In my last post I shared how I hit $20 million with one of my companies. I this post I’ll share my general approach to building businesses.
Not saying this is how you should work, just sharing how WE work.
Here goes:
COMING UP WITH AN IDEA:
We don’t build “idea” businesses.
What we do instead: Look at businesses that we can see work, and work for a lot of people, and we go build one of those. No “idea” required and we remove the uncertainty of figuring out if it’s viable or not. It’s obviously viable cause someone else is crushing it!
VALIDATION:
Since we stay away from having to come up with an awesome idea in the first place, we don’t need validation. There are plenty of businesses you can build that other companies have already validated for you. And when you find that thing, stop worrying about competition. ***Competition IS the validation.***
COMPETITION: Somebody else is doing it? Great! They’re making money? Excellent! Now we know it works!!! The more successful competition we find, the happier we are!!! 
BUSINESS PLANS: This often ends up being a way to push action further down the road. For us we do a one page plan and get moving. We download something like this, fill that bad boy out, and get to work. http://100startup.com/resources/business-plan.pdf
LLC/INCORPORATION: All but one of the businesses we’ve built (that worked out) we took to launch in 30 days and got to revenue in 60 days. If we don’t make money in 60 days we try something else. So we wait until we make our first dollar before spending money on this stage.
BUSINESS ANALYSIS: Demographic data, market analysis, the economic outlook… blah blah blah. More ways to kick the can down the road and to feel that you’re doing something when you’re really not. WE just get to work. If a lot of people are making money doing this thing, the startup cost is low, and there is no sorcery involved, it can be done!
PRICE: We don’t compete on price. Ever. We compete on brand, customer experience, speed of delivery, or some other factor. But not price. If you get those other things right, you can charge pretty much what you want.
FEAR OF AN IDEA BEING STOLEN: Ideas hold little intrinsic value without execution. However, you can start to extract value when you get feedback on it, massaging it, push and poke it, and really run it through the wringer. And the only way to do this is to tell people about it. This goes against our most basic instincts because we’re fearful that our ideas might be stolen. Well the reality is, most people are sitting on the bench with a gazillion ideas of their own that they are not executing on. You just added one more to that list. Either way, if an idea cannot survive competition it’s probably not that good in the first place. In addition, what happens when you launch? You can’t run a business without telling anybody about it.
Worrying about somebody stealing your idea is like worrying about someone trying to break into your dream home…but the home is still just a dream. For us, we share our ideas without a care in the world! Try to get over this stuff.
Don’t believe me, here’s a business idea I’m actively working on:
1) At home hormonal testing kits
Want to take it and beat me to it. Go for it! Who cares.
***There is no copying in business. Only business!***
Otherwise there would be Uber and no Lyft.
Or Homeaway and no Airbnb.
Or Ford and no GM.
GETTING A HOMERUN
Start something small to get practice: You don’t get good at running marathons by reading about running marathons. And you don’t get good at business by reading about business. You get good by doing. And doing it over and over again. But just like you wouldn’t expect to win the first marathon you entered, why put so much pressure on yourself to win at the first company you start? Or worse yet, paralyze yourself with fear into never running at all because you’re afraid you won’t win? It doesn’t make sense with marathons and it doesn’t make sense with business.
FAILURE:
What happens if we fail: Nothing happens! It’s literally the most mundane non-event imaginable. I spend a day or two wrapping up any loose ends, head to the movies or do something fun, and by the next day I’m already figuring out what the next thing is. My personal experience hasn’t been “Try->Win”, it has been more like “try, fail, try, fail, try, fail, try, fail win, win, win, win.” With each failure you get better, and then things just start to come easy. Don’t be afraid of failing, it’s like the best and cheapest MBA you’ll ever get.
INNOVATION:
Business innovation is over-rated and should probably be avoided unless you have a ton of cash. Each additional twist you add to an industry introduces risk and introduces cost of educating customers. Instead we find something that we see working for a lot of people and go do that.
DESIGN
This will be super important in determining your success. We don’t launch with bad design. Ever. Would be like going on a date with bad breath, smelly clothes, and holes in your shirt and expect to make a good impression. Not for us! We make sure we’re looking niceeee before launch. Fresh line-up and all! We want to make our person feel comfortable enough to pull out that credit card. And we have to look fresh to get there.
FUNDRAISING
Funds are hard to come by. Even harder to come by if you’re black. The data is there. So instead we bootstrap everything. My first biz I just saved up and worked on it and grew it and then took that money and poured it into a second biz and on and on. Even now that we’ve shown that we know how to build successful companies and have done it over and over we have never gotten a single cent of investment. F*ck it, we’ll do it ourselves!
VALUE CREATION
More often than not, the biggest value you add to an industry will be around simplifying or streamlining the process of doing business with you and not an improvement in the actual product or service. Keep things simple, forms short, and make it as easy as possible for folks to give you their credit cards.
CONTRACTS
If you have a service provider or vendor or supplier that won’t do business with you unless you sign a long-term contract, keep it moving. The reality? If the service is good, you won’t leave them. If the service sucks you don’t want to be locked in. Month-to-month or nada. We don’t commit to ANY long term contracts!
TIME MGMT
“NOW” is the only time we have available. Get used to now. As far as I’m concerned if it ain’t now, it ain’t happening. And now, you have time. There is always time, you just have to give up some unproductive stuff.
AND FINALLY….
NAYSAYERS: If you’re doing something…I mean anything, you’ll meet them. Whether it’s in real life, on the Internet, or wherever else. Sometimes it’s even your friends and family.
Here’s one of my favorite ones from 4 years ago when I was making $4k per month, from what was a new company at the time.
This was the top voted comment when I said I had started a promising new business:
http://i.imgur.com/UNNyS0F.png (Yes, I’m petty I save naysayer comments)
That $4,000 per month company has now done $8 million in the last 4 years.
Screenshot: https://www.dropbox.com/…/Screenshot%202017-02-24%2014…
What intrigued me most about this comment was the fact that it was so thoughtfully written. This wasn’t a troll. This was someone that provided a seemingly well-reasoned analysis of where he thought I would be in 12 months, complete with business school type analysis: barriers to entry, competitive landscape, etc.
So why is this important?
***Because this is exactly what many of us do to ourselves.***
We have a naysayer living permanently inside our heads that is constantly appraising and analyzing every business idea we entertain. And the analysis sounds just as reasoned, and well thought-out and measured as the one I posted above.
Not a bad thing on its face, but the voice in our head typically skews negative. Shut him or her up! Or you’ll analyze and over think and what-if every single idea until you convince yourself it won’t work.
Over time this messes with your confidence, and you end up paralyzed.
WRAPUP!
I know this is long as hell but this is pretty much everything. My little MBA in a box. Everything we’ve learned.