entrepreneurship

Small Things Lead to Big Things

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Great post from Joel Gascoigne on how great things develop from small things:

What I’m starting to notice more and more, is that great things almost always start small. Most of us know that Branson started the Virgin brand with a student magazine, but Virgin is just one of many examples which shows that the reality is counterintuitive: actually, the best things we know and love started as tiny things.

I’ve found that if I look into my own life, I find similarly that some of the most important achievements I’ve made started as little projects. My startup Buffer itself is a great example: it started as a two page website and in addition the short blog post describing this process has now turned into a talk I’ve given more than 30 times.

I’ve read Carnegie’s classic How to Win Friends and Influence People, but didn’t remember the anecdote Joel mentioned at the beginning of his post. Great reminder.

On Ideas and Starting a Company

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In a post that’s over three years old now, Derek Sivers muses on why you’d want to start a company of your own (hint: it’s about execution of your ideas):

When I was at CD Baby, I’d be able to play with new ideas immediately. (“What if we had a $5 sale?” “What if I could co-op card swipers?” “What if I could go multi-lingual?”) Any time I had an idea, I’d be able to test it out within days.

But now, for the first time in 10 years, since I had no company, I couldn’t test out these new ideas! All I could do was read, think, and maybe write about it. Damn!

Then I realized why I need to start a new company. Not for the money. Not because I’m “bored”. But because a company is a laboratory to try your ideas. (The word “laboratory” is defined as a room for research, experimentation or analysis. I think of it as a sandbox or playpen.)

I think Sivers downplays the boredom aspect in his post, but it’s still excellent advice. My other thought: what if you could execute on your ideas via your art rather than by founding a company? For an example of what I mean, check out what Seth Godin is doing with a Kickstarter campaign.

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(HT: Swiss Miss)

Profile of Manoj Bhargava, Creator of 5-Hour Energy

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Fortune has a profile of Manoj Bhargava, the creator of the 5-Hour Energy drink. At $3 a bottle, creating this concoction has made Bhargava billions (he claims that he’s the wealthiest Indian in America). The energy drink is sold under the company Living Essentials, which doesn’t report revenue or profits (but a source with knowledge of its financials says the company grossed above $600 million last year on that $1 billion at retail).

Early on he realized he didn’t much care what sort of business he was in as long as he was winning at it. At 17 Bhargava noticed that blocks of low-­income homes in the roughest North Philly neighborhoods were being razed and cleared. Bhargava bought a 1.5-ton 1953 Chevy dump truck for $400 and started clearing out debris from the demolition. He’d find rats bigger than cats among the garbage and rubble. “The stench was mind-bending,” he says. He remembers hearing gunshots outside a crumbling house on crime-ridden Girard Avenue and learning an old man had been killed for $5. Still, Bhargava made $600 that summer—and resold the Chevy for $400. He didn’t care if the work was unglamorous. It was profitable.

He won a full scholarship to the Ivy League feeder Hill School before heading to college at Princeton in 1972. Bhargava lasted a year. The pretentious eating-club culture wasn’t really for him, and he didn’t find his math classes particularly challenging. “‘Annoyed’ would be a mild word for my parents’ reaction,” he says. He returned to Fort Wayne, Ind., where his parents had settled and his father owned a plastics company. “There were no jobs; it was a disaster,” he says. “It was right before the oil embargo, the stagflation era.” He started reading books about a Hindu saint who’d spent his life on a spiritual quest. That, he thought, was something worthwhile. In 1974 he moved to India.

Bhargava says he spent his 20s traveling between monasteries owned and tended by an ashram called Hanslok. He and his fellow disciples weren’t monks, exactly. “It’s the closest Western word,” he says. “We didn’t have bowler haircuts or robes or bells.” It was more like a commune, he says, but without the drugs. He did his share of chores, helped run a printing press and worked construction for the ashram. Bhargava claims he spent those 12 years trying to master one technique: the stilling of the mind, often through meditation. He still considers himself a member of the Hanslok order and spends an hour a day in his Farmington Hills basement in contemplative silence.

