13 lessons in business from 2013
2013 was without a shadow of doubt the most intense, eventful and transformational year for my company PeoplePerHour since it’s founding in 2008. And so as the year comes to an end I reflected as I usually do on what the key learning from the year have been for me.
1. Trust your instincts
I don’t often regret things but if I ever had one regret its not trusting my first instincts in a given situation. As a Founder your gut is an invaluable barometer to the company. If you get this eerie unexplainable feeling about something – a new hire, a product launch, funding terms you just received – whatever it may be which at the outset seems ‘the right thing’ my learning is that you should not rush into it. Take a step back. There’s a good reason you have that feeling.
Looking back whenever I had that feeling and ignored it, it ended up backfiring. I had it with new senior hires who on paper looked amazing and turned out foul. With direction in product when under pressure from your board to go emulate something that’s new and hot when you just feel it’s not quite right. With promises you get from investors when something tells you they won’t materialize.
So trust your gut. Its your most valuable asset
2. Business is 80% textbook. But the other 20% is what makes all the difference!
I recently met a super successful tech founder and CEO of a well known multi-billion public company that employees about 2000 people and he told me something that impressed me. He said to me “I’m a terrible manager, I hate managing people I just manage ideas. And so I’ve a been a remote CEO from the get go” I was amazed. In his words he said “look, it’s one of those things that business school & books will tell you can’t be done but it can. It just works and we are actually more efficient because of it”
To a lesser extent I’ve witnessed the same. What works for one company doesn’t necessarily transfer to another. Best practice for one isn’t necessarily best practice for another. It largely depends on the personalities of that core early team and the thing that gels them together. In other words: culture.
So what I’ve learnt is that rather than focusing on conventional wisdom, which will just make you like everyone else at best, focus on figuring that 20% that goes against the grain. And here I’m not referring to product differentiation, I mean in the way you do things. That becomes your unique culture that sets you apart. Don’t mold yourself to best practice. Mold best practice to you.
3. Pick sanity over vanity every time
“Vanity is fickle and will get you into a pickle”. I recently watched a video of Jeff Bezos of Amazon where he talked about how business is all about eliminating risk. Coming from one of the boldest, most aggressive risk taking founders of our generation that says something.
Business is a game of survival. At every stage. Unfortunately too many entrepreneurs today forget that and opt for a strategy of ‘vanity over sanity’. Success metrics become being cool, hot, wanted, growing beyond your means instead of the old fashioned sensible way which is “add value, serve customers well, and do it a little better every day”. If you do that you can’t lose. It may take longer than some VC would like who’s modus operandi is investing in hockey stick growth. There’s nothing wrong with that if you do it across 10 times, the odds start being sane. But for you as founder with a portfolio of one, betting the farm is not risk-taking its recklessness. And stupid.
That’s not to say you should be conservative. But the metrics of success should be based on fundamentals. Like making money, getting repeat business, high customer satisfaction ratings, a high Net Promoter Score (NPS), organic growth through people referring you. That’s what I mean by sanity.
These things are forgotten in today’s tech world unfortunately. The name of the game has become ‘vitality’ and the search for that hockey stick growth. Well corporate America wasn’t built that way. Companies like WalMart, American Airlines, IBM, even Microsoft, that serve us every day, were built over decades of constant improvement, continuous innovation, chipping away at it little by little.
So the learning is this: yes if you just happened to go viral, if you are sitting on the next Facebook then great make the most of it. But you cant plan for it. And don’t punish yourself for it.
4. You can take a horse to water but you can’t make it drink
As a founder a big part of your job is to exert influence. Influence to your team, your customers via the product changes you make, to your stakeholders and the community at large. One of the hardest things to figure out is what can be influenced and what things need to take their own course and mature in their own time.
People are in general always resistant to change. Organizations are made up of people: their stakeholders, customers and employees. But one thing I’ve learnt that’s been very useful is that organizations and the communities they serve take on a persona that goes beyond the aggregate of those people that its made up of. Its like if you add enough stuff in the soup the thing that comes out is different to the sum of the parts.
I now think of my company and our community as a persona, with a character of its own. Understanding that persona is paramount in figuring out the balance between what will wash and what won’t. It takes more than deconstructing an entity to the sum of its parts. It takes understanding the entity itself.
5. Being better than everyone else isn’t good enough. You need to be distinctly different
Often times you hear people, advisors, investors etc say to you “just figure out how you can do what this guys do but do it better”. I’ve been through that process as well and i now know that that’s the wrong question to start off with
There’s a great scene in the movie “Margin Call” which I watched recently, where before the crisis of 2008 explodes the CEO of the bank featured says to his board
“What did I tell you when you first set foot in my office. There are three ways to win in this business. Be smarter than everyone else. Be first. Or cheat. Now I don’t cheat. And whilst there’s many smart people in this organization it seems sure as hell easier to be first”.
Being first means being the innovator. Paving the way. Being boldly and distinctly different. Even if in just one thing.
Over the last year what I consider our biggest success at PeoplePerHour is that we’ve made that a methodology. The good news is that you CAN in fact systematically develop innovation. Great fresh ideas don’t just drop out of thin air.
A lot of people choose execution, focus and ‘being better’ as a strategy. The Samsung versus the Apple strategy. And that’s because in many ways it’s easier. It’s not easy. But it’s easier than breaking new ground. Being 10% better than the there guy is easier than creating step change that can make them irrelevant.
6. Substance beats process. Every time
One of the key things I’ve changed in the last 12 months in my company is the way we set goals and manage people. I get much less involved in process today and instead I just set the Goal and the KPIs that come with it. I then let people to go meet the goal. I tell them I care much less about how they hit it, so long as they do. I make myself available as a resource to assist in getting there but not to guide them there
The result is really refreshing. People step up to the game, get inventive and creative and find ways you would not have thought of to get there . Which is great! It just ups the paying field. Some may drown but that’s part of the growing up process
What’s paramount in this methodology however is to get the KPIs right and make sure you can measure them. And you need the right people, high achievers and the right culture to glue them together. You need to develop not just output metrics but leading metrics that show that the team is making progress towards the goal. Sometimes the end goal may need revising because you set it too low or tow high. Which is why the leading metrics or drivers need to be part of that dashboard you look at.
7. It’s a marathon not a race
Perseverance is consistently cited as the no1 driver of success. I cannot agree with this more. As the old saying goes: “if you never give up you cannot fail”
But like most things there’s a fine line and crossing that fine and you just want to make sure you are just an inch on the right side of that line. A famous Greek author Kazantzakis once said “The doors of heaven and hell are right next to each other”
If you success you were a hero who persevered and didn’t let people deter you. If you fail you were pig-headed, stubborn and didn’t listen.
How does one solve this conundrum? For me the crucial difference between pig-headedness and perseverance is conviction. Brutally honest, utterly unbiased, raw conviction that what you are building meets fundamentals. You don’t know if it will work yet but you have signs that is valuable.
Getting early conviction is super important in whatever it is you’re building. I remember when we put the first page up on PPH, getting the first customer was probably the most important moment in the company’s history. But what was
equally important is rigging that customer and hearing him tell me that he was ‘wowed’ by the experience.
Now a customer size of 1 is far from making success certain. But even a handful of customers are enough to show you early signs that whatever it is you have built has a place in this world : its needed to adds value .
So my advice to entrepreneurs is waste zero time to get that early validation. Do whatever you have to do to get it. And once you have it just don’t give up. Move mountains, march through walls, trust your instinct, listen but don’t be de
8. Logic takes you from A to B, but imagination takes you everywhere
Albert Einstein said: Logic takes you from A to B, but imagination takes you everywhere
If you were to eliminate all activities in a company apart from two, I would say that they are: analyze and imagine.
Analysis is what gets you from A to B. You optimize your product, you improve it little by little every day. A tiny bit better every day makes you much better in 3 months and leaps and binds better in a year. Logic is what drives analysis – have honesty in numbers, analyze everything to death if you have to. Sometimes the analysis involved looks like a sledgehammer to crack a nut: you need to climb a mountain in order to get that extra 5% gain. But that adds up and its necessary
The second activity is to imagine. Logic is far more abundant in the world I find than raw imagination. And that partly because imagination has managed to create a bad name for itself 🙂 Cognitive ability us rated so much higher than creativity in this world. At school I was called a dreamer because my mind would wonder uncontrollably. And it still does. It just drifts apart into all sorts of random places you really don’t want to go
But you know what: that wondering is what brings me my best ideas. Its the serendipitous exploration powered by the subconscious that breaks free from convention and straight line thinking.
