The Blade

James & Alanis

Seeing Alanis Morissette’s recent duet with James Corden of her 1995 song “Ironic” on The Late Show reminded me of a hilarious video parody of the same song. In 2013, after 17 years of being nettled by Morissette’s casual use of the word “irony,” sisters Eliza and Rachael Hurwitz, both 24 at the time, fixed the song’s snafus by producing and distributing “It’s Finally Ironic,” a video mimicking the original. In the new video, these young satirists kept the song’s melody, but changed its lyrics to relay truly ironic anecdotes, such as: “He won the lottery, and died the next day, from a severe paper cut from his lottery ticket.”

Rachael & Eliza

Rachael and Eliza wrote the video in order to set the record straight on the meaning of “irony” and to gain exposure for their entertainment careers. They invested about two weeks in writing, shooting, editing, and producing the video, saving money by borrowing video equipment and a car from their father to use as the setting for their parody. Their parents and another sister helped them film. “The editing process took us about a week, and we just used iMovie,” Rachael says. “Overall, we really did not have money to spend on creating the music video, so it was a very low-budget endeavor.”

Their spoof has had nearly a million YouTube views and still counting, and it’s been featured on a number of national media outlets such as The Wall Street Journal, ABCNews.com, McLean’s website, MSN, and The Huffington Post.

Shortly after watching the Hurwitz parody, I was surfing the web and landed on publicly traded payroll processing firm Automatic Data Processing’s (ADP’s) website and saw it had 630,000 customers and nearly $11 billion in revenue. This is serious business! Kudos to ADP; they’ve done a good job of managing their company in that its stock has returned 4,667 percent since 1983, versus a 1,174 percent return in that period for the S&P 500.

Entrepreneurship is a process that goes on every day somewhere in between the creating/producing of “It’s Finally Ironic” and ADP’s large, complex, tightly-managed organization. Many startups begin as spur-of-the-moment ideas, like this video spoof, but grow to be as complex as ADP. In fact, ADP was started in 1949 by 21-year-old Henry Taub on a low budget to solve an “of-the-moment” problem that he had identified–an issue that he found interesting. Henry’s idea to process payroll for companies came to him when he was visiting a nearby company and learned that its payroll manager had fallen ill, so payroll wasn’t produced on time, resulting in service disruption.

He may have thought, “Ah-ha! I can fix that.” Henry’s first client, New Era Dye and Finishing, was across town, but he didn’t have a car, so like the Hurwitz sisters, he improvised, taking the city bus to pick up their paperwork and deliver their payroll until he reached hockey stick revenue growth.  

Entrepreneurship needs a mixture of artful creativity, like the Hurwitz sisters’ investment in their video, and also the direct business-mindedness of ADP. What’s important in the case of each startup is finding the right balance to meet the requirements of the founder’s personality and life goals. Balance? Unless you are a Wallenda, that’s easier said than done.

The 1979 song “Message in a Bottle,” from The Police, depicts a lonely, despairing man who writes a letter, places it in a bottle, and throws it into the sea, proclaiming he’ll “send an SOS to the world.” Years later, the man, still alone, returns to the beach.

“Walked out this morning,

Don’t believe what I saw—

A hundred billion bottles

Washed up on the shore.

Seems I’m not alone at being alone,

A hundred billion castaways

Looking for a home.”[i]

Image by markuso

There are many millions of potential innovative entrepreneurs today who are looking for a home. They are stuck in dead-end jobs, yet hold, like a radiant green-glass bottle, this note in their thoughts: “I desire to build an innovative company, but I can’t overcome the risk and uncertainty of such an undertaking. SOS! What should I do?” If I could send my own message in a bottle to aspiring entrepreneurs, here is what it would say…

Don’t believe for a second that just because you have a job that you’re risk-averse.Click to tweet

Once your startup business is up and running, you’ll probably have less risk than you would working for a large firm in a tired industry. I can’t tell you how many bankers, software salespeople, programmers, and engineers I know who have lost their jobs right when they least expected it. (Often right when they start earning real money, have three kids to feed, and college coming soon.) But I know a lot of entrepreneurs who have built profitable, valuable, niche lifestyle companies who have less risk than others in traditionally “stable” careers working for “The Man.”

Your chances of success are wayyyy greater than 10 percent.

An often-quoted statistic is that 90 percent of startups fail. I’ve searched and searched for proof of that stat, and it isn’t available. If you have been able to generate significant revenue at costs that are manageable, I believe your chances are greater than 50 percent (or even better if you do things right) to at least build a niche business you can make a solid living at – and greater things could happen.