Bhargava would return to the U.S. periodically during his ashram years, working odd jobs before returning to India. For a few months he drove a yellow cab in New York. When he moved back from India for good, it was to help with the family plastics business at his parents’ urging. He spent the next decade dabbling in RV armrests and beachchair parts. He had no interest in plastics whatsoever but devoted himself to buying small, struggling regional outfits and turning them around. By 2001 Bhargava had expanded his Indiana PVC manufacturer from zero sales to $25 million (he eventually sold it to a private equity firm for $20 million in 2006). He decided to retire and moved to Michigan to be near his wife’s family. “Nobody moves on purpose to Detroit,” he says. His retirement lasted two months. He knew from his plastics success that the chemicals industry was ripe for exploiting. “Chemicals are really simple,” he says. “You mix a couple things together and sell it for more than the materials cost.”

Aside from this feature on him, you won’t really find Bhargava on the internet:

His paper trail is thin, consisting primarily of more than 90 lawsuits. This is his first press interview. “I’m killing it right now,” he says, adjusting a black zip-up cardigan from behind the table of a soulless conference room in a beige low-rise building in a suburban business park in Farmington Hills, Mich. “But you’ll Google me and find, like, some lawyer in Singapore.”

What’s most interesting to me is that Bhargava’s idea for 5-Hour Energy wasn’t new (he went to a trade show where he tasted an energy drink and copied its ingredients in 5-Hour Energy). What was novel was his idea of incorporating energy drink ingredients in a tiny package and effectively selling the product (having it on Wal-Mart store shelves certainly helped).

Paul Graham on Wealth

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I can’t remember how I stumbled upon Paul Graham’s classic 2004 essay on wealth, but I am glad I re-read it last night. Excerpt below:

Wealth is the fundamental thing. Wealth is stuff we want: food, clothes, houses, cars, gadgets, travel to interesting places, and so on. You can have wealth without having money. If you had a magic machine that could on command make you a car or cook you dinner or do your laundry, or do anything else you wanted, you wouldn’t need money. Whereas if you were in the middle of Antarctica, where there is nothing to buy, it wouldn’t matter how much money you had.

Wealth is what you want, not money. But if wealth is the important thing, why does everyone talk about making money? It is a kind of shorthand: money is a way of moving wealth, and in practice they are usually interchangeable. But they are not the same thing, and unless you plan to get rich by counterfeiting, talking about making money can make it harder to understand how to make money.

Highly recommend reading the whole thing. It’s long, but it’s worth it.

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Question of the day: What is wealth for you?

Readings: Google in the News

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Two interesting stories in the New York Times appeared this weekend, both relating to Google:

1) “Google Grows, and Works to Retain Nimble Minds” [New York Times] – a nice explainer about Google’s unparalleled growth, and a side effect: employees who are leaving the company for smaller companies or for start-ups:

Recent departures include low-level engineers, product managers and prominent managers like Lars Rasmussen, who helped create Google Maps and Wave before he left for Facebook, and Omar Hamoui, the founder of AdMob who was vice president for mobile ads at Google and is now looking for his next project. At least 142 of Facebook’s employees came from Google.

I like this phrase used in the article: “Corporate sclerosis.” In the last five years, Google has grown from 5,000 to 23,000 employees, while its revenue has increased by more than seven-fold, from $3.2B to $23.7B. So what is Google doing to prevent employees from leaving the company?

Google is taking aggressive steps to retain employees, particularly those with start-up ambitions. Google has given several engineers who said they were leaving to start new companies the chance to start them within Google. They work independently and can recruit other engineers and use Google’s resources, like its code base and servers, according to half a dozen employees.

This is a highly innovative move, and rarely seen in other companies (I think). Of course, financial motivation is there too: this month Google gave every employee in the company a 10% raise.