And yet without imagination we are hopeless. We are orbits marching in a straight line waiting for the future to unveil itself in from of us. Vision into the future is what gives us hope, what excites people, what gives us something to look forward to. Why do you think so many movies are futuristic? Because it’s in our nature to be curious, inquisitive and to want to know the future (also they make for good entertainment:). And yet so few of us stop to imagine.
So what I’ve learnt is that its the juxtaposition of analysis and imagination that places us best to win. Both are important. One is living the moment and making every day better. But it can lead you astray.
My modus operandi today can safely be summarized in this one phrase: “I start by imagining the future, and push first myself and then my team to build towards it. One day at a time.”
9. Focus is vital. But sometimes it’s used as an excuse not to innovate
The founder of one of my competitor companies who is someone I have a lot of respect for, said this to me recently which struck me.
“Focus is vital. But sometimes it’s used as an excuse not to innovate”
I remember reading “In Search of Excellence” by T. Peters years ago when I was still at school. The one bit of it I remember is the experiment with the bee and the fly. I may be paraphrasing this but I think it goes like this:
Take two empty glasses and in one put a bee and in the other a fly with the base of the glass pointing towards a light source. The bee – a far more intelligent and focused insect – will keep doing the logical thing. Which is hitting the bottom of the glass trying to get to the light source. And it will get stuck there for hours. The unintelligent fly on the other hand will quickly escape
Focus is super important in a business. But you need to make sure you are not that bee trying too get to the light source. We misinterpret what focus is i think. It often a process of non deviation from a straight line. Its what you focus on that matters more than the how. Set the goal correctly and focus on that goal. But keep questioning.
One of the healthiest pieces of advice I got and now its become daily routine for me is to wake up every single day with amnesia. I forget about yesterday. I ask myself very simple: what really matters today? What are the three things that matter today. And so I focus on these. The light source gets reset every day, which is a fail-safe mechanism for not banging your head on the wall.
10. The road to hell is paved with good intentions
Education doesn’t prepare us very well for the real world. And partly the reason for that is because in education you get rewarded for effort. In business you don’t. Not if you’re an entrepreneur at least
Unfortunately trying hard to please customers doesn’t make you loved by them. Delivering great products and service does.
So a culture of embracing effort can – I believe – be destructive in a business. I often tell my team to think of me as a customer instead of their boss. I spend a good portion of my time talking to my customers and I can tell you they are ruthless, uncompromising, demanding. They serve reality on a cold plate with no sugarcoating. As they should! Because you know what – that’s what makes us better every day. Why would I want to waste my and their time talking to them to get a covered up reality? What good is that.
So one of my key learnings is that if you want full alignment with the customer in your business, if you want to have a truly customer centric culture you must act and behave like a customer and then it will trickle down the organization. Don’t sugar coat reality. Don’t appraise people for effort unless its effort that your customer would value. Don’t sheltie people from the raw truth.
One of the things I’m most proud of this year is that after a lot of time and zig-zag path we now have a culture of brutal honesty, transparency, and full alignment with the customer and single-minded focus on getting results. The acid test is to ask yourself: does the customer care? If so, so should you. In most cases customers don’t care how you deliver results, they don’t care about your feelings, they don’t care about the fact that you mean well. They care about the result. And that’s why the road to hell is paved with good intention.
11. Stay in love
I often get asked what the ‘exit’ plan is. Whether I want to sell my company etc.
I think of exit more like an emergency exit in a mall. You need to know where it is in case there’s a fire. But other than that, enjoy the mall. You don’t wonder around optimizing your path to get to the exit door faster do you that’s ridiculous.
