“How I Built This: The Unexpected Paths to Success from the World's Most Inspiring Entrepreneurs” by Guy Raz
Published September 15, 2020 by Houghton Mifflin Harcourt
Pages: 320
ISBN-10 : 0358216761
Date Finished: Jan 2, 2021
How strongly I recommend it: 7/10
Find it at Amazon or Bookshop.org
For some reason I was hesitant to spend time with books that come from podcasts that I’ve already heard, but once again I’m proven wrong. There is something to seeing the same material in a new format that allows it to stick with me more than it might otherwise. There is, however, more than a touch of entrepreneur worship throughout this book that reads as a bit too naive and bandwagon-y for my sensibilities, but there is something wonderful in seeing how famous founders have failed their way to success. It’s worth a read.
My Notes:
And yet, there is always that one person we know who goes the other way. Who embraces a different set of instincts. The kind that have driven humans for millennia to leave home, to push boundaries, and to build. For most of history we have called that kind of person an explorer. But in the twenty-first century, with the frontiers that are still open for exploration no longer physical, but technological, social, intellectual, and economic, we have given that person a new name: entrepreneur. Part I : The Call
The French novelist Victor Hugo famously wrote in 1862, "One withstands the invasion of armies; one does not withstand the invasion of ideas."
But in doing them he learned that "you don't need that much to live on if you're really enjoying what you're doing." He also learned that nothing is permanent and that you can always go back once a different path has run its course.
Just as Jim came from a long line of brewers, Michael [Dell] came from a long line of physicians. "I was a premed major," Michael told me, "and some of this was [a result of] the programming from my parents, because my father was a doctor, my older brother was a doctor, a lot of my cousins were doctors, and I always thought I'd be a doctor."
Paypal alumnus and LinkedIn founder Reid Hoffman captured the romance of entrepreneurial daring perhaps better than anyone when he said, "Starting a company is like throwing yourself off the cliff and assembling an airplane on the way down."
You need a partner whose skill set complements yours. Someone who not only shares your vision but elevates it and holds you accountable to it; who does what you cannot; who thinks and sees things in a way you don't; whose strengths compensate for your weaknesses, and vice versa.
Method shows that finding the right partner can unlock any good idea, no matter how arcane or esoteric or beyond its sell-by date it may seem.
"My best business decisions really have to do with picking people," Bill Gates said in a 1998 conversation with Warren Buffett on the campus of the University of Washington. "Deciding to go into partnership with Paul Allen is probably at the top of the list... Having somebody who you totally trust, who's totally committed, who shares your vision and yet has a little bit different set of skills, and also acts as a check on you—and just the benefit of sparking off of somebody who's got that kind of brilliance—it's not only made it fun, but it's really led to a lot of success."
In a 1985 Playboy interview, Apple co-founder Steve Jobs talked about the importance of both his partner Steve Wozniak's differing interests and their shared lack of a vision. "Neither of us had any idea that this would go anywhere," Jobs said. "Woz was motivated by figuring things out. He concentrated more on the engineering and proceeded to do one of his most brilliant pieces of work, which was the disk drive that made the Apple II possible. I was trying to build the company... I don't think it would have happened without Woz and I don't think it would have happened without me." pg 48-49
* Between the time Adam and Eric reconnected on their flight home in 1998 and they got their first product on store shelves in 2001, Pets.com would be born, raise eight figures in venture capital, be acquired by Amazon, IPO, crater, and then be shuttered. pg 51
It's called bootstrapping. Bootstrapping is what you do if you don't have a Rolodex of billionaires to flip through and ask for money; if it's your first company and you're going it alone, just you and your partner(s). More specifically, bootstrapping is using what you have at your disposal to get yourself where you want to be. pg 53
Airbnb began as a website called Airbedandbreakfast.com that was designed to offer a place to stay for attendees of large conferences once all the hotel rooms in the host city were sold-out.
They launched the site with six listings, just in time for the conference. Unfortunately, only two people booked. And one of them was Brian.
"It was completely demoralizing," Joe said. "Here was this idea that we were so excited about, and nobody took us up on the idea." [AirBnB]
[Andreesen Horowits] He described in 2010 how his company evaluates CEOs, whose main job, he contends, is to be "the keeper of the vision and the story."
