Nothing to Lose, Everything to Gain
Page 14
I went into Outlook, clicked on the address group called “the boys,” and pressed send.
Next I sat at my desk, eagerly waiting for the first response from the seven or eight true friends on the list who, I supposed, were dying laughing. The first e-mail came in titled “Re: Festivities,” but it was from one of my investors, Fred Warren. It said, “Ryan, I’m going to wear a pink tutu to the event and I can’t wait to see you!”
I was totally puzzled. How the hell did our chairman, Fred Warren, get into my e-mails? Was he spying on the server? I went back to Outlook and realized, to my absolute horror, that I hadn’t sent it to “the boys” after all—I’d sent it to “the bod,” our board of directors.
As you know, my board was composed of billionaires, titans of industry, world-renowned venture capitalists and businessmen, men whom I had worked very hard to earn respect from.
One after the other, they started replying “to all,” each letting me know what they would be wearing and whether they could make it. Scot Jarvis said he planned to fly in for the event. Others said they weren’t going to make it, but were really disappointed. It was an absolute disgrace.
I broke into a red sweat. In a panic, I frantically hit the recall button (a feature that doesn’t do anything except notify the person you sent the e-mail to that you regretted sending it). I freaked out for hours. I reread the e-mail again and again, wondering how they’d interpreted it. What had I done? Was this the end of me? Meanwhile, the board continued to bask in my embarrassment.
All because I’d hit “the bod” instead of “the boys.”
I will never again put something in writing that I wouldn’t want to come back to me. And furthermore, I’ve made it a personal policy never to use the auto-fill function of Outlook again when sending e-mails. I’ve seen this feature bite a few other people in the ass.
12. DON’T DATE THE WRONG WOMEN.
Or the wrong men. This should be self-explanatory.
13. DON’T INVEST IN UNCOACHABLE ENTREPRENEURS.
For example, the Make the Difference Network (MTDN) had a failed business model, and the two entrepreneurs behind it cost me and several others more than a million in cash because of it. Here’s an e-mail between the founders and me.
From: Ryan Blair
Sent: Tuesday, March 04, 2008 11:31 AM
To:
Subject: Today’s call
, In preparation for today’s call to discuss your need for additional financing, I thought I would give you my perspective and some things to think about prior to.
I am still a believer in what MTDN could be to the world, however I am not confident in where we are as partners as of today. I know from talks with the internal PathConnect team that you continue to fault us for your inability to drive revenue and execute on your business. And we find ourselves investing a disproportionate amount of time and effort into the project helping to fill operational gaps and going beyond the call of duty at times, doing what we can to help move the business forward, despite it all. As you know I am sensitive to your perspective on our work as it impacts the morale of our team and at present the people here working on MTDN are starting to express negative sentiment . . . especially in consideration of the following:
To date, we’ve spent $394,000, specifically on the MTDN site development. We’ve loaned the company $30,000, purchased $55,000 worth of sponsorships and services, in addition Chris and John Tolmie have loaned $75,000 . . . to bridge the company while it seeks financing. This brings our group’s total spend to $504,000. As a start-up ourselves, this capital is very significant as it represents our time, money and opportunity to become a profitable business.
I believe we are at a critical decision point in both of our businesses and our continued relationship. As I see it, we only have 3 options:
1. You take the independent route, accept the investment (which is a fair deal from our BOD’s perspective), and we define our final deliverables, and continued maintenance requirements for our 25% equity position.
2. You integrate completely into the PathConnect group, we take a controlling interest and double down our efforts while working toward being profitable together.
3. We decide that our differences are insurmountable, and we restructure the relationship, whereby we own less equity and have limited further obligations toward the building of the MTDN product.
In my humble opinion, there is no option where our group (or myself personally for that matter) continues to provide bridge financing. In light of the aforementioned
I hope we can find a solution!
Sincerely,
Ryan J. Blair
Chairman
ViSalus/PathConnect
He decided to raise money from others. I wanted to run with MTDN, but despite my efforts, these entrepreneurs absolutely refused to listen to me, or all the other smart businesspeople I surrounded them with, including Jay Fulcher, CEO of Agile (Oracle bought Agile for $500 million); Todd Goergen; and a host of other prominent businessmen and investors. I got Paul Allen, cofounder of Microsoft, to show up at my house to meet the spokesperson, Jessica Biel, to talk about the project. We even hosted the Clinton Global Initiative and got former president Bill Clinton to promote us. We sent out Jessica Biel to talk the company up and pulled enough strings to get Chris Cuomo to endorse the project on Good Morning America.
But a great project doesn’t mean a good business. To use Fred Warren’s expression, “I broke my pick on them.” I spent all my energy trying to persuade the founders to change their business model.
They were so caught up in their own ideas that they decided to go their own way. And a few short weeks prior to this writing, I went to their Web site and saw that they’re officially out of business. I hate being right when I’m predicting that I’ll lose money.
I hope they’ll learn from their mistakes. I learned a lot, and MTDN actually led to the creation of the Body By Vi Community Challenge, from which we’ve raised enough funds for more than five hundred thousand meals for at-risk kids. This is one of the cornerstones of the ViSalus community. We utilized the valuable insights we gained from our work on MTDN to launch our cause marketing campaign and to make cause marketing a core of our work in the local communities we participate in.
So there you have them, my million-dollar mistakes. The irony here is that I never imagined that I would have enough money to make million-dollar mistakes. In truth, I’ve probably wasted more in mistakes and the resulting lost opportunities than I’ve made in income. But I’ve been able to do very well for myself despite my setbacks, so I guess the moral of this chapter is that you should try not to do what I did. If you have to, you can make as many of your own million-dollar mistakes as you like (as long as you can afford them), then eventually apply what you’ve learned, and win.
In the following chapters I will get into the nuts and bolts of starting your business. Without technical understanding, you don’t have anything, so I urge you, when you are ready, to read this material. Starting your own business is not easy, and nothing is guaranteed, but if you are smart, you will have the right strategies and business expertise to increase your odds of success.
13
I HATE BUSINESS PLANS
Most business plans aren’t worth the paper they’re written on.
And most entrepreneurs write business plans that are a bunch of fluff about how “through strategic partnerships” we will “maximize efficiencies” and “combine market place opportunities.” Is there any value in the aforementioned statement? None at all. Most plans that are sent to me are closed within a few seconds of opening them. The best business plan is one built from a business that is already up and running and forecasts the business’s potential growth.
A business plan can be built on the back of a napkin because the plan part is simple. But there is a lot of prep work required before you can write on the back of a napkin a plan that actually works. You first need to do a lot of soul-searching, have serious discuss
ions with your family, and shift to entrepreneurial thinking. And if you’ve done all that—save that napkin. It might be worth something someday. Like the one the guys at Yahoo have hanging on their wall.
A business plan is simple. Take the plan you’ve probably been composing in your head and have written on various scratch pads for a long time, and put it in an executive summary that is no more than three pages long. Make it clear and base it on reality or your best guess of the potential of the business. This will be the platform from which you reach out to potential investors and clients. That’s it. Three pages of clear, concise business objectives, expected results, and the strategy to get there. Easier said than done, right?
The focus of this chapter is not to help you determine whether you should become an LLC or a C Corporation or to instruct you in how to manage the patent process. There are great online resources, such as the U.S. Small Business Adminstration’s Web site (www.sba.gov), to help walk you through those parts of the process of formulating your business plan.
Instead, I want to focus on the mind-set you will need as you enter into this phase of your business: what to consider, what to keep in the back of your mind, and what to watch for as you bring your business to life from page to pavement.
Before you begin creating spreadsheets and crunching numbers, though, I suggest that you begin your business plan by writing a personal purpose statement in which you outline the philosophies and vision that you want for you and the company you are creating. Post this where you can see it while you’re working on your budgets and potential client lists. Keep a copy in your wallet so you have it with you when you make spending decisions. A tangible, visible reminder of your goals and ideals will help keep your focus and your mind in the right place as you create the plan your business will follow.
In 2003, I sat down to create a purpose statement for my own selfgoals, and I created the following document:My purpose in life is to inspire the minds and actions of others in harmony with myself and with the minds of the people by whom I am inspired. I will lead others to their own personal greatness. I will mobilize an unstoppable army of like-minded individuals to achieve extraordinary results. I will help those in need and give the gift of an independent life to thousands of willing minds. I will give independence from abuse and self-destruction, independence from confusion, and independence from economic burdens. I will identify my unsuccessful beliefs and remove all beliefs that do not suit my purpose in life.
In this pursuit, I will learn to identify GREATNESS in others with extreme accuracy, and I will hold myself accountable for all of my actions. I will operate with integrity, and I will seek feedback from others with an open mind for self-improvement.