One of the worst pieces of advice I got was to always start with the exit in mind. I think that’s terrible advice. Build for the figure, imaging the future and build towards it as I say above but with the customer in mind not yourself. Imagine what customers want 5, 10, 15 years down the line – however far your vision can reach – and set that as the goal. Not when to sell.
I truly believe that ‘building to flip is building to flop’. At least if you do it consistently. You may get lucky once or twice but the build to flip attitude doesn’t change the world.
I don’t think my company is perfect, there is still a lot to do, a lot to improve and a lot to learn. In fact I think we are just at the very beginning.
But as the year draws to a close I reflect in where we are today and this is what I see.
I run a company that serves a real purpose, that changes peoples lives in a fundamental way. We do good for society by helping people earn an extra dollar, pursue their dreams of being financially independent and start their own business. I get to work with very talented people I really like and respect and who – more importantly – complement me and are much better than me at what they do. I am able to keep innovating and push the boundary, to carry on dreaming, imagining end executing those dreams with my team.
So I consider myself super lucky and grateful to be here, and thank all the parts of the universe that conspired to make this happen. I am truly in love with what I do. Hell, I would pay to have this job !
12. Its not where you start from its where you end up
Basic as this may sound, I find that one of the rarest assets to find in people – and yet one of the most important – is the ability to be introspective, to constantly push themselves and step up
I have people in my extended circle who at school and university were best in class. Maybe even in their fist job. But they stayed stagnant. Perhaps the comfort of growing up as best in class rid them of the desire and ambition to keep pushing the envelope. They became complacent and stagnant
Yet others who starry much lower on the achievement ladder per say have n uncanny ability to evolve rapidly.
Darwinianism is often misperceived as survival of the fittest. Its not. Its survival of the most adaptable. I am uncertain as to how much this can be learned but it certainly can be developed. Some people are just naturally introspective and very harsh on themselves, setting themselves insanely difficult goals and stretching them eves constantly to achieve them. And others are just less so inclined. But it starts from a desire to reflect and understand oneself.
And if that fails – well that’s why God invented Mums. To push us when we don’t push ourselves 🙂
13. Have faith
I won’t go into too much details here for want of not revealing company sensitive information. But the last year if I look back was short of a miracle at PPH
In 2012 we made some mistakes and over expanded beyond our means. We asked for more help from our investors in early 2013 which we didn’t get. So in this last year we had to face reality: we needed a big turnaround in order to survive.
I faced the truth and told our team we would be making cuts and that we would also be reducing pay of the more higher paid team members. I knew that this presented a real risk that some of the more crucial people would leave. To compensate for it i doubled the stock options pool and instigated a cash for stock scheme for this staying.
The result has been remarkable. The team halved in size. Some of the early people left. It was painful but necessary. And in the end the right people stayed who saw this as an opportunity to get more stock in a business they believe in. They stayed for the right reasons: believing in what we do.
And so now the core team we have left over is bought into our purpose and goals more than ever before. They feel and act like owners. The team moves a lot faster, a lot of inefficiency has been removed and a lot of the unnecessary conversation and noise died down. We just get on with things
The result: we went from burning considerable amount of capital per month to being cash-flow positive for the last 5 months and turning into profit. We halved costs and almost trebled revenue. And have a much more solid foundation to build up from, with a more gelled team, more loyal and gelled.
At the start of this ordeal one of our shareholders come out point blank saying i should ‘consider my options’ tactically copying in others in the conversation to show-off how he was coercing me and exerting his muscle. Perhaps that’s what a corporate person would have done. The only ‘considering’ I did of course was whether that email was best fit for my trash can or my wall to look back on a more sunny day and laugh.
And that sunny day didn’t take long to come. It wasn’t easy but I had faith that things would work out. And they did.
This is not the first time we looked death straight in the eye at my company and probably not the last. If we want to keep pushing the boundary we will need to take calculated risks some of which may go astray.
That’s what entrepreneurs do. And when they are down they don’t ‘consider their options’. They pick themselves up and go fix the problem. And come out ten times stronger at the other end
The bad news is that people from the investment community or corporate world won’t ever understand that unless they’ve been through it themselves and very few have. The good news is that that’s why you are the entrepreneur and they’re not.
So have faith. Especially in your lowest moments. It moves mountains.
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