What does it take to become a lean, mean entrepreneurial machine? I’m not so sure, but I’ve listed a few points to keep in mind (this is just as much a note to self as it is a post for you). All of these points involve differentiating yourself from the herd in private equity; they involve working hard mentally, which really means leaving your comfort zone and realising the scarcity value of certain skills.
- Live simply: it’s a monumental advantage to not need what others need. To not need expensive clothes, gourmet food, a luxurious condo, a regular cup of coffee, an LCD television, etc. Living simply saves money, time and brain power, and it promotes lateral thinking.
- Think big, think laterally: swing for the fences, like really swing for the fences, but do so independently. Make your goals unachievable, but find innovative ways to achieve them. Thinking laterally isn’t about inventing another Google or Facebook; it’s about working with a clean slate. No limits, no preconceptions, no egos, no vices, no money, no skills, no rules, no bureaucracy… just a few thoughts, a pencil and a bag-full of determination. Traditional wisdom is your enemy.
- Debt is king: this is daring to say right now, but let’s be honest, if you have great ideas, great skills, great conviction and great execution, what’s the problem with debt? You’re putting everything on the line anyway, so why dilute your equity if you have the cash flows and ability to raise debt? Buffet would disagree, Trump would agree; but we’ve ditched traditional wisdom remember, so who cares who agrees? Do it properly, do it sensibly, only do it with conviction, and hopefully you and debt will remain best friends.
- Scalability is paramount: your potential market needs to have serious scale to provide the necessary opportunity and to allow for miscalculations and mistakes. Rock stars and movie stars are wealthy because their work is scalable. If there’s anything you need to learn from a rock star, it’s the value of scalability.
- Education begets success: identify what matters to business success and learn to be successful in those areas. Learn what matters; prioritise what matters; become an absolute master at what matters. This doesn’t mean enrolling in degrees to learn low level skills. It means talking to competitors, learning the market, understanding the customer, knowing how to run tight cost centres, etc. You should never need to take an exam for this education; exams are for company-men/women who need to justify their existence. (I realise we all need to do exams at some point, whether it’s in prep school or college, but work with me here.)
- People provide the power: it’s not easy leading people, but people give you more leverage than debt. People allow you to build a phalanx of business mercenaries with which you can take down the most difficult markets. You can invest $100,000 a year in one person whom can easily make you $500,000 a year; now that’s an investment. Many highly intelligent and motivated people would rather work for the certainty of a salary, and this is one of your greatest assets in business. Learn to lead and work as a team with other people and realise they don’t all need equity to be motivated.
- Patience is not a virtue: waiting for you is procrastination, waiting for others is subservience. An entrepreneur doesn’t wait; he/she moves constantly in mind, body and spirit. Time is money, time is scarce, allowing time to lapse unnecessarily is certainly not an entrepreneurial virtue.
- Be honest with yourself: even if not with others. What is your actual situation, what do you actually need, how is your business actually placed in the market, etc? This can be as simple as realising you don’t need a new suit. Or it can be as critical as realising you need to improve your communication skills. Be honest about what really matters and be honest with what really needs to be done.
I’m very interested in your thoughts and other comments about what makes a lean mean entrepreneurial machine. So please post a comment if you have something interesting.