Startup: An Insider's Guide to Launching and Running a Business (4 page)

Larry Ellison of Oracle and Marc Benioff of Salesforce.com are two examples of this type of entrepreneur. They both created business models that are targeted at other businesses, and as such have fewer transactions at a higher dollar amount when compared with the B to C working model.

Takeaways:
Which of these work models sounds the most satisfying to you? Where does your business idea fit into this picture? Will you start in one category and deliberately work your way up?

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Grains of Sand

The only way that we ever accomplish anything of real enduring value is through
sustained concentrated effort.

The author Malcolm Gladwell writes about the idea of
10,000 hours
. His theory states that people who rise to the highest levels of accomplishment in any area—be it sports, music, or any profession—do so by spending at least 10,000 hours focused on it. This equates to about 10 years of intense focus. He asserts that the geniuses we watch and admire acquired their skill not through any kind of gift from nature or from heaven, but through sheer force of sustained and focused attention. I agree with this.

Building anything, be it skill in a foreign language, ability to play the piano, or growing
a business
, is like building a mountain a few grains of sand at a time. The image here is that we are starting with nothing, and have the intention of building something of note. Something remarkable. A mountain. You add a handful of progress every time you work on your project. If you are distracted and don’t continue to add on, when you eventually come back to it you will find that your progress, your mountain building, is substantially smaller. How many handfuls of attention would you need to put on a large task before you have a substantial accomplishment to look at? If you have ever worked on something or practiced something enough to become
excellent
at it, you know that it was a long process. Growing a business is also a labor-intensive process that will require an investment of sustained attention over what is likely to be a long period of time.

Note
Being an entrepreneur—raising a business from a mere idea to the level of a successful enterprise—is a multifaceted undertaking that will only come to fruition through the coordinated and concentrated arrangement of hundreds of thousands of individual decisions and actions on your part.

As a cautionary tale, some would-be entrepreneurs that I have seen are hot and cold on actually doing the work of realizing their business ideas. One fellow in particular who I occasionally meet up with here in Austin, Texas, has substantial means at his disposal; he is from a wealthy family. He wants to be successful outside of his family’s money, and has ideas that he is enthusiastic about. He puts his money and his energy into projects—up to a point. He goes all-out for a little while, and then cools off. He stops putting in the time, and
the projects wilt on the vine. This is disheartening for him, and confusing for the people enlisted to help out. I think this is a problem of
intrinsic motivation
: his need is insufficient. In other words, his “why” must not be clear or sufficiently powerful enough to him.

My experience has been that when the project is right, then substantial amounts of work take care of themselves. It is not so much deciding to do it—in my case I simply find myself pushing toward the objective because I understand my “why” very clearly. Because I make sure I can connect the dots between the goals of the business and the present moment, my desire to get to the destination powers all the thousands of moving parts by itself.

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Intrinsic Motivation

I make it a point to avoid the rah-rah cheerleader approach to coaching would-be entrepreneurs. I think it is a dangerous waste of time and resources for people without sufficient directed, built-in motivation to start their own businesses. Several of my good friends are extremely interested in getting people excited about starting their own businesses, and I frequently chide them about this, as I think it is a disservice.

I am not interested in convincing people that entrepreneuring is a good idea. What I am extremely interested in is helping people that already
know
they have to do it to be successful. These are
intrinsically motivated
would-be entrepreneurs that are moving forward.
²
They may need guidance, but they certainly don’t need a pep talk about why they should be trying to build something. These folks are the ones that I like to spend my time coaching and assisting. Helping this group to efficiently get their ideas out is more useful to society than trying to convince otherwise passive people that they should get out there and take a chance on starting a business.

The kind of short-term motivation resulting from a good pep talk is no match for the mountain-building task of going out there and doing it.

__________

²
They have a fire burning inside them that makes them move and build something. They don’t need a pep talk, but occasionally they need help and advice about how to make their vision a reality.

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A Vision to Guide You

If you have decided that you are going to commit to building a business, or if you are already on your way, that is fantastic. Let’s do a quick exercise together that I think will help you to get more out of your entrepreneurial voyage.

Imagine a sailing ship, white and shining in the sun . . .

Imagine that you have the boat loaded with supplies and crew, all the is equipment on board, the sails are up, and you are pulling out of port, away from the safety of land.

There you are, standing at the wheel, looking out into the bright expanse ahead. Now I will ask you a deceptively simple question: Where are you going? Are you just going
out
? Many entrepreneur sailors do just this—they head out to try to see what they can see. Inevitably, everyone in business is doing this to some extent—leaving a measure of safety and certainty behind in favor of self-determination and the excitement of finding out
what will happen
. You have to leave port and throw yourself into the wind and currents to see what you can see, find what you can find.

However, if “sailing” is the beginning and end of your strategy, you might discover problems along the way that would have been unnecessary and avoidable. What will you use as a compass? How will you interpret what your compass tells you? What decisions will be made, and on what basis?

As you leave port, which direction are you going to head in? If you are not sure, you might head south one day and north the next. Are you out on this vessel to get somewhere? If so, where? And how will you know when you get there?

