Chances are that many readers had to do one of those things as corporate employees or as members of any large organization that asks management consultants for help: brainstorm on a vision, formulate a mission statement, create a business plan. As an aspiring start-up business owner you cannot escape trainers who tell you need a have a logo designed by professionals, hire MBAs as CFOs, hire more professionals to dream up a great marketing strategy, and execute That Great Plan based on Your Sincere Belief in That Great Singular Idea.
This does not resonate with my experiences as an entrepreneur though. You might expect correctly that I would rather go for antifragile ‘dilettante’ tinkering – and all those buzz words make me remember that eerie documentary of brave new corporate world.
It is refreshing to find confirmation by a very successful founder of start-ups. I have linked Frank Levinson’s Top 10 Things You Must Have to Start a Business so often – it deserves a dedicated post. As usual I cannot resist pointing out some resemblance with Nassim Taleb‘s ideas.
Note to readers who might miss the physics in this post: Frank Levinson is a physics PhD and self-educated programmer. He has given an extensive interview about his career to the Center for History of Physics of the American Institute of Physics – the transcript can be found here. I was most impressed by his ability to deal with failure – he founded his successful venture Finisar after he had been fired as a CEO of a company he had founded himself. Levinson called it Finisar as he hadn’t finished anything before.
You Need Comfortable, Cheap Furniture – It doesn’t matter how you look but what you do.
This is in contrast to all that advice about branding and (online) reputation. Customers should not be jealous of your Porsche company car or suspect that those high rates they are charged for go into hiring designers that tweak your corporate identity every month.
Remember the coconuts!
The German title of Monty Python and the Holy Grail is: Knights of the Coconut. Horses were replaced by coconuts for budget reasons and this joke has gone viral. Monthy Python were creative and innovative because of constraints and necessities.
Levinson believes that therefore entrepreneurs need not enough money. In addition, the best money you can use is customer’s money – found the company on an existing revenue stream – or literally use your own money.
After all, it is about what Nassim Taleb would call Skin in the Game.
Pride of a Fat Baby and 1000 Ideas
Which pride does a fat baby have? Exactly: None. In contrast to Focus on Your Core Business and Go for that Great Idea (probably accompanied by Follow Your Passion) Levinson advocates accepting project requests appearing as tangential to your aspired core business. His company did contract engineering for some years, then delivered bad products we considered good ones and finally manufactured really good products.
This is Taleb’s Optionality. Those seemingly odd projects allow for interaction with real customers, collection of feedback from the real world. Levinson also advises to love your tough customers – those who complain about the product – because they are really interested.
Non-core-business projects might give you new ideas and turn change your so-called business plan based. Actually, you should be generous with ideas and give away 1000s of ideas (for money), e.g. in contract engineering, rather than believing you have stumbled upon that singular idea – knowing exactly what the world really needs, based on your impeccable market studies.
“Common Sense”: You Need Customers
Sounds trivial, but isn’t. Frank Levinson’s key message is that customers are people who place an order and pay for services or product received. Customers are not: People who like your idea, would love to get free samples, and do co-development.
It is so simply but yet it cannot be overstated when you read it ten times a day in articles tweeted how important it is to grow your network, exchange ideas, find partners.
It resonates with my experience: The most enjoyable business relationships start with a client really in need what I offer – I do it – the client is happy and pays in due time. Actually it always was those business relationship that naturally morph into friendships. But the alleged friendships with people who want to discuss market potential over a coffee hardly ever turn into business.
Sure, customers need to know you exist. But as Levinson I feel that advice for start-ups over-emphasizes the importance of marketing to the point of replacing the requirement of having a very product with sophisticated marketing! Professional marketing, business plans, Vice Presidents (suits) should materialize very late in the company’s growth process – before an IPO, thus probably never if you decide to remain a small privately owned business.
Social media can help to connect with potential clients – your mileage may vary depending on the very nature of your business. Yet I believe Levinson is still right in being wary about the significance of a website as engineers are shy and hope to replace face-to-face customer contact by virtual online communications.
But watch the video yourself – 19 minutes well spent: