The entrepreneurial transition curve

“A start-up puts you on an emotional roller coaster unlike anything you have ever experienced. You flip rapidly from day-to-day – one where you are euphorically convinced you are going to own the world, to a day in which doom seems only weeks away and you feel completely ruined. The level of stress that you’re under generally will magnify things. Incredible highs. Unbelievable lows at whiplash speed and huge magnitude. Sound like fun?”

MARC ANDREESSEN,  NETSCAPE  CO-FOUNDER

I remember the moment we decided to put everything on the line. We were going to build a business. Business had alluded my parents despite their desires. My wife and I were ready to risk our house, our careers, our savings, and our credit for a dream. We dreamed that we were going to be successful with a big house, with many businesses that paid us passively while we travelled the world.

It took 22 months to open the first business, a franchised restaurant. I was so excited the day we opened, I went to a quiet place and cried. I had finally started achieving my dream. Blissfully ignorant, I had gotten into the roller coaster of entrepreneurship.

The first phase of any roller coaster is climbing the hill. Filled with anticipation, the rider is excited, scared, and happy. But at no time, is there a fear of death. The fear of death or destruction only happens to those still on the ground, who fail to jump into the cart. Those on the ground don't see the point of the journey and hence don't embark. They wait and see to watch the result of their friends and loved ones get off the coaster. These people are either paralyzed by fear or they have no desire to be thrilled for a couple of minutes. There's nothing wrong with the people on the ground. They are hard-wired different than those who get on the ride. Same goes for those who never venture into the cart of entrepreneurship.

In this first phase, those in the cart are fuelled by Blind Optimism. Nothing could possibly go wrong. This is going to be an amazing ride, they think as they clickity click to the first apex of the ride. Same goes with entrepreneurs. The ride up the hill is also filled with blind optimism. The 22 months I waited coupled with the next 3 years after I opened, I was optimistic about everything in my business. I was making money. Business was good. Staff was challenging but on the most part good. One person showed me how to make more money through cost savings. I thought to myself, why do I worry about pennies, when I'm making thousands of dollars. 

Then an event changed my entire focus. The roller coaster was now released and I was weaving and bobbing through the loop de loops. With each turn, I became increasingly pessimistic about my operations. The transition curve calls this second phase Informed Pessimism.  Just like a real roller coaster, there is a moment that crosses most people's mind, "what if I'm on the first roller coaster that breaks away from the track?" Momentary fear makes the ride even more exhilarating. But in business, it starts to hurt. There is no safety of track. Business is built on people. And sometimes people don't do what they are supposed to do, including the owner. That's where I was. I stopped doing what I was supposed to do, primarily out of fear. I worked so hard to achieve that level of success that I didn't want to lose it. Everything I did was now based on fear. That was the moment I needed the most help. 

An employee taught me the power of pennies at year five. Some of my long term employees, who were used to the old, carefree Rick, didn't adjust well with the penny pincher person I had become. The same strategies that I dismissed while in blind optimism three years earlier were incorporated into the business. I was now ready to hear what other informed people were sharing. Fear drove the decisions to watch the business even closer. And the business was the most successful through the next two years.

Fear, as the catalyst, drove me to want to sell my businesses. I couldn't see the "light". I was so pessimistic about the future that I couldn't see how the business could succeed in the long term. The third phase of the transition curve is Crisis of Meaning. Being in crisis, there are only two options: get off the ride before you crash and burn or stay on the ride and find the fourth phase, Informed Optimism.

I wasn't optimistic in that business any further. I was emotionally drained. My family was falling apart. Everything I thought I had achieved was built a foundation of sticks. Luckily, we found buyers for our businesses before I hit rock bottom. I fully believe looking back, that I was on the track of terror leading to defeat. I was going to Crash and Burn. My biggest demon was my attitude. The potential defeat was my own doing. I couldn't take them any further. The businesses continue to operate today under renewed leadership, energy and most importantly blind optimism.

