After graduating with my bachelors I was handed a certificate, wished good luck for my life, then quickly shoved off stage for the other cogs in line to receive the same treatment.
Luckily, I was part of the small minority that actually had a job waiting for me after graduation. This job was based in Saint Louis, MO at Mastercard. When landing in STL (what the cool kid’s cal Saint Louis) I leased an apartment within walking distance from the University of Washington. Partly due to my obsession with libraries and partly due to a HUGE misunderstanding I had about what’s valued in the working world.
This university has a “prestigious” MBA program that some people look up to, past Dylan included. My thought process was simple but uninformed and superficial. I thought by attending a good MBA program corporates would value me more, which would turn into a higher salary, a better title, and credentials that would open many doors for me… Sadly, this thought process isn’t unique and happens to most undergraduates after being tossed into the real world.
The MBA myth was busted for me early on. In my first year out of college in the “real world,” I experienced a series of events that fundamentally changed my perspective on MBAs and formal education more broadly, but we’ll stick with MBAs for now.
Here is a rough outline of the events I remember…
- Washington University Meeting – When first arriving in STL I decided to attend an MBA recruitment meeting at Washington University where the administrators talked about the curriculum, cost, alumni, and all the benefits. I asked a lot of questions, spoke with the alumni, and poked my head into a few lectures. It seemed to me that they were charging a ridiculous amount of money for credentials and not education, plus the education they were providing seemed irrelevant. They prided themselves on their “case study” heavy curriculum and exposure to the “real world” of business, but all they were teaching were approximations of reality that focused on a small sliver of what matters when running a business. This left a bad initial taste in my mouth.
- Follow the leader – After realizing an MBA is mainly for credentials and not education I wanted to know if the credentials were worth it. I reached out to a long list of higher-up executives inside and outside of Mastercard, asking if an MBA was something they would recommend. To my surprise, over 80% told me an MBA was a waste of time and to direct my energy for learning into the “real world” of work. It was clear to me that going into a lifetime debt to receive very little education, with the hope, but no guarantee of a higher-paying job was not the right path.
- My MBA – Instead of taking the traditionally accepted route of an MBA, I decided to create my own… I read a ridiculous amount, shadowed as many people as possible, and informally interviewed everyone I could. This journey led me to realize that most “business” books are trash and if you’re interested in learning about business, it’s better to reverse engineer and learn different subsections of business, stitching it all back together through experience. The only “business” book I would recommend is “The Personal MBA”. Josh (the author) does a good job covering the concepts that matter, without wasting your time and he provides plenty of additional resources.
This week I decided to revisit this book to brush up on my understanding of what makes markets, companies, and people “successful” in the business world.
I’ve decided to write out the high-level insights I’ve pulled from this book, along with the barrage of other books and experiences I’ve had since my first encounter with this book 5 years ago.
Basics of business
Most topics are simple, but we humans are unwilling (ego) or unable (incompetence) to convey them in a simple way. Business falls prey to this weakness.
During the industrial revolution, everyone began to specialize and this led to the over-complication of how businesses are created and operated. A whole new language developed around business and the more jargon, the more intelligent a person is, right!?
No… Wrong…
A business in its simplest form is the creation, communication, distribution, and operation of a thing (product) or experience (service). Nothing more, nothing less. Now… We can peel back the layers to add more detail, but that’s “business” is in its simplest form.
Let’s go a little deeper.
Pre-creation (market research & testing)
- Before you actually make the thing you’re interested in selling it’s important to know if this thing actually has a group of people that want it. This is more formally called “Product Market Fit”. Many excited first-time business folks assume there’s a market for the gadget or experience they want to create, but sadly they spend all their money without actually questioning that assumption. Don’t do that! Always question your assumptions and see if people are willing to pay for that thing by putting up their money.
Creation (product/service design, development, & iteration)
- This is the moment when you actually go through the process of designing the thing while iterating through multiple versions of it to see which resonates most with those people willing to pay for it. Once you’ve settled on the “best” design, then it’s time to actually create this thing, but make sure to record the development process, so you’re able to automate it in the future.
Communication (branding & marketing)
- You’ve created your thing, great job! Now you need to tell people about this amazing thing but in a non-sleazy way. This part of the business is all about human psychology and storytelling. The goal here is to understand why humans do what they do, then convince them that what you’ve created actually improves their lives in some way. My advice here would be to read books on psychology and compelling narrative creation, avoiding all marketing books.