I suggest that the most successful entrepreneur-sailors absorb themselves in every moment of the sailing; enjoying it for everything that it is worth. And they couple this
kinetic mental absorption
with a guiding vision. This vision sees them in a beautiful destination, a desired future place that they want to inhabit and experience.

The vision I am contemplating is a thing of rich detail, an
emotionally charged
mental construct, vibrant with colors, sounds, smells, and feelings. This destination
vision is why the sailor is at sea. The vision is of the place being searched for and, in the end, even built by hand if necessary.

As the entrepreneur-sailor encounters obstacles and challenges during the voyage, this vision and all of its detail serves as a beacon to inform them of which way feels right.
Are we heading south or north? Are we running fast along the coast with the prevailing wind, or tacking against it?
The vision guides those decisions. It is this vision that will also eventually inform the realization that the
destination has been reached
. The voyage, as all things, will come to an end someday—the vision will guide you to the place you want to be when you disembark from the boat and begin your next chapter.

No matter what kind of business you are starting, be it an Internet, software, technology company, or anything else, a vision is something that you as the founder must provide. As an illustration of how to apply this, I am going to frame it in a simple and accessible business model: a pizza restaurant. This is a business that we all understand, so let’s take a look at how
vision
applies here.

A Passion for Pizza

You are going to open a pizza restaurant. As the founder, how are you organizing your thoughts and purpose to make this restaurant all it can be? In the absence of a vision, you may open the doors to your pizza restaurant with the calculation of how many customers you need each day to break even, and then hope and plan to exceed that amount. This could be a guiding principle for you, but it is not very colorful, is it? So, how about a vision that inspires and informs your day-to-day actions and gives meaning to every step from the first day all the way out to years into the future? Here’s a thought:

I love making pizza. I love to see people smile when they try my grandma’s pizza crust recipe. I know it is better than any other in my town. I am going to use this passion to open a restaurant that will be the single most popular restaurant in the neighborhood. People will wait just to get a table every night. When the time is right I’m going to open other restaurants in other neighborhoods, which will provide the same quality and experience to our customers. For the rest of their lives, anytime my customers think “pizza” they are going to think of my restaurant.

This is a sample narrative that can guide the entrepreneur in making many concrete decisions. Because you will do it for the love of it, you will

• Focus on quality and customer service, driving the popularity until it is standing-room only.
  
• Drive far past break-even or even profitable, heading to a future where there is enough capital to open other locations—yes, a pizza dynasty!
  
• Know what success looks like. You will also know when you
  don’t
  have it, which will drive you to change any aspect of the business that falls short.
  
• Know when you are on the right track. Eventually you will be rewarded with the satisfaction that comes from seeing a
  specific
  dream realized.
  

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The Bootstrap Mentality

The bootstrap mentality is the state of mind that comes from using your own cash to get your business going. Think about that for a second. When the money is your own, you can do anything with it that you want. An envelope with $10,000 could pay for a new kitchen in your house or a super-fancy vacation in the Bahamas. Or you could choose to invest it in your business. You had better be pretty damn sure of yourself if you are going to take thousands of your own dollars out of your wallet, with trembling fingers, and use that money to lease a new office, hire a new employee, or buy new equipment. This is very real and immediate stuff here.

Imagine how different it would feel if you were a manager at a big company and you had a budget of $10,000 to spend on a little project. You could easily decide to buy equipment or hire a contractor in that case—no problem, right?

Reframe that as someone knocking on your door and informing you that you need to write a check from your own bank account to cover $10,000 or $100,000 of office expenses. It feels a little less comfortable, doesn’t it?

The point is that, mentally, there is a huge difference between spending your own money and spending company or investor money. My advice to you is that you should always treat investor or company money
as if it were your own
when you decide when, where, and how to spend it.

Back in the mid-1990s, I started a company called Meridian Internet Services with my business partner, Sterling. We launched this business in pure bootstrap mode, using our own cash to buy everything. We started quick and lean, and began pulling in revenue from customers in only a few months. All of this revenue was then rolled back into marketing the product. We were making money, but not enough to build the next generation of infrastructure that we needed. This meant that when we finally decided that we needed to upgrade, it meant scraping together all available cash and credit and then personally committing to doing it. Imagine two guys sitting at a fold-up card table counting pennies and nickels and wadded-up $1 bills mixed with gum wrappers and pocket lint. That was us. We knew what we wanted (new Dell rack-mount servers), but we could not afford the number of them that we needed. Being technically minded bootstrappers, we decided to build our server farm not machine by machine, but piece by piece. We ordered dual-processor motherboards, server cases, network cards, fans, everything. Saving money got downright comic when I fashioned the server-mounting rails for our database server from raw aluminum bars with a drill press in my garage. One particularly painful part of this was when we bought server RAM. The market price at that time, in the late 1990s was $1,000 per gigabyte—and we needed a lot of it. In the end, we outfitted a fleet of new servers, at a time when we had no cash to spare. The point here is that this necessity, when combined with lack of resources, and a commitment to being successful in our chosen field, gave us a deep and profound respect for every single dollar.