Nevertheless, the biggest takeaway for me was this: if someone has the drive to do something on their own, compensation packages and promises to work on independent projects can only go so far. This was the best line in the story:

Part of Google’s problem is that the best engineers are often the ones with the most entrepreneurial thirst.

Is it that surprising that these engineers are looking for greener (but perhaps riskier) pastures?

2) “A Bully Finds a Pulpit on the Web” [New York Times] – an amazing and horrifying story of a sunglasses merchant who thrives on negative feedback to boost his Google search rankings (which leads to more people buying fake/poor merchandise from him). Not much is below this merchant: threats, intimidation, non-delivery (or fake delivery) of product.

This story left me fuming (I refuse to provide the name of the merchant). What’s interesting, and other people have pointed this out, is that Google does not appear to perform sentiment analysis; that is, a “negative” link to a website might be as beneficial as a link of praise, and Google’s algorithms (which are, in fact, a secret) don’t distinguish between them. So for instance, we have this from the NYT, where people posted complaints about the company:

Between then and now, hundreds of additional tirades have been tacked to Get Satisfaction, ComplaintsBoard.com, ConsumerAffairs.com and sites like them.

But because those web sites are reputable, if they point to the offending website, it’s essentially more “Google juice” and the merchant described in the article benefits.

One last note: the reporter, David Segal, appears to take a liking to this merchant:

It’s almost painful to say, but Mr. [Redacted] is amusing company. He is sharp and entertaining, although much of the entertainment comes from the way he flouts the conventions of courtesy, which he does with such a perverse flair that it can seem like a kind of performance art.

I thought the sympathy was undeserving, but perhaps this is a psychological phenomenon: if we tend to get close to someone (even if we do so objectively, such as reporting for the New York Times), we tend to begin liking the one we’re with to help us cope and/or help us approach the subject. Familiarity breeds good journalism, it seems.

Update (12/01/10): News of the New York Times article has made the rounds at Google headquarters, and Google has acted swiftly. In a blog post titled “Being Bad To Your Customers Is Bad for Business,” Google explains that they have modified their search rankings, incorporating user reviews in Google’s search algorithm:

Instead, in the last few days we developed an algorithmic solution which detects the merchant from the Times article along with hundreds of other merchants that, in our opinion, provide an extremely poor user experience. The algorithm we incorporated into our search rankings represents an initial solution to this issue, and Google users are now getting a better experience as a result.

Huge props to Google on this quick, worthy update.

Readings: Alexander Ovechkin, College Life, Five Guys Burgers, Nuclear Devastation

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Here are some interesting articles I’ve read over the weekend.

(1) “Load up on Life, Not Classes” [The Tech] – a sound editorial at MIT’s student newspaper. The paragraph below is applicable to any kind of learning, and independent of where you end up going to college.

So much learning in college takes place outside of classes. By getting involved in extracurricular like clubs, sports or music groups, you learn to work with and communicate with other people — and initially, they’re usually strangers. You will learn to accomplish goals alongside people you like, but you’ll probably meet other people you don’t like. This is how the real world works, and MIT is a great place to get practice.

(2) “Alexander Ovechkin, the Mad Russian” [New York Times] – a most interesting article about the life and times of NHL’s best player, Alexander Ovechkin. In case you aren’t familiar with Ovechkin:

In 2005-6, he was the N.H.L. rookie of the year, scoring 52 goals, tied for third most in the league. In the 2007-8 and 2008-9 seasons he led the league in goals, with 65 and 56, and won back-to-back M.V.P. awards. He has been at, or near, the top of the scoring chart this year and is on track for another 50-goal season.