Distribution (Sales & Delivery)
- If you’re at all like me you’re probably disgusted by the idea of “sales”, but I promise it’s not that bad. Don’t think of “sales” as a used car salesman trying to take all your money through dissipation but as a teacher educating students on good decision-making. Someone that’s selling a thing they truly believe brings value to others, doesn’t feel like they’re selling. You can make money off products or services in many different ways, here are the major ones. Once you’ve sold the thing, it’s time to figure out how you’re going to get it to the buyer, this is called “value delivery” or “distribution channel”. This is pretty simple, so I’ll leave it to you to Googling.
Operation (Customer Support)
- Most businesses ignore or put off the operational side due to it being less sexy. This short-term thinking usually leads to a horrible reputation, which then evolves into lower sales and eventual business death. So don’t overlook it! When operating a business it’s best to look at it as a complex system… The goal of any operation is to improve efficiency and resilience over time. Two simple tips to get you started – Make checklists for the critical parts of the business and document as much as humanly possible, so you’re never needed for the business to operate successfully.
Numbers can be intimidating for some people, but they’re spread across many parts of the business, so it’s good to understand the basics of finance. I promise it’s not hard, just covered in jargon… Here and here are two good places to start.
Entrepreneur > Corporate Exec
First off… I’ve never created a business (yet), so this entire section is based on books, observations, and mentoring startups, so take it with a grain of salt – Actually, you should take everything anyone says with a grain of salt no matter what their background. Ha!
The topic of entrepreneurship is something I could rant about over a series of posts, so I won’t be able to cover everything, instead, I’ll point out the most harmful myths about this endeavor.
When creating a business it can be very overwhelming, especially if you’re coming into this journey with very little understanding of how to create, market, distribute, and operate a business. The good news is you’re not an academic, so you don’t need to be an expert in any specific area, by applying the 80/20 rule you’ll cover all the necessities. The 80/20 rule basically states that 20% of the effort provides 80% of the results, meaning you only need to learn the most critical 20% of creating a business to survive.
There are two myths I want to bust today…
- Entrepreneurs are “special” people – If you’re at all a fan of history you might be aware that the idea of an entrepreneur is a very recent thing… In pre-industrial times everyone acted as an entrepreneur, it was the specialization and our reliance on factories for income that changed society’s mentality towards entrepreneurship. Being able to create and run a business is nothing special and it doesn’t take a magical person to do it… yes, it can be hard, but it’s definitely possible. From now on, I want you to remember that the idea of “entrepreneur” is new and anyone can create/run a business.
- Funding – Almost no one should ever take venture or angel investments. There are very few people that actually need additional capital when starting a business, but mainstream news outlets and social media have idealized this path, so everyone feels it’s the only way. This false assumption kills many companies that could and should still be alive today. When bootstrapping you’re business you’re adopting a mindset centered around making a profit, instead of growing at all costs. This profit-centric mindset acts as a forcing function to sharpen the entrepreneur’s focus on what really matters for the business’s success, not ping-pong tables, fancy coffee, free snacks, and overly expensive software developers.
Creating your own company can be a very enjoyable, rewarding, and long-lasting journey, but the key here is to push against the social norms and not accept the traditional startup myths.
Create a turtle, not a tiger
“What the business world needs is more turtles and fewer tigers.”
This is hands down my favorite quote from this week’s book… 🙂
We live in a capitalistic world, which motivates people to grow their businesses by solely focusing on profits. That kind of mentality created a system where the average company lifespan is between 10 – 15 years. When focusing so heavily on profit growth most businesses overlook long-term reputation and resilience.
To be a company that lasts 100, 125, or 150+ years it’s important to behave as if you’re creating a generational company that’s going to be passed down to your kids or someone else. So how does this relate to turtles and tigers?
Think about it… How long do turtles live in comparison to tigers?
Turtles tend to live long lives because they’re resilient… They protect themselves from present and future catastrophes thanks to their shell and they’re not greedy with the amount of food they consume being able to fast for longer periods of time.
Tigers are the opposite. They expend a lot of energy to catch their food and can only protect themselves when they’re healthy.
If you’re able to think in generations, instead of profits you’re business will have a better chance of becoming a turtle, instead of a profit-hungry tiger.
Until next time my fellow wanderers!