Don’t put too much pressure on yourself.

Start with one goal in mind: survive and advance.Tweet this When I started my own company, sales research firm First Research, one important resistance to failure was that my partner, Ingo, and I never defined failure. We never discussed whether or not we were failing or meeting goals. For example, we never decided that our $4,000 in sales during the first year was an indication of how we performed. We never talked about when or why we would quit because it wasn’t an option. We were simply successful because we were there and in the game.

Start with as little cash and commitment as possible.

When first starting out, you should raise only as much money as you absolutely need to begin testing your idea and then, once you’ve determined to go ahead with building the business, only as much as you need to get to launch. One of the most dangerous misconceptions about starting out is that you can speed it up by pouring cash into attaining scale.

The Startup Genome Report, conducted by entrepreneurs Bjoern Herrmann and Max Marmer in collaboration with Stanford lecturers Steve Blank and Chuck Eesley, researched thousands of Internet startups. One of its findings from an analysis of more than 3,200 firms is that “one reason for failure has shown up again and again: premature scaling.” Better to bootstrap until you figure out how to grow–which sometimes can take years of trial and error. And don’t quit your day job until you have to.

Don’t be afraid of the big bad wolf.

Too many aspiring entrepreneurs have good ideas but are afraid to compete against large established firms. Many big firms have huge cost structures and trip all over themselves. So happy hunting. Here are 3 industries ripe for disruption.

Calibrate the pundits’ advice.

The world of startups is full of pundits–know-it-alls with strong opinions about how things should and shouldn’t be done. (I’m one of them….eeeeeee e.) Many of those strong opinions are delivered mostly to bring attention to themselves. So it’s best to trust your own gut instinct and calibrate all advice based upon the likely biases of that particular pundit.

Balance small failures with small successes.

When I started First Research, I played all these little mind games with myself to feel successful. When I experienced a failure, I would counter that with a small, yet meaningful success. For example, when I called a prospect, and he said, “I just don’t see us ever using this.” Failure. I would pout for a while and then start hunting for good news. I would pull up our website to see if anyone had logged in. I would then email them and receive good feedback. Success. Now I felt successful and could press on.

Teddy Roosevelt said, “It is hard to fail, but it is worse never to have tried to succeed.” Our society puts so much emphasis on winning versus losing. But winning versus losing isn’t what made our country great. We became great by taking risks and innovating–which is far greater than wins and losses. And, as The Police song “Message in Bottle” says, “Only hope can keep us together….” I agree, hope is the greatest strategy of all.

[i] (The Police 1979)

I paced back and forth in my office, listening on speakerphone as sales and middle managers were grilled or praised by the boss. After an hour of this, I shifted my energy to staring out the window at the pedestrians below. Soon I’d have my turn to face the music.

Like many other large-company managers across the country, I despised the process of sales “commitment” (a.k.a., goals) roll calls. My business unit had missed our commitment a few weeks in a row, and the boss’s patience had run out. You have to picture the scene – several people were on the call, silently enjoying the show and thinking, “I wonder how Bobby’s going to talk his way out of this?”

When it was my turn in the hot seat, I actually used the word that gets the weak fired and the lame hunted down and killed in American business. The executive asked, “Bobby, I need your commitment. Will you get the results by the end of the week or not?”

And then I said it – I used the riskiest, baddest word of all:  “I HOPE so.”

You could cut the tension with a dull knife. The boss barks, “Bobby, ‘hope’ is not a strategy. Are you going to get the results or not?”

“I just don’t know. But I’ve built my entire career around hope.” My answer, though honest and straight from the heart, didn’t go over well, and the shit hit the fan.

Hope isn’t a popular word in big business, and you may agree with my former boss that hope is indeed no strategy. Businesses don’t pay people to sit around and hope things happen. We get paid to develop plans and meet objectives. “Hope is not a strategy” has kind of a commanding ring to it, doesn’t it? It implies the speaker is strong and the listener is feckless and weak. The phrase insinuates that, “You’re not capable of succeeding because you only hope things will happen. You must lack the ability, drive, and work ethic to get this job done.”

How did hope get such a bad rap?

When did hope get lost as the virtue it really is? Have we become hope-less? Well, take a look at who attracts all of the attention in American business. Today, Wall Street titans of industry set the tone. Results-driven, hope-empty philosophies sound decisive and powerful; everybody wants to be like that.  Thus these messages leach throughout society by our mighty media and word of mouth. Soon we begin to believe that these unrealistic, simplistic, brittle ideas and practices are the formula for success in entrepreneurship, too. Hope is only an emotion, a poor, pesky throwback to the early twentieth century or before.