On Ovechkin’s most memorable, absolutely insane goal:

Ovie doesn’t just score often, he scores memorably. Against Phoenix in January of his rookie year, there was what is now known simply as the Goal. Going one on one against the Coyotes’ defenseman Paul Mara, he got knocked down and landed on his back but kept the puck on the end of his stick and, as he slid backward, flung it over his head and into the net. This magical feat was viewed so often on YouTube that Caps officials estimate ticket sales went up 15 percent as a direct result.

The following paragraph profiles other Ovechkin goals, and I’ve linked to the respective YouTube videos below:

There are now so many celebrated Ovie goals on YouTube that connoisseurs can argue over them like stamp collectors comparing the 1840 British Penny Black, say, with the 1868 Franklin Z-Grill. Which is better? The goal against Buffalo in December 2008, when he slipped the puck around a defender’s legs, fell and then, while sliding on his stomach, whipped a shot through the goalie’s leg pads? Or the one against Detroit in January 2009, when he dragged the puck between his own legs, faked a backhander and then drilled a shot into the top of the net? What about the stupefying goal against Montreal the following month, when, catching the Canadiens on a bad line change, Ovechkin spun 360 degrees, passed the puck to himself off the boards, got knocked on his side and while skidding across the goal mouth lifted a shot over the goalie’s outstretched leg? Against the New York Rangers in early February, he scored a one-hander, pushing the puck between the skates of the defenseman Michal Rozsival, picking it up on the other side and then stabbing it with one arm past the Rangers’ goalie, Henrik Lundqvist.

Also of interest is this TSN video highlighting Ovechkin’s top ten goals.

I think what makes Ovechkin appealing to the hockey fan (not just a Capitals fan) is because he’s extremely approachable and personal:

Unlike most Russian players, who are paired with a Russian-speaking minder when they come to the N.H.L., Ovie insisted on an English-speaking roommate, and his English has become steadily better (though he does refer to the Verizon Center’s corporate suites as “suits”). In January, he was made captain of the team, in part because he’s such a presence in the locker room. He seldom ducks an interview, a chance to appear in a commercial or a request to make an appearance for a charity. According to Nate Ewell, the Capitals’ director of media relations, it’s hard to persuade Ovie to say no to anything. Off ice, he enjoys full rock-star privileges. He lives in an immense pad and markets his own line of Ovie-wear. He enjoys techno-pop, fast cars, beautiful women, torn Dolce & Gabbana jeans and loud parties.

The entire NYT Magazine piece is a pleasure to read, and I encourage you to check it out.

(3) “How I Did It: Jerry Murrell, Five Guys Burgers and Fries” [Inc Magazine] – an excellent interview with Jerry Murrel, founder of Five Guys, one of the best burger joints in the United States. Three quotable gems from the interview (on soliciting reviews, creating ownership in the company, and how the name Five Guys came to be):

  1. We have never solicited reviews. That’s a policy. Yet we have hundreds of them. If we put one frozen thing in our restaurant, we’d be done. That’s why we won’t do milk shakes. For years, people have been asking for them! But we’d have to do real ice cream and real milk.
  2. We try to make kids feel ownership in the company. Boys hate to smile. It’s not macho. And it’s definitely not macho to clean a bathroom. But if the auditor walks in and the bathroom isn’t clean, that crew just lost money. Next thing he knows, the guy who was supposed to clean the bathroom has toilet paper all over his car and a potato in his tailpipe.
  3. Our lawyer said “You need a name.” I had four sons — Matt, Jim, Chad are from my first marriage, and Ben from my second to Janie, who has run our books from Day One. So I said, “How about Five Guys?” Then we had Tyler, our youngest son, so I’m out! Matt and Jim travel the country visiting stores, Chad oversees training, Ben selects the franchisees, and Tyler runs the bakery.

(4) “Dark Element” [Walrus Magazine] – a heartbreaking account of Zhovti Vody, a Ukrainian prairie city (built in the Soviet era to supply ore for nuclear weapons) on its deadly legacy: cancer and devastation. Still, life must go on, as this poignant photo essay demonstrates.