Every entrepreneur will go through the four phases of this curve. 80% of small businesses fail in the first 10 years of operations. So most don't get to Informed Optimism.  Knowing where you are in the curve is half the battle. Getting help at the informed pessimism stage is the key to surviving this entrepreneurial roller coaster and ultimately not hitting the Crash and Burn stage. Good Luck!

Reach vs Frequency

What is better reach or frequency?

Buying broadcast TV or radio, you choose a target audience, usually based on an age and a gender. The wider you make the age gap, the more likely you will reach some of your potential customers. They associate a number with your advertising and they give it a fancy name: Gross Rating Point (or GRP for short).  

Basically, GRP is a simple formula that multiplies how many average times the target audience heard the message by the percentage of the population that heard the message at least once. Again, advertisers give these terms complicated, physics-like names. They call them Reach and Frequency.

Unsophisticated advertisers think Reach is the most important number. They will go into detail why more people that hear the message will have a better chance for advertising success. They call this chance Exposure.

I hate the word "Exposure" when it's applied to marketing. You can't put a value on exposure. You can't calculate a return on investment. Did someone in a sales department come up with that word knowing full well that if you can't measure it, no one can deny it's effectiveness.

For an ad to get any traction with a target audience, it has to be the right message delivered at the right time, using the right medium to the right person.

I am exposed to over 5000 messages everyday. I will not act on almost any of them. I'm not the right people.

Forget about exposure or reach. Frequency is king. Think about it. The more you hear a message, the more apt you are to remember it if and when you are in the market for purchase.

We ran a campaign once with an average frequency of 13 on a small radio station. The budget was so small we couldn't afford to bring out the big guns. We chose the number seven radio station in the market. The message was fun, energetic, simple and remarkably different. We had very little exposure. 

Everyone thought we were crazy. The client didn't know any better. He just wanted to sell musical instruments.

The client sold out his inventory in three days without any in-store specials.

So the next time you want to do mass advertising, ask yourself a very simple question. Do you want to rent your customers or do you want to own them? Delivering a message via reach is like renting them. Whereas frequency buys ownership of your target audience.  

Target Marketing

The advertising world buys and sells media based on demographics. Mass media sells it based on age and gender.

If you want to do a radio advertising campaign, I dare you to call up the local station and ask for the number of listeners they have who are men, 42 years old, divorced, and are depressed.

Mass media doesn't work that way. You sell one to many. The message is delivered to the masses of listeners or viewers and the attention of those you're trying to reach will be grabbed if the message is appealing enough.

Mass media works like a bucket of water. If you have a big enough bucket, you will get enough people wet that there is a good chance your ideal customer will be one of them.

In the internet world, effective target marketing forces advertisers to have one-to-one conversations. There is a relatively new term called Avatars that describes the target audience.

In the old days, one could ask the mass media how many women aged 35 to 54 listened to their TV show or radio station. In a retail environment, this can still be effective today.

But what if you're not in retail? What if you're trying to leverage your business through e-commerce or on-line strategies? What if your business is not bound by geographic or logistical boundaries?

In the new internet world, if you are trying to have a conversation with an Avatar who is a 42 year old man divorced, depressed, and thinking about a career change, you can do it.

You build your messages geared to your Avatar. You send it out to the world talking directly to that person. While the rest of the world won't care about your advertising, the target audience you're trying to reach will feel like you're talking directly to them. 

Because you are! 

You're sending out a message in a bottle and dropping it into the ocean. Sounds ineffective. But wait. The internet is not like the ocean. It is not a vessel. The internet is just a series of connections from computer to computer or person to person. People are the vessel. The ones who don't pay attention to the message aren't the target audience. The ones that do will share within their tribes.

 

The internet allows you to talk to your audience with more impact, greater detail, and insight.  You have to find the tribe. If one doesn't exist, you have the privilege to create it.  