But is hope a hopeless strategy for entrepreneurs…or the rest of us for that matter? Does our hope reveal our weakness as we open and run a small business? Or can hope actually make us more successful–and happier as we are becoming successful?

Hope is more than a strategy

The world is more complex than big-business America, whose incentives are primarily driven by the accumulation of wealth. This central emphasis on accumulating assets is totalitarian, fundamentalist, and simplistic, thus weak. Any system of thought and action that takes its energy from one idea—to get rich and stay rich—can be toppled easily, too easily to put your faith into. Better to trust yourself. To feel hope and to use it in the service of your own true work.

And this is where entrepreneurship comes in.

The real world is humble and understands that we don’t fully comprehend the human race, the depths of the human heart. We simply can’t know what will happen tomorrow. While we may attempt to control the future, we often fail. The future is, of course, a lot like the past, only more so, as the Bible tells us. But it’s also determined by thousands of variables beyond individual or corporate and governmental control. We can hope only to influence the future in a small way.

Thus, hope is vital because it strengthens our weakest link in human existence –– lack of control over the future.Tweet this Hope fuels the ability to act upon our desires. Hope is therefore a strong, positive emotion as it aids all enterprises, especially entrepreneurial ventures.

Human beings, including entrepreneurs, fundamentally need hope because we live in an imperfect world.Tweet this Two of the greatest speeches ever given remind us that hope is much more than a strategy.

Martin Luther King – “I Have a Dream” speech, August 28, 1963, Washington, D.C.   

“I have a dream that one day ‘every valley shall be exalted, and every hill and mountain shall be made low, the rough places will be made plain, and the crooked places will be made straight; and the glory of the Lord shall be revealed and all flesh shall see it together.’

“This is our hope, and this is the faith that I go back to the South with.

“With this faith, we will be able to hew out of the mountain of despair a stone of hope.”

_______________________

John F. Kennedy — Inaugural Address, January 20, 1961, Washington, D.C.   

“To that world assembly of sovereign states, the United Nations, our last best hope in an age where the instruments of war have far outpaced the instruments of peace…”

Try to imagine someone interrupting Martin Luther King during his “I Have a Dream” speech: “Excuse me, Dr. King? I hate to interrupt you because clearly you’re on a roll, but hope is NOT a strategy!”

That’s so off course it’s comical. Hope had deep meaning in his speech: it resonated in the hearts and minds of all who heard it. Hope was persuasive, uniting all listeners to positive, creative action for change.

For Dr. King, hope was not a strategy, hope was everything.

Most entrepreneurs hit a point after about a year when their “plan”–their carefully constructed “strategy”–begins falling apart. “Where are the customers? Why can’t we break even financially? I’m tired of living with no income. My wife/husband is freaking out! My heart was in this, but now I’m losing faith.” It’s at this point when hope is all we have. Hope is strong for us because hope is the last to die. Hope raises our tattered, smoke-scorched flag above the battlements and waits staunchly, silently for reinforcements – which turns into action – and eventual success.

Image credit: jppi

It is well-known that “entrepreneurial grit” is a trait required to build an innovative business, but too many founders fail to understand a realistic timetable for taking a new idea and turning it into a viable business. Grittiness isn’t months of hard work with little noticeable results–it’s years.Tweet this

Case in point is the creation of $18 billion Xerox Corporation. Chester Carlson, who invented Xerox’s flagship product, the modern-day copy machine, spent a great deal of his life commercializing it. In 1934, Carlson worked in a patent department and became frustrated with reproducing his drawings several times over. In response, he set out to invent a device that could copy images.[i] It took him four years to make the first xerographic copy. By 1938, his prototype was a working machine and should have been ready to market and sell, but that didn’t happen because Carlson didn’t have the capital or experience to produce and distribute it. So he pressed on.

Carlson spent four additional years asking 20 firms to help him develop and market his invention. They all turned him down. Finally, a nonprofit company agreed to help him. Three years later, Haloid Company obtained the commercial rights to his xerographic invention. Eleven years after that, Haloid—now calling itself Xerox—finally introduced the office copy machine, making Carlson a multi-millionaire.[ii] However, from the time that Carlson imagined his invention until it became a viable product, nearly a quarter of a century had elapsed. Now that’s grit!

A modern example is the six-year creation of financial software firm Sageworks. Its founder, Brian Hamilton, spent 18 months, singlehandedly grinding away and building his first artificial intelligence software product, plus another two and a half years discovering a market for it—which ended up being CPA firms. That’s four years of trudging through grit for survival. After that, Hamilton pushed an additional two years, from 2002 until 2004, trying to figure how best to sell to CPA firms to make his startup viable.

