Becoming an Entrepreneur

Be helpful. Make something people want

I hold a BA Honors (first class), an MSc (with distinction), and a PhD. It was humbling to realize tat such things are largely irrelevant in business. What counts is one’s ability to be helpful and mke something that people want.

• Choose a venture for which you have great empathy for proposed customers. Ideally, be a customer yourself (“eat your own dog food”).
• Develop your industry knowledge by working in the industry, talking to people who understand it, and reading about it.
• Build your technical expertise by developing rare and valuable skills in your proposed area of business.

Provide purpose

I started the business with only a vague idea of what I was doing. I came to understand that my most important responsibility was to provide a defining purpose and a clear vision for the venture.

• Your job as an entrepreneur is to be Chief Enthusiasm Inspirer for a purpose that others can rally to.
• If you choose a purpose for your business that you genuinely care about, it will keep you going during the hard times.
• Find a way to express your purpose as simply as possible, ideally in three words.

Learn by selling

Although selling our services to potential customers was the last thing I wanted to do at first, I came to understand that it was the most important activity for my business.

• The main value of selling is that it is a learning process. It shapes your business by providing you with essential feedback about what works.
• Every entrepreneur needs this learning process in order to succeed, so it’s vital to start selling as soon as possible and devote significant time to it on an ongoing basis.
• Ignorance and prejudice surround the act of selling, but the reality is that principled selling is a mutually beneficial activity that nurtures relationships.

Measure everything

When I started my business, I was running from one emergency to the next. After my rethink, I adopted a very proactive approach to tracking and analysis.

• A business plan can be a useful way to summarize your business’s purpose, the means by which you propose to make money, and the steps that you intend to take in order to reach a few easily understandable goals. Nonetheless, your business plan is just a guess that will change over time.
• Business tracking is more valuable than planning. It is the most important guide for all your activities. The information (or business intelligence) collected by tracking is the most valuable aset you have.
• In order to gather business intelligence, you need to build, maintain, and analyze databases concerning all aspects of your operation. This chapter has provided examples of data collection relating to marketing and sales activities.

Don’t spend it until you’ve got it

I learned (the hard way) that spending money until you run out is not a good plan. Instead, I came to adopt the approach of funding the business from earnings.

• Self financing through revenue is by far the best financing there is. It keeps your business focused and maintains your freedom and independence. Whenever you are considering any investment into your business, the most useful question to ask is whether you can finance it through revenue. It may not be possible to rely on revenue alone (it wasn’t for me), but the benefits mean it’s certainly worth trying.
• Track your cash-flow position as far into the future as possible: it is your early warning system when it comes to financing.
• You probably do not need nearly as much financing as you think. You may even need to run out of money in order to achieve the psychological changes necessary for your growth as a business owner.

Make yourself redundant

I learned to stop increasing my responsibilities within the business and do the opposite: extract myself from workflows as much as possible.

• Extracting yourself from day-to-day operations is essential to your own freedom as an entrepreneur. It is also what allows your business to scale.
• There are three steps to extracting yourself:
  • standardizing your product
  • creating procedures for all your operations
  • optimizing those procedures (for example, by using mechanization or automation whenever you see a repetitive process).
• Be careful not to waste time optimizing ultimately senseless activities. It’s better to eliminate an activity as soon as you realize that it is commercially unsustainable, rather than waiting until the market forces you to.

Revenue is vanity and profit is sanity

Instead of focusing on growth, I learned to focus on what matters for the health of the business: profit.

• Every entrepreneur has to make the transition from the initial pursuit of growth to the conscious pursuit of profit.
• If you don’t adopt the profit motive, your expenses will rise to match or outpace your sales and you won’t make any money.
• Only by adopting rigorous tracking and analysis will you know where your profit comes from. You are unlikely to get to profitability unless you implement sufficient tracking to give you this information.

Act despite uncertainties

I had to give myself permission to risk failure, in order to achieve something remarkable.

As Reid Hoffman has put it, if version 1.0 isn’t embarrassing to you, then you’re launching too late.

Just Fucking Do It. This is what the experience of entrepreneurship teaches us about life. Living is expressed in action, not contemplation. A thought that does not lead to action somewhere down the line is useless, except for the gratification it brings in the moment. It doesn’t get you anywhere.

The only way to be creative is to act. If you really take this knowledge on board, it frees you enormously. If you want to make anything, action is always better than inaction, no matter how imperfect you think the result is. Our conditioning has left us with the fear that starting a business is as risky as jumping off a cliff, but the biggest cliff is the one in your mind. Jump off the cliff and build your wings on the way down. It’s scary at first, but once you are airborne, it is a wonderful adventure.