Show Me The Money

Author: Ron Morris, The American Entrepreneur

Last week, in response to a column that I had written entitled, People Watching Can Be A Science, I received a letter from Kevin that reads as follows: 

“I think the value of failing is overrated. I'd much rather succeed and study what I did right. I will no doubt make mistakes and learn from them in my business career, but mistakes only teach me what *not* to do. Success teaches me to do more of whatever I did to be successful.

You can only learn so much from making errors.

And the statistics back it up:

http://www.nytimes.com/2009/03/22/business/22proto.html?_r=2

(The above is a New York Times story, written by Professor Gompers, proclaiming to the entire world that success beats failure in terms of learning important business lessons.  I heartily disagree.)

The telling quote from that article:

"Already-successful entrepreneurs were far more likely to succeed again: their success rate for later venture-backed companies was 34 percent.” 

I read this response (ironically, Kevin is one of my current students), and then read it again.  I must admit that steam came from under my collar as I read it for the fourth time.  I thought to myself, “This article was clearly written by someone who has never in their life made a payroll.”  Further investigation showed me that the formulator of the theory that, “success is a better teacher than failure,” was also a college professor --- a Harvard Business School college professor, no less.

Why the steam? 

Because, and for the millionth time in my life, I had to watch helplessly as someone with absolutely no experience with the subject matter he was talking about used his credentials as a professor at a prestigious university to put across a point that, and in my opinion, holds little or no water.  Worse, this guy sucked in one of my students --- and it sure as heck sounds like my student bought what this guy was selling. 

People Watching Can Be a Science

Author: Ron Morris, The American Entrepreneur

Regular readers of this column know that I owned a number of companies before I really hit the jackpot.

I now like to think that my big success was the result of sheer genius, but I know better. Much better. Truth be told, our ultimate success was the result of literally tens of thousands of hours of Effort and Error.  Call them the “double E’s” if you like. 

Let’s start with Error.  First, making errors is incredibly important.  Anyone who has ever created something magnificent knows this.  You try something, you fail.  Then, you study the reason why you failed, and then you adjust.  The next time around, you tend to fail just a little bit less. 

It’s a hell of a way to run a railroad, but it works. 

Most of what you are doing whenever you are building an enterprise is science.  Most. But there is also some part of any human endeavor that lingers in that hazy mist between science and art, the “people” part.

Ahh, people.  They will make you, and they will break you.  Pick the right ones and you win, pick the wrong ones and your hair becomes whiter. 

One of my favorite aphorisms is, “It’s easier to change people than it is to change people.”   (I’ll let you at least ponder this for a minute.)  When I was young, I thought that I could take virtually any personality and/or any set of experiences and then; through sheer will, “bend” that individual or situation “my way.” 

I found out that this doesn’t work.  So don’t even try it. 

Instead, the trick (well, one of them anyway) to building a successful business is to get everyone pulling in the same direction.  (Like I said, “one of them” --- because before even this can happen, you first have to be sure that the direction they’re “pulling” in is the “right” direction.) 

This is generally regarded as “management.”  Or, as some might call it, “management science.”   But just who manages? And who is qualified to manage, and who should be following that manager?  These are all problems that must be pondered and resolved before any organization can properly mesh. 

You're Either Making Something, or You're SELLING Something

Author: Ron Morris, The American Entrepreneur

And if you're doing neither of these two things, just what the hell are you doing in my company?

It's true. All business comes down to just two primary functions:

  • Businesses MAKE stuff, and,
  • Businesses SELL stuff.

And people who do neither of these two things are just what they technically define to be ... OVERHEAD!

Oh, sure ... somebody has to keep SCORE ... and that's why the Great Creator invented BEANERS.

And, I "allow for" ONE beaner per company. One. Plus, outside beaners as required.

Look around at your company right now. What do you see?

Because if you see lots of people who cannot tell you how they either make or sell YOUR "stuff", then my advice is "update your resume".

Because somebody has opened the barn door and let the "Illusion of Movement" people IN to your company. And that's BAAAD, baby. Real bad!

The WHAT, you say Ron?

It Was Twenty Years Ago Today

Author: Ron Morris, The American Entrepreneur

When Jonathon Kersting asked me to write something in celebration of the High Tech Council's twentieth anniversary, my mind almost immediately went back to the year 1982.

1982. My dad was still alive. (Though he still, and after a decade, had not once visited or even acknowledged the existence of, my "high-tech" business.) Mike Jackson was all you heard on the radio. Pitt was a force to be reckoned with in football, and the term "high-tech" was pretty much verboten. After all, we were still very much a steel town and a manufacturing town.

Another "dirty word" was "entrepreneur". In fact, and this is highly unscientific, I doubt that anyone much used that word in those days. (Google shows only sporadic references to it in certain academic journals. It was, after all, 1982.)

Had I gone to my father in 1982 and said I was an "entrepreneur", he would have said, "That's just another fancy word for "unemployed".

To make matters worse, I was a software entrepreneur in 1982. In fact, in 1982 I was already in my tenth year of being a software entrepreneur. I was 32 years old.

What was the climate for an entrepreneur like back then? Well, it was, ah, DIFFICULT! Very difficult, for a start-up company. Consider:

Talk to Me When You've Made a Payroll...

Author: Ron Morris, The American Entrepreneur

Recently, I had a rather stirring debate with a "consultant". His contention was that there is no difference between paying just "one's self", and actually paying a number of employees.

"It's the exact same thing", he sniffed, "In fact, I've gone many times without a paycheck."

("I'll bet you have", I thought to myself, "especially if this is your mindset.")

The question that I did not ask him was, "And who loses when you miss a payroll of one --- that one being YOU? As opposed to what happens when you miss a payroll of MANY?"

I always like to say that running a business is perhaps the toughest challenge (short of combat and parenthood) that a person can face. No less than Jim Rohr, CEO of PNC Bank once said to me, "I don't even know how you entrepreneurs do it ... I know that I certainly could not (the topic was starting and growing a business from scratch) do what you do."

And, the toughest part of starting and growing a business? Well, and in my opinion, it is making a payroll ... every two weeks, for every month, of every year that you are IN business.

"Tougher than coming up with the business idea?" you ask.

"Yes, tougher than that and tougher than raising money, selling product, and finding/hiring/retaining great employees", is my answer.