content and video marketing still. We have a team of nine male and female riders, and we do anywhere from 6 to 12 races around every year around the country, around the world. That’s definitely a part of our strategy. Not every single one of our customers is necessarily a racer and not every single one of our customers is necessarily interested in racing style bikes, but having that as something that appeals to a certain customer is certainly something that we value. It lends a bit of a face to the brand as well, our race team does.
Felix: What makes a successful sponsorship in terms of bringing more business?
Mehdi: I think it’s going to boil down to someone who is authentic and genuinely likes you as a company and genuinely embraces your ideals. We’ve gone down the road of trying to get really accomplished riders and even paying them to ride our bikes, and they get great results. But ultimately, they were in it for a paycheck. And those types of relationships, I think, are usually short-lived. You need to find someone that embraces your company ideals, whatever that may be. In our case, we want someone who can perform but also someone who knows how to relax and have a good time and have fun while riding because, ultimately, riding a bike needs to be fun. So we look at each athlete holistically. They don’t need to be maybe an A-plus rider, but as long as they are a very good rider or a decent rider and they have an A-plus personality, that tends to go far away for us. That’s what we’re looking at and someone that we know we can be with long-term. I think building that familiarity with your audience, whether that’s through videos, through your social media pages, whatever it may be. Building that familiarity long-term is important, so if you have some kind of sponsorship or some kind of ambassador and those types of people are cycling through and having a lot of turnovers, I don’t think that’s really the best way to do things, so trying to build long-term relationships.
Felix: What are some ways that you’ve been able to take the sponsorship and actually use it more in terms of getting more engagement from your audience?
Mehdi: There’s a number of ways. We will use our race team and our riders. The first way is obvious, going out to races, winning, going up on the podium, wearing our clothing, and having representation at key events. That’s critical. As I said, not everyone’s into racing. Not everyone’s going to pay attention to that. That only takes you so far. Another way that we use our riders or again as ambassadors. We throw our own events. And they’re not races. Maybe we’ll do a 20-minute mile ride to just get people out on their bikes or even a longer ride. We do a ride from Phoenix to Tucson and have our riders there to be experts for people, whether they have a flat tire and they need some help or just a question about tips and tricks. Having people with experience that are knowledgeable athletes is really critical. Another thing that we do with our riders is a ton of content, so whether that’s using them in our photos for products, whether it’s clothing or bicycles. These are people that are going to be comfortable on the bike and be really authentic and they use bikes, so that’s what we try to portray in our photos. We also have a really fun web series where we ride bikes up a mountain called Riding Fixed Up Mountains With Pros, and we pair one of our athletes with a professional cyclist, so this is like a Tour de France professional-caliber cyclist, and it’s an interview show, so people can get to know our riders that way as well. And we use them really as the face of the company in that sense.
Partnership with brands for limited edition products
Felix: Speaking of partnerships, you had collaborations with Wu-Tang Clan and The Simpsons. Can you say a little bit more about what these collaborations entail?
Mehdi: One of the things that make our company unique from most traditional bike companies is our partnerships. Me and my brother started this company. We didn’t really come from a bike background. So we wanted to bring in a lot of our influences from just our personality, and I think that shows in the company. One of the things we’re really interested in is streetwear and sneaker culture. And in that realm, you see a lot of collaborations and co-branded items. That’s one of the things that sets us apart, and it’s something that the 20-year-old to 30-year-old customer really appreciates too. They want a bike that is special and limited edition and reflects their personality and their interest. You mentioned we did a collaboration with the Wu-Tang Clan. That was centered around the 20 year anniversary of their first album in 2013. And that bike did phenomenal for us. We’ve collaborated with clothing brands. We’ve collaborated with breweries. We’ve done bikes with bottle openers on it that are themed for a brewery. We’ve done a lot of collaborations. The Simpsons was probably our highest-profile one thus far, and that was a big one we did back in 2016. And we have some more coming out this year. I think that’s going to always be part of our DNA. It gives us inspiration to design around. It gives us more talking points about our brand. It brings in a new audience, so whoever we’re partnering with. It’s something that we can maybe introduce our brand to their audience, and it also gives our audience something new and fresh to purchase.
Felix: How do these partnerships and collaborations come about?
Mehdi: There’s a number of different ways. And this might be kind of like giving advice. For someone who’s just starting out trying to go and get that big, big collaboration with your favorite sports team or your favorite Disney character or whatever it maybe might be a little bit daunting. But the first ones we did were really organic and really like, “Hey, I follow on up and coming clothing brands on Instagram and we exchange information, and I realized your customers and my customers probably are about the same people. There’s a lot of overlap here. Let’s do a fun project.” And it can be something as simple as that. The Wu-Tang bike project, believe it or not, I was walking a bike through Agenda, the streetwear trade show. It was a black and gold bike, and I got tapped on the shoulder by Power, who was one of the original producers of Wu-Tang Clan. He said, “I need that bike, and I want to do a Wu-Tang bike.” It was just like the right place, the right time on that one. And then something more high profile like the Simpsons. That was going and dealing with 20th Century Fox at the time. Now they’re Disney, but that was dealing with 20th Century Fox, and that was a straight-up licensing deal where we were having to come up with projections and royalty numbers and minimum guaranteed payments. And that one was a little bit more one-way where they’re sending us assets and we have to get certain things approved. And it’s like a licensing deal the same way you might buy a candy bar at the candy store that has a picture of your favorite cartoon character. That was like a straight licensing deal. We’ve done them in a number of different ways. There are licensing expos in Las Vegas and New York where you can go and find brands to partner with, but if you’re just starting up, I think the best advice I could give is to try to find a company that is in a similar stage as you. It’s going to be very difficult for a brand new brand to work with someone like Nike, for example, because they’re a multi-billion dollar company, but find someone in a similar stage as you and has a similar customer base and someone that you’re not competing with but someone that you complement with and organically build that there. And I think that’s going to be the most successful way to do it. Ultimately, the best way to win any collaboration is that both parties need to feel that something is being added to their brand. It has to be a two-way street.