Do you think there are enough 42 year old divorced men who are depressed and thinking about a career change in North America? If you do, and you have a product that fits their needs, you might want to figure out how to target them on-line.

How many people have you helped lately?

The famous Zig Ziglar said, "You can only get what you want, when you help enough people get what they want".

That seems selfless enough. Find out what other people want, help them get it and mysteriously everything comes together for you.

When a new business is built, one of the first things entrepreneurs are forced to create is the business plan. The plan is comprised of competitive pressures, market size, internal strengths and weaknesses, pricing, promotion, product offering, and etc.

Reviewing the market size, entrepreneurs build an argument to the reasons their business will be successful. Budgets are developed. Number of clients required to satisfy revenues are extrapolated.

Most entrepreneurs dream about what the business will do for them. Instead, they should be asking what the business will do for their clients.

A good salesperson never discusses the cost of his product. He demonstrates how the product can fix a potential client's problems.

When I owned restaurants, my number one competitor was people eating at home. It was an impossible competitor to win against. Most people think the food cooked at home is healthier, cheaper and more natural. The problem with cooking at home is that the cook (primarily Mom) didn't have time to enjoy her family. And by the time she sat down, the kids were already filling their face so they could go play again.  Then there were the dishes and cleanup after the kids left the table.

So in thinking about the weaknesses of the primary competitor, I focussed on delivering excellent service to mothers without the hassles of preparation and clean-up.

Focussing on mothers helped my business to grow every single year we were in operation.  Would it be any surprise that Mother's Day was our busiest day of the year?

Stop selling to people. No one likes to be sold to.

Start helping people. Find out what your target audience needs and fill it with genuine, authentic, honest help.  Give some stuff away for free. Build the relationship. Demonstrate credibility.

People do business with people they like. Be likeable.

I live in a "want" world

There was a time when there was a clear line between WANT and NEED. My parents could have been categorized as working poor. With two children to feed and tend to, we weren't the type of family that wasted a lot of money. Toys were limited to two times per year: Christmas and birthdays. At birthdays, we could expect a cake, maybe a special meal, a gift from gramma,  one from our godparents and one from our parents. Gifts were the $20 variety, not the $200 variety that my children enjoy today.

We had what we needed. The stuff we really wanted was reserved for Christmas. I remember one year, I wanted an Atari video game system. I had a problem. My parents wouldn't allow video games to be played on their colour TV. Having an Atari didn't make sense if I couldn't play it. So I asked for TV instead. I waited until the following Christmas to ask for the Atari again. It took two years to get the object of my desire.

Happiness and wanting have no correlation. My sister and I were quite happy. We learned to play with simpler toys.

I try to teach my kids the uselessness of want. But it's hard. Namely because I have fallen into the same traps of always wanting more.

My son asked for a fish aquarium for his last birthday. Now that he has desire, he doesn't talk about them any more. He now wants a guinea pig. He is in consuming mode.

I think our children play the mental video they learned from us as parents.

Want's do not bring happiness. Want's are a moving target. The moment we satisfy it, the desire shape-shifts into a new shiny objective.

Yet, I'll hear, "When I get this bright, shiny object, I'll be happy". Bright shiny objects are not just limited to things. They can also be relationships, love, vacations, or vocations.

I recently read that happiness is derived from the appreciation of what you have, not what you want.

Last week, our family started a new ritual to highlight appreciation. Each person takes a moment before supper to say what they appreciated about their day.

At first, our 9 year old thought the process was dumb. Then our 8 year old thought he would be funny and not take the exercise serious. Each day, the 30 seconds gets more and more interesting and profound.

We are not a perfect family. But, in one short week, we have seen the power of the pause. All it takes is one minute to stop looking forward for what we want and to take a deep breath and enjoy what we have.

When was the last time you spoke out loud about the things and people you appreciate in your life?