... "The story must explain at a fundamental level why you exist." It is a story you have to tell to your customers, to investors, to employees, and ultimately to yourself.
Ben Horowitz is right: knowing your story and being able to clearly articulate to the world why you exist is one of your most important challenges as an entrepreneur. Not because it helps you sell more product, or build a cooler brand, or make more money—though all those things are true.
... it answers the big "why" question is the one that creates loyal customers, finds the best investors, builds an employee culture that keeps them committed to the venture, and keeps you committed and grinding away when things get really hard and you want to give up (and you will).
There's something many entrepreneurs learn quickly as their businesses start to gain traction: with some rare exceptions (Hello, Spanx!), bootstrapping, for all its early effectiveness will take you only so far. It doesn't matter how hardworking or economical you are, or how well you drive early sales and then flow that revenue back into the business; there will always come a time when you will need something that you can't do yourself and don't have the money to pay for even if you could.
But today, even the most casual observer of the entrepreneurial world understands that for x dollars, you give up y percent of your company and/or z percent royalty.
Soliciting money from friends and family is sort of like an unofficial step between bootstrapping and scaling up with professional fundraising.
If all he was doing was making shoes the same toxic way the'd always been made, just without the swoosh or the stripes or the star on the side, how new of an idea was it, really? And how long before the logo-less story ran out of legs?
I would love to tell you a story about an entrepreneur who succeeded in spite of the paralysis of their perfection—but I don't have one, because such people generally don't create companies.
In 2012, Peter Rahal came up with the idea for RXBar when, as a hard-core Crossfit enthusiast and an adherent to the Paleo diet (like so many other CrossFitters), he recognized that there was no energy or protein bar out there that met the strictures of that diet. "And the question was, why?" Peter said. "There's this group of people that all do the same activity, that subscribe to the same nutrition values, and yet these gyms are selling water, they're selling T-shirts, but no good-tasting bar that fulfilled the Paleo criteria."
It is precisely at this point in the iterative process that any one of these founders could have frozen in fear of negative feedback and let their idea get stuck in what Hollywood calls development hell.
Microsoft employed each of those strategies to great effect. A year after Raikes's email to Buffett, Microsoft would surpass General Electric as the world's most valuable company and stay in that position for five consecutive years. [in 1997 Microsoft VP Jeff Raikes sent Buffett an email asking if he'd invest in the company]
Today, RXBar, which was acquired by Kellogg's in 2017 for $600 million, is one of the fastest-growing brands in the protein bar space, and 5-hour Energy has a 93 percent share of the energy shot business.
"I am fundamentally suspicious of orthodoxy," Tobi said. A claim evidenced in his decision a few years earlier to build e-commerce software from scratch, and then to abandon Java for Ruby on Rails as the programming language with which to build it. "I don't react very well to people telling me what to do," Tobi said of the various VC offers he'd received, ...
"Where you live matters," Drew said in his address. "Whatever you're doing, there's usually only one place where the top people go. You should go there Don't settle for anything else... If the real action is happening somewhere else, move."
More often than not, the success of a new business depends on its ability to get attention—specifically, it's ability to build buzz and to engineer word of mouth. While these two concepts are often used interchangeably, I actually think they are distinct phenomena that should be treated differently if a founder wants to be effective in attracting attention and growing their business.
He took out ads in cycling magazines calling out the only other real player in the market, PowerBar. "The headline was 'It's Your Body, You Decide,'" he said. The ads asked the reader whether they wanted refined ingredients or whole ingredients in their energy bars. It even included pictures of both sets of ingredients. "That caused us to be sued immediately," Gary said, "but it created this buzz in the bicycle industry where people said, 'Hey, have you heard of Clif bar?'"
... "nobody cares what a brand has to say about itself."
"You know, for somebody who's starting a venture, and particularly if you've got a product for which there isn't precedent, the big challenge is obscurity—trying to get out of obscurity and get up on the radar."
But what I have found in my own experience and from listening to the experiences of entrepreneurs across the spectrum is that there is only one reliable way to engineer word of mouth: you have to make a really good product.
Actually, that's not precisely true. It can't just be really good. It has to be so good that someone has to recommend it.
The year before, McDonalds's had opened a record 597 new stores, bringing their total store count to nearly 9,000. Wendy's had booked record annual revenue on the heels of its famous "Where's the Beef?" campaign, and Carl's Jr. had finally begun franchising stores.
That, to me, is the unifying characteristic of every founder I've met who counts positive word of mouth among the principal reasons for their success. Each of them made something really great, really special. They were so good that they became the signal that broke out from the noise of their competition and reached farther than they could have ever imagined.
In the startup world, there is a name for this flat, desperate, profitless in-between place that Gary Hirshberg had spent a decade battling through and now found. himself swallowed up by. It's called the "trough of sorrow"—a term coined by Paul Graham to describe the period young companies find themselves in as a result of a lack of product-market fit.
[Tylenol recall 1982] Today, these steps taken by Burke seem like standard practice in the face of such corporate calamities. But in 1982, they were anything but common. "Before 1982, nobody ever recalled anything," one public relations executive who advised Johnson & Johnson during the crisis told the New York Times in a 2002 anniversary piece subtitled, "The Recall That Started Them All."
Modern evolutionary theory has been dominated by two competing schools of thought. There are the gradualists, who, like Charles Darwin, believe that large species-level change occurs as a result of the slow, gradual accumulation of smaller changes over long periods of time. And there are the punctualists, who believe in the "punctuated equilibrium" hypothesis—popularized by Niles Eldredge and Stephen Jay Gould in the early 1970s—which argues that species-level change occurs rapidly, in short bursts, with long stable periods in between.
The reality is that both schools are probably right. Evolution can happen slow or it can happen quickly, and sometimes both kinds of change occur within the lineage of the same species.
It turns out there is a name for founders who fall into this trap. They're called "monarch CEOs," according to Professor Jeffrey Sonnenfeld, who studies CEOs at the Yale School of Management. "Their business is defined around them and their life is defined around the business," he told the Washington Post. The most notorious of these figures is recent years was Dov Charney, the controversial founder of the now-defunct clothing retailer American Apparel.
The New York Times said, "Charney himself had no other interests outside his company. He viewed himself as indispensable."
Quickly he began wholesaling to other stores in the area—dry goods, fabric, mining supplies—before finally getting into what we now call blue jeans in the early 1870s. [Levi Strauss]
Companies are like families. From the outside they all look similar and sometimes sort of boring, but on the inside they're all uniquely complicated. They have very specific ways of doing things that seem peculiar to anyone else. They have rules and traditions and terminology that mean a lot to them and define significant aspects of how they function. They also have weird internal rivalries and quarreling cliques. They have baggage and secrets and skeletons in their closets.
In the military there is a saying: "Proper preparation prevents poor performance"—the five Ps.
The troops didn't feel an increased sense of esprit de corps. Instead, they felt demoralized.
In February 2008, the popular Harvard Business School professor Noam Wasserman published an article in the Harvard Business Review that would become the basis for a best-selling book of the same name a few years later. It was called "The Founder's Dilemma." The thesis, based on reams of research Wasserman had conducted on thousands of entrepreneurs, was that at some critical point in the growth of their companies, all founders will find themselves with a choice between two competing interests—money and control—and they will often choose poorly. They will act either against their own self-interest or, in some instances, against the best interests of their companies, and sometimes both.
"Founders don't let go easily," Wasserman wrote. In fact, 80 percent of the entrepreneurs he analyzed were forced out of their founding leadership positions before they were ready to leave, and "most [were] shocked" when it happened.
"I have had psychologists study our employees," Yvon [Chouinard] told me, "and they said, 'Your employees are the most independent we have ever seen in any company. In fact, they're so independent, they're unemployable anywhere else."
That's one of the reasons I end every interview on How I Built This by asking my guests to what extent they feel luck played a part in their success, compared with things like hard work and skill and intelligence.
"If you'd asked me that in the late eighties, I would probably have said it was 90 percent intelligence and insight and work, and 10 percent luck. But I would say today it was the other way around," Rod said. "That tells you how perspective changes with time."
"The whole world runs on luck. The question is, what you do with it."
This is the other thing about luck that you can't forget: you have some agency over it. ... "sometimes you make your own luck."
For more… find it at Amazon or Bookshop.org