Felix: How do you turn a customer that has come from a collaboration into a long-term customer?
Mehdi: I think that our products by nature are not just a one-time purchase. So with any bike, you’re going to want to change it, modify it and that at the very least maintain it over time. That’s things like getting new tires, replacing the chain every so often. Maybe you start off with one saddle, but now you’re riding a more comfortable saddle. You want a lighter saddle. We’re always evolving as riders, and we’re always evolving as a company, so we’re always going to be having new options and new ways to style and basically tune up your bike and make it perform differently or make it perform better. And the way that we communicate with our customers is through various email flows, reminders a certain time after purchase, “Maybe it’s time to check up on all these points that are wear and tear.” Just like a car, you need to maintain it every certain number of miles, so we do have checkups with that. And then we try to constantly be engaging our customers with our social media channels and our YouTube channel so that we’re always doing something, a content piece, a giveaway, whatever it may be so that we’re top of mind and hopefully it isn’t just a one-time purchase and you’re done with us.
Felix: How often do customers come back and buy?
Mehdi: We start seeing subsequent purchases on a typical average about 60 days afterward. And I’m not saying they’re buying another bike, but they might come back and buy a new bar tape or change something up. It gives people an opportunity to change something up. But typically speaking, a customer of ours is close to making four purchases within a lifetime, which is great. That means someone is initially buying a bike, and they might be changing their tires, their wheels. Most of our parts are interchangeable, so even if they buy a black bike, let’s say, and then six months or a year later we come out with their favorite sports team’s bike color or whatever it may be, they can buy the frame and even get the parts swapped out. Bikes keep their value pretty well too, especially when we’re talking about limited things, so it’s not uncommon for people to buy new parts, sell their old ones. I myself I’m always in that bucket. I’m always tinkering with all of my bikes. It very much is a fun project. As much as it is something that you ride, I think part of the fun is similar to tuning our cars, and there are other hobbies like this. Part of the fun is just tinkering, playing around with your bike, changing it up to customize your ride.
Felix: What is the marketing that happens after they become a customer?
Mehdi: We do have a series of email drips. If you’re opted into the email list, after a certain amount of time you’ll get a reminder, a follow-up, “How is your bike?” Oftentimes we’ll send out thank you and coupon codes that are specifically targeted to certain accessories and parts that complement the style of bike that you bought based on what previous customers bought. Through our newsletters, we’re always releasing fun and new products that we’re enjoying, some of it seasonal, but stuff that we’re enjoying and stuff that we’re using ourselves as riders, and those are our recommendations to our clients. The email platform we use is Klaviyo, and I find that it’s really good as a plugin for Shopify for these types of campaigns and this type of marketing. You can get as specific and as granular as you want to. I don’t know that we’re the most advanced and sophisticated at doing it, but for a novice or someone who wants to get really, really specific in the types of emails and targeting, that’s a great platform.
Tools and apps for scaling the business
Felix: Any other apps that you use to help power the business?
Mehdi: We use a series of Bold apps for add-ons and product customization. I mentioned when a customer buys a bike, it’s not the only thing they’ll need. There’s a lot of accessories and parts and upgrades and swaps that you can make. So we’re using the product options from Bold. I think that one’s probably like a staple in our quiver there. That’s the main one. We’ll have some kind of email pop up for more or had a better app usually running around holiday time or around certain promotion, so that’s another one that’s good. We’ve used ViralSweep for contest and promotions, so if you’re running a giveaway, let’s say you want to give away a bike, you can run email, signups there, but that app also people can get extra entries into your contest if they share it or follow your social media accounts, so if you want to drive more followers to your social media accounts. I really like ViralSweep. I think those are the big ones that we’re using in terms of sales and marketing.
Felix: What has been the biggest lesson that you’ve learned within running State Bicycle maybe within the last year that you want to apply the lessons from this year?
Mehdi: I think just being persistent is really critical. I mean, our industry last year was hit pretty hard. This is going back to late ’18 and most of 2019. Our industry was hit pretty hard with the tariffs and the toll trade war. We were very persistent and resilient, and we were able to shift all of our production from China to Taiwan. Later on, we were able to petition the government and actually get a tariff exemption from the Trade Department, so our bikes were excluded from the tariffs. We were the first bike company to get that exemption, and the exemption was for our entire industry, not just for our company. That was a big win for us last year. I think a lot of people your first instinct, when things get tough, is to abandon something or just accept something like, “Oh, we’re going to be paying these tariffs, or this is going to be the way it’s got to be.” But we did everything in our power to make sure we could continue our business the way we wanted to run it, even though some of the things we did took a lot of bandwidth. The trade tariff was a complete long shot. We took the long shot and it panned out for us. Yeah, I think just persistence and being able to stick with things when times are tough. I am sure there’s a lot of businesses that are weathering storms right now as I talk to you during this whole COVID pandemic. I think for those people that are listening, find a way to adapt, or make the best out of the situation because persistence will ultimately pay off.