Creative genius inside all of us

In my first year of working in marketing, someone compared marketing activities to planting a garden. To get the fruits and vegetables, we had to plant the seed, nurture the soil, remove the weeds, add sunlight and water. It takes time but marketing will produce results just like potatoes will grow in the right conditions.

Can creative ideas work with the same analogy?

Ideas are thought impulses that we connect to a perceived need in the marketplace. Ideas can be simple. Ideas are not easy for some of us. It comes down to creativity.

We all have creativity in our DNA. Creativity is like a muscle. If we don't use it, we goes into hibernation like a grizzly bear.  There was a point in our lives in which we all thought we were creative.

Something happens around grade school that robs many of our ability to tap into our right brain. I blame the educational system. Spelling, mathematics, and language rides shotgun in our car, while art, music and theatre get stashed in the trunk, often forgotten it exists.

If you consider yourself one of those non-creative types, try planting some seeds. Take up a musical instrument. Play for fun by hopelessly pounding away or take a few lessons. Practice daily. Compose your own score, with your own words. Does it matter if it's any good? Good is a comparative construct. It's your piece of art. It's your contribution to the world. It is as original as you.

If music isn't your thing, trying painting, sketching, or illustrating. It's your choice if you want to take a course. It doesn't matter if you anyone thinks it's good. Good compared to what - Picasso? It's good because you are nurturing your soil.  Keep going. Practice daily. You'll find techniques that will inspire you. You'll try things that won't work. But you'll learn.

Maybe you always enjoyed literature. Start writing about simple things that you observe. Maybe it's the interaction between a mother and a child, or maybe it's the sway of trees in the winter wind. Don't worry about detractors. Haters hate us, 'cause they ain't us. Keep going as you remove the weeds. The things that don't work, in your mind, you'll stop doing. The techniques that do work, you'll continue.

Feed your creativity. Add sunlight and water. You'll see growth. You'll see the world in a way you never saw it before. Do it daily.

Jerry Seinfeld attributes his comedic success to writing jokes every single day. Some were good. Some were terrible. It was the act of committing to the process of writing everyday that made him the highest paid comedian on the planet.

Potatoes don't grow in the shade. And neither can your ideas. Share them. Don't worry about the opinions of others. You have genius inside of you.

Relativity

Imagine this scenario. A professional baseball pitcher and catcher are playing catch on a flatbed traincar going 100 miles per hour. The pitcher throws a baseball 100 miles per hour toward the back of the train. How fast is the ball moving?

That depends on where the ball is being observed Albert Einstein would explain in his theory of relativity.

If you were on the traincar, the ball would be moving at 100 miles per hour. If you were on the ground observing the game of catch from a distance, the ball would not be moving at all.

How could a ball not be moving when it is being thrown? The answer is the same for people standing on a planet. Earth is spinning at thousands of miles per hour but we don't feel it. Again, it's all relative.

Now imagine an entrepreneur working incessantly  building a business that satisfies all his dreams and desires. If you are working on your own business, on the same path (train), you won't see a relative change in the person because you're moving about the same speed in the same direction.

Ideas and strategies in business are like fastballs.

If you're not on the train, watching the entrepreneur's activity from a distance, it may sometimes look like the business isn't moving forward. And other times, it will look like the business is moving forward quickly.

If you're stuck in your business it could be because you got off the train at some point. Learn from those who are on the train. Get back on and practice throwing your fastballs. Moving in the wrong direction on a speeding train will look like you're not moving from the onlookers. Onlookers call those fastballs moving in the wrong direction mistakes. On the train, they are called learning experiences. They're not going anywhere relative to the ground. Keep throwing your fastballs. Eventually you'll learn to throw them in the right direction. As you get better at them, even if you can't throw them as fast as the great entrepreneurs on your train, you will still throw them exponentially faster than someone with both feet stuck in the mud.

Stay on the train. Don't give up. Throw your fastballs. You'll figure out what works and what doesn't. Success is relative to where you are.