Grit helped build my own startup, First Research. Check out my blog about the 6 reasons I kept my startup going.

In the book Grit: Perseverance and Passion for Long-Term Goals, by Angela Duckworth, et al., (See her Ted Talk) it is noted that many of the greatest professional accomplishments come from grit, not talent:

“In a qualitative study of the development of world-class pianists, neurologists, swimmers, chess players, mathematicians, and sculptors, Bloom (1985) noted that ‘only a few of [the 120 talented individuals in the sample] were regarded as prodigies by teachers, parents, or experts.’ (p. 533). Rather, accomplished individuals worked day after day, for at least 10 or 15 years, to reach the top of their fields.”[iii]

Chester Carlson and Brian Hamilton’s start-up stories show that building a viable business is often muddled, mind-numbing work – in many ways more akin to blue-collar work than white-collar, “ivory-tower” work.

So grit is more than just determination—it also derives power from its alternative meaning: hard, coarse-grained sandstone. Grit is messy. It takes failed experiments, grinding slowly through ups and downs, finally getting there while others are left spinning their wheels, wasting their time and resources. The most successful founders use mental and physical muscle to keep advancing their dream into reality.Tweet this

There’s a fine line between knowing when to bail out and when to press on with a fledgling startup. With so much emphasis these days on “fail fast…fail often” and being okay with failure, maybe there’s another way to look at success versus failure. Sometimes, grit does pay off. Just because you fail early on doesn’t mean you’ll fail at the same business later on. So consider this: if you have a good startup concept, are you willing to keep the fight alive?

[i]  (Encyclopedia Britannica 2012)

[ii] (Encyclopedia Britannica 2012)

[iii] (Duckworth 2007)

If you are the founder of a startup, have you given thought to what…or who…set you on your entrepreneurial path? I certainly have, and there is one name at the very top of that list…

Photo credit: Elodie

Throughout most of school, I was a lousy student. In fact, my lack of maturity and short attention span led to my “repeating” fourth grade. I was hyperactive, and if I were a kid today, doctors would put me on Ritalin. According to my father, experts told him I’d never graduate from high school much less go to college. I could easily have hit the skids.

I’m unsure when I turned the corner to actually try in life, but I’m pretty sure I know who had the most influence. He’s the person I owe the most to in terms of my becoming an entrepreneur and having a fulfilled, engaging career. Don Goodwin, my high school American history teacher, practically danced across the room, engaging students from the front to the back. He loved American history, and his passion for the subject helped me come alive, opening my mind to a love for learning. He was tall and lanky, wore cool glasses, and was a charismatic, confident outsider who humorously mocked sports events, proms, cheerleaders, spring break, student government, and pop culture.

The mediocre teacher tells. The good teacher explains. The superior teacher demonstrates. The great teacher inspires.  –William Arthur Ward

Yet Mr. Goodwin was an independent thinker in a highly productive way, instilling in me a sense of optimism and confidence that one can be different and still be relevant in a conventional setting. No need to be a conformist if you didn’t want to. His energy was contagious, and I ate it up more than anything I ever had experienced. I never knew that Thomas Jefferson and the Louisiana Purchase could be so interesting!

Sure, Mr. Goodwin was smart and articulate, but that’s not what made him influential. Rather, it was his coming alive with his subject matter in a quest for something greater. He excelled at his craft mostly because he liked it so much. It was from Mr. Goodwin that I first learned some of entrepreneurship’s most critical ingredients – passion for your idea and whatever is your “thing,” and genuinely caring about people.

My point of telling you this story is that if today, you’re happy with your career and doing things you love—think hard about who helped you get to that point. And be sure to thank them.Tweet this

I was fortunate enough to hunt down Mr. Goodwin, have a beer with him, catch up on life, liberty, and the pursuit of happiness—and thank him. I also provided him an advance copy of my upcoming book, The Hockey Stick Principles, which is dedicated to him.

Who inspired you on your path to entrepreneurship?
What did they do or say to light a fire in your belly?

Let’s not take ourselves… or our businesses… too seriously

Once when travelling who knows where, who knows when, who knows why–a young flight attendant was taking us through the safety precautions and says, “There may be fifty ways to leave your lover, but there are only four ways to exit this aircraft.” Ahhhh, clever– throw in some Paul Simon lyrics. I like.

Image credit: Stuart Miles

The flight attendant strolls by me, and I exclaim, “You just slip out the back, Jack!” No reaction. She strolls by again, I add, “You don’t need to coy, Roy!” No reaction. A few minutes later, “Just drop off the key, Lee!” Nothing. At this point, I’m not even trying to be funny; I’m just looking for some sort of reaction. The flight attendant eyes me as if I’m crazy. The man seated behind me is belly laughing – so I believe this exchange is somehow funny. But she’s not amused and instead is clearly irritated. Now I’m just confused.

The man behind me finally explains why he’s laughing: “She’s only 25 years-old and has no idea what you’re talking about. She’d probably heard another flight attendant use the phrase ‘50 ways to leave your lover…’ and so she copied it.”

I tried to explain myself to the flight attendant, but the damage was done. The more I tried to clarify what had occurred, the less she cared and the more awkward the situation became. Passengers are just shaking their heads.

Truth be told, I’ve done some pretty stupid, silly, embarrassing things during the time I founded two companies. Here’s a partial list:

• I inadvertently sexually harassed the sexual harassment trainer (that story is for another blog post).
• I broke my assistant’s nose playing an impromptu soccer kick-around.
• At a cocktail party meet-and-greet with customers at a very nice restaurant, I showed everyone in the room my geographic tongue.
• I requested my salesperson and intern help me clean my house in exchange for pizza. What was I thinking? This one became legendary.
• I once went postal on a few customers – shocking the room.

If you are a startup founder, I recommend you make your own list. How many times have we heard someone tell a work story that makes their boss sound like a complete moron (think: Michael Scott from The Office)? The reality is that, as a startup founder, embarrassment and vulnerability are inevitable. Best to go with it—laugh about it, be yourself, and enjoy the ride.Tweet this

I would never trade these stories and red-faced embarrassments for anything. The stories are a culmination of who I am and how I remember my startup experience. What would be sad would be looking back at eight years of me trying to become something I’m not. I could never be the CEO of a large publicly traded business; my personality would never lend itself to the necessary political correctness. But I can successfully create a positive atmosphere and grow a thriving small business by simply being myself.

So as Paul Simon advises, “’The problem is all inside your head,’ she said to me; The answer is easy if you take it logically…” Sometimes the problem is easy – Just don’t take yourself too seriously. You’ll be amazed by how much more fun your startup culture will become.

This is the third in a three part series on how Ben Franklin’s startup story teaches us that the methods by which startups are conceived, grown, and evolved are timeless.

Hitting the Growth Inflection Point

For five years, from 1724 to 1729, Ben had been a struggling founder who was attempting to find his way. He tried to open a business for two or three years without success, and then when he did open for business, he struggled with a lazy partner and debts. But Ben was a creative bootstrapper and learned methods to do work himself in order to save money, pay off loans, and eek by.

Much of Ben Franklin’s printing success in those early years was the result of his marketing creativity. He created popular writings that were remarkable and memorable—which he’d print and sell for a profit. He wrote like a modern-day blogger—providing entertaining, useful content in several subject areas. In 1733, under the pseudonym Richard Saunders, Franklin offered witty, worldly wisdom such as, “He’s a fool that makes his doctor his heir,” through his widely-read pamphlet Poor Richard’s Almanac.[i] To stand out, Franklin was the first to print cartoons and maps with his essays, the visuals increasing the appeal of his words.[ii]

Poor Richard helped Franklin’s printing business as its circulation grew to more than 10,000—keeping his presses busy. His creative content also helped him improve revenue at the Pennsylvania Gazette, the newspaper he had purchased, where advertising grew 42.5 percent under Ben’s management.[iii] This success also helped Franklin obtain larger print jobs, including being public printer for New Jersey and Delaware.

Five years after opening, Franklin’s forward-thinking print shop was now gaining momentum and was close to hitting a growth inflection point: “My business was now continually augmenting, and my circumstances growing daily easier, my newspaper having become very profitable…. I experienced, too, the truth of the observation, ‘that after getting the first hundred pound, it is more easy to get the second,’ money itself being of a prolific nature.”[iv]

Image courtesy of Archiving Early America

Surging Growth

Like many innovative businesses today, Franklin’s growth was also a result of his ability to duplicate good ideas. In 1733, Franklin entered into his first successful partnership with aspiring printers in other geographic locations. “The partnership at [South] Carolina having succeeded, I was encourag’d to engage in others, and to promote several of my workmen, who had behaved well, by establishing them with printing-houses in different colonies, on the same terms with that in Carolina. Most of them did well, being enabled at the end of our term, six years, to purchase the types of me and go on working for themselves, by which means several families were raised.”[v]

By 1748, when Franklin was 42 years old, his startup had grown into an empire of printing presses and publishing houses. Ready to take on new challenges, Franklin sold his printing company to his foreman, David Hall, in exchange for half the company’s profits for 18 years. Franklin’s payoff amounted to about 650 pounds annually ($943,044 in today’s dollars[vi]), after which he went on to discover processes, invent useful products, and play an important political role in effecting America’s independence from England by 1783 when the Treaty of Paris was signed.

The growth process of Benjamin Franklin’s printing startup resembles that of today’s innovative business startups. His success wasn’t predicated on detailed planning that, once followed, resulted in a quick success.

Instead, Franklin’s success was based on his resilience, eye for constant improvement, and personal ingenuity during the span it took him to turn his idea into a viable printing company.Tweet this

We unfortunately don’t have records of Franklin’s Printing Company’s annual revenue. As an alternative, I charted the estimated number of pages his company printed each year.[vii]

What we can learn from observing Franklin’s innovative print company startup nearly 300 years later is that its growth track appears also to be shaped much like a hockey stick, a pattern that is timeless and repeatable.Tweet this

Every business you or I start today, therefore, is likely to follow the same growth curve as Ben’s printing business, one that calls for the same unflagging hard work, self-disciplined resilience to recover from periodic setbacks, and the fun of applying creative problem-solving in different ways again and again.

[i] (Franklin) 1733)

[ii] (Independence Nat’l Historical Park 2012)

[iii] (Miller 1974)

[iv] (Franklin 1996) p.51

[v] (Franklin 1996) p.51

[vi] Currency Conversion

[vii] Franklin’s Printwork.

This is the second in a three part series on how Ben Franklin’s startup story teaches us that the methods by which startups are conceived, grown, and evolved are timeless.

Part 2: Ben the Bootstrapper

In Part I of young Ben’s startup story, in 1724, he had been burned after traveling to England to buy equipment. He remained there for two years and had learned about modern printing concepts and how to properly manage a shop. Ben moved back to the U.S., working for Samuel Keimer at the print shop where he had first apprenticed, essentially starting all over again. Franklin applied there what he’d learned in England to become innovative—he was the first to manufacture type in America and the first to generate a new font still used in many newspapers today, Franklin Gothic. “I made the ink; I was warehouseman, and everything, and, in short, quite a factotum,” or handyman, Franklin writes.[i]

But Ben was miserable working for Keimer, partly because of the printer’s authoritative attitude and lack of work ethic.

Ben had an independent, rebellious streak, so he struck out on his own again, this time with co-worker Hugh Meredith, whose father agreed to invest 200 pounds ($313,101 in today’s dollars)[ii] in Ben’s print shop. Franklin sailed again to England and purchased equipment and fonts with a “generous array of … page decorations, marked features of his typography through his printing career”[iii] that would later help him differentiate himself from Keimer and another pair of Philadelphia printers, Thomas and William Bradford.

In 1728, when Franklin and his partner started their business, Meredith & Franklin, they knew they had to adhere to a bootstrap mentality—keeping costs low by living in their print shop and taking a sub-lessee which helped pay his rent that in today’s dollars was $37,000 per year. Doubters expressed concern that a new printing company would survive, but Franklin and Meredith finally acquired their first customer, who paid them five shillings ($395 in today’s dollars[iv]). Even though the job was small, the first sale gave Franklin “more pleasure than any crown I have since earned,” a crown being the equivalent of 21 shillings.[v]

Franklin took advantage of his personal strengths and inventive nature to get his print shop off the ground. For example, one of Ben’s strengths was networking, so he created a club for mutual improvement, “Junto,” that catered to the city’s movers and shakers. The group met on Friday evenings to discuss morals, politics, philosophy, and business. Junto also helped Franklin find customers for his new business.

Despite some small early successes, Franklin’s business faced setbacks. Meredith’s father had promised to provide 200 pounds in capital, but only delivered the first 100 pounds, leaving Franklin 100 pounds in debt. “The merchant, who grew impatient, .. su’d us all. We gave bail, but saw that, if the money could not be rais’d in time, the suit must soon come to a judgment and execution, and our hopeful prospects must, with us, be ruined, as the press and letters must be sold for payment, perhaps at half price.”[vi]

To make matters worse, Meredith wasn’t holding his own in the partnership. He didn’t enjoy print work and was spending most of his time drinking in pubs. So in 1729, Franklin and Meredith decided to part ways—leaving Franklin to endure greater financial debt in order to buy out the Merediths’ interest in the business.

Image courtesy of Archiving Early America

Franklin was forced to work alone tirelessly to pay off the debt. “…To show that I was not above my business, I sometimes brought home the paper I purchas’d at the stores thro’ the streets on a wheel-barrow,”[vii] noted Ben.

Franklin gradually earned enough revenue to make his loan payments. Here’s how: he adopted vertically integrated processes to reduce costs and increase revenue. Franklin manufactured his own ink, a skill he had learned in England, and sold it to other print shops, diversifying his revenue sources. And to gain more customers and use of his presses, in 1729, Franklin purchased an ailing newspaper, the Pennsylvania Gazette, and also opened a store that sold stationery and books.

Like entrepreneurs today, during his time of trying diverse innovative ideas to survive, Franklin’s new wife, Deborah, helped his business. “She assisted me cheerfully in my business, folding and stitching Pamphlets, tending shop…”[viii]

Learning from Ben’s Blade Years

After five years of trying, Ben was still struggling with his startup. Let’s dive into the timeless lessons from this stage:

• His Blade Year struggles are par for the course: Ben’s startup reminds me of many of the startups I invest in today. During the first few years when revenue is low and growth is non-existent, founders have their backs against the wall and must be scrappy, penny-pinching, and do whatever it takes to survive, often bootstrapping, just as Ben did. He made his own ink and did much of the work himself. Remember, even today, bootstrapping should be standard operating procedure for startup entrepreneurs.
• Partnerships don’t always work out: As much as we try to make cofounder arrangements work well, sometimes they do not. Don’t get down and blame yourself when partnerships fail, as was the case with Ben’s partnership with Meredith. Instead, press on with your idea and recognize it as a bump in the road, not a failure of the company. Remember, a business with momentum is much bigger than any one individual.

But Ben is just getting started; be sure to check out next week’s post as he presses ahead and his revenue begins to turn northward.

[i] (Franklin 1996) p26

[ii] Currency Conversion

[iii] (Miller 1974)

[iv] Currency Conversion

[v] (Franklin 1996) p.28

[vi] (Franklin 1996) p.31

[vii] (Franklin 1996) p.33

[viii] (Franklin 1996) p.37

This is the first in a three part series on how Ben Franklin’s startup story teaches us that the methods by which startups are conceived, grown, and evolved are timeless.

Part I: Two Lessons from Ben’s First Four Years

Diplomat, inventor, statesman, businessman, and politician Benjamin Franklin (1706 – 1790) is credited with inventing many practical devices such as the lightning rod, the Franklin stove, swim fins, a “long arm” to reach books on high shelves, and bifocals, yet he characterized himself on the first line of his last will and testament as “I B.F., printer.”[i]

Ben’s entrepreneurial story from nearly 250 years ago is similar to many entrepreneurs’ stories today. In 1728 when Franklin started his printing company, the industry hadn’t changed drastically since Johannes Gutenberg first used movable type in 1440. Printing companies were a lot like the thousands of innovative internet companies today: entrepreneurial enterprises trying to deliver content in a singular, relevant manner in order to stand out from the competition and thus become necessary to their customers. Printing was the communications technology of the day.

As a youngster in Philadelphia, the smart, curious Ben had wanted to attend Harvard, but his father, Josiah, refused to pay for it, so Ben apprenticed with a candle-maker and a printer to learn a trade. Ben’s first opportunity to start his own print shop came in 1724, when he was 18. Pennsylvania’s governor, Sir William Keith, noticed Franklin’s disposition for good sense and hard work, so he wrote to Franklin’s father encouraging him to support financially a printing venture for his son. But Josiah’s return letter said Benjamin was “too young to be trusted with the management of a business so important, and for which the preparation must be so expensive.”[ii]

After his father’s help fell through, Keith promised to finance Franklin’s new printing venture, but then Keith reneged on his promise, even after Ben had quit his job and sailed to England to purchase printing equipment. But soon he was making the most of the unfortunate twist, remaining in England for 18 months to further his education as an apprentice in two reputable print shops.

During his trip to England, Franklin met Thomas Denham, a Quaker merchant. Back home in America, Denham and Franklin opened a store in Philadelphia. Franklin was a hard-working, diligent storekeeper, and learned a new skill: selling. “I attended the business diligently, studied accounts, and grew, in a little time, expert at selling.”[iii] Unfortunately, not long after the store opened, Denham fell ill and died, and Franklin hadn’t been written into Denham’s will to inherit his portion of the store.

Unemployed and with few prospects, Franklin was forced to start all over yet again.

Learning from Ben’s trials and tribulations

The first three or four years of adulthood were a bit rough for young Ben. He reached high, but each time was shot down. Here are the two main lessons to be learned from Ben’s early years:

• Good luck doesn’t build success. During those first years, Ben did many things the right way, but he was unlucky. He found a reputable financial partner who let him down. He worked hard in a shop and earned the right to own it, but that didn’t pan out, either. Goes to show you – if during the first three years of starting you fail or have bad fortune, it doesn’t mean you’re going to fail in the future. You should ignore the cliché I guess it’s just not meant to be.
• Keep learning. The climax of the story came when Ben had committed himself to starting a printing company by sailing to England to purchase equipment and then was reneged on after arriving. But Ben turned this unfortunate situation into a positive by taking an apprenticeship in England and learning more about the industry. Smart founders of today do this as well. They have a deep appreciation for the long-term nature of building a successful business.

In Part II, which will be posted in the next few days, we’ll see how Ben leverages what he learned in England to create an innovative shop.

[i] (Isaacson 2003)

[ii] (Franklin 1996) p15

[iii] (Franklin 1996) p25

This is a follow-up from last week’s post, “Doing Things Badly,” which recounts the first year of starting First Research, my first company, which was eventually sold to Dun & Bradstreet for $26.5 million.

First Research struggled during that first year. On paper, it was failing. Year-end 1999 revenue was just shy of $4,000. We had $399 in cash, $899 in accounts receivable, and a $20,150 loan payable to me. So even nine months into the venture, we had almost nothing to show for it. I was approaching that crossroads many people experience after a year of starting a new business: Should I keep going with First Research? Since I was unable to answer that question, I kept fighting with no stopping-point in mind. The six reasons I kept on were as much psychological as they were empirical.

First, First Research was about so much more than a business – it was a crutch to buoy my emotions after three crushing failures: My long-time girlfriend had just dumped me; before starting my business, I had been passed over for a bank manager job; and I found myself sitting on the bench while playing soccer for a local semi-professional team.  In a frustrated state of near wall-to-wall failure, I wasn’t interested in failing again. And I was not a rational investor–a $500 check made me feel rich. Thus, my desire to keep First Research going was more emotional than logical.

Second – I was motivated by a “me-against-the-world” mentality. I enjoyed playing the underdog because it confirmed my belief that I wasn’t supposed to be successful; therefore, I had nothing to lose. So why not give it everything I had? Managers holding me accountable or requiring that I do something had hardly motivated me. Instead, I was motivated by my own “inner manager” daring me: “This is a big challenge, Bobby; can you figure it out?”

Third – I loved trying to make something work that had never been done before. Somewhere in my DNA is the microchip, “Wants to build new concepts.” When I woke up every morning, creating something gave me a sense of wonder. My cofounder, Ingo Winzer, later told me, “After a year, we still didn’t know if we had a business. That didn’t matter to me. By then I was pretty confident something good would happen, mainly because you were so excited about what we were doing. I think every new business needs that–infectious enthusiasm. Just having a good idea isn’t enough.”

Fourth – my sixth-sense confidence told me that my idea was a good one. Common sense told me that a salesperson needed to understand a customer’s business before a meeting. Almost every sales guru in the country was preaching sales-call preparation and understanding the customer’s business. And from my own first-hand experience as a banker, I was confident that First Research was an effective new tool. I only needed patience and execution to convince others.

Fifth – I wanted to finish the puzzle. Parts of the puzzle, like product enhancements and reaching new customers, were yet to be pieced together. You can’t start a puzzle and not finish it. Putting its pieces together was fun and absorbing. Every time Ingo and I matched a puzzle piece, we created that wonderful feeling of accomplishment for ourselves.

And last – Ingo and I never defined failure. For example, we never decided that $4,000 in sales during the first year was an indication of how we had performed. We never talked about when or why we would quit because it wasn’t an option. We felt successful because we were in the game.

So Ingo and I just buckled down and did our thing. I woke every day and asked myself, “How can I convince someone to buy our amazing product?” And Ingo woke up every day and asked himself, “How can I write an industry profile that will blow the socks off our customers?” And that became our fight:  it was simple, precise, restricted in scope, energetic, and elegant.

Not taking outside investors enabled Ingo and me to have this simple mentality. An outside investor would have likely become impatient and frustrated by our inability to meet our business plan goals. Spending only the money we needed to get the product going kept us focused. Without investors, Ingo and I didn’t need to continuously satisfy someone else or waste our time explaining our failures—we simply recalibrated and fixed the mistakes. My lack of business experience was never a question because we were stuck with me—no hiring/firing quandaries there!

And so the fight went on.