I will focus only on items I am deeply passionate about, items at which I can be the best in the world.
I will set my mark as an individual who overcame great obstacles to achieve extraordinary success. I will help, both directly and indirectly, millions of people to do the same.
I will measure my influence by the network of people I can draw upon for inspiration and economic creation.
As you can see from my personal purpose statement, it is nothing especially profound. It doesn’t have to be. It just needs to be an honest declaration of the principles by which you intend to operate and the goals that you hope to achieve through your efforts. I have continued to revise, rewrite, and rework this original purpose statement as my situation has changed, but the core ideals and the vision remain the same. The irony is that in December 2003, I had no idea what I was going to do. Looking at my purpose statement now, I can tell you that I am on the path toward achieving the results I dreamed of through the companies I am a part of. With clarity of purpose as an individual, you will have clarity in your business; after all, you are your business.
I urge you to take the time to complete this step before moving on to the more technical parts of your business plan. The perspective and direction a purpose statement can give you will be invaluable for the days when you want to give up, when you’re questioning why you ever jumped into the world of entrepreneurship in the first place.
You are now ready to start the actual plans for the business itself. One of the most important of these, and one of the earliest ones to focus on, is your company’s name. I cannot emphasize enough how important it is to come up with the right name. Enlist family members and friends to help, bounce ideas off one another, and take note of which ones get positive reactions and which ones get confused looks.
YOUR BUSINESS NAME, NOT YOUR PORN NAME
When I decided to write this book, I had no idea what to title it. In an interview I did on CNBC’s The Big Idea with Donny Deutsch, Donny asked me, “How did you figure this out? Where did this drive come from?”
I answered, “I lost everything and found myself in a position where I had nothing to lose.”
I immediately searched to see if NothingToLose.com was available and, as you can imagine, it wasn’t. That didn’t stop me. I looked up who its owner was, and that led to a company called DomainMarket.com, which had it for sale on their site for $35,000. I contacted them, and because they were inspired by the project, they agreed to sell me the URL for a reduced amount. It’s still the most expensive domain name I’ve ever bought, but it was worth it to me to have that connection to my book. I tell you this to stress that your business name is extremely important, and the brand equity it creates may one day be your most valuable asset.
If you have a good name, it will stick with people, which does as much to give you brand recognition as does a catchy jingle or slick logo.
Take, for example, Airborne. It’s got a great story and a compelling hook, but it also has an extremely smart name. The maker chose a word that has meaning because many cold viruses are spread through the air. We human beings hate the thought of somebody sneezing in our proximity; we’ll hold our breath or try to breathe in the other direction—especially in an enclosed area like an airplane or a classroom. So the product name plays to the common fear, but it gives it a positive spin—it’s a way to fight back against the common airborne illnesses we all dread. It’s catchy and simple and easy to remember.
The selection of your name should be something that helps tell your story so it sparks continued interest in your product. Think about Google. It wasn’t just selected because it’s a funny-sounding word; it is the mathematical term for an unimaginably large number—one with one hundred zeros after it. That’s a smart name. It sounds unique, so it sticks with you, but it also has a relevant meaning and clues you in to the product and the company itself.
Some people want to have their names in their titles, such as Thompson & Sons Furniture Company. That is a fine option, too, if you are creating something you want to be your legacy as a family owned and operated company.
I know that some people are a little leery of having a name that reveals the company to be a family-based business because they fear the perception of being a small-time operation. I believe, however, that we are in the midst of a major trend that is orienting toward family-run companies. Most of us would rather support a locally owned business than a global corporation—we want to keep our money in the area and give our business to the people who have stuck their necks out and worked hard to establish a reputation in our community. I think a lot of this is tied to Americans’ natural tendency to side with the underdog, but I think it also has to do with some of the major news stories over the past number of years concerning companies like Enron and various business schemes. There isn’t necessarily safety in size anymore. Corporate greed disgusts us, and as our confidence is shaken by stories of unethical and hugely harmful practices, I believe that the value of faceto-face service and accountability will continue to grow in the minds of consumers.
Make a list of all of the adjectives you would like people to associate with your business, and then narrow it down to your top three or four. Using those words as your reference point, try to come up with names that match that image.
You may need to dedicate a lot of time to finding just the right name that fits you and fits your business because this will be the backbone of your brand.
This search for a name can be one of the most satisfying steps in the entire process, because once your company has one, not only will you be able to use that title on all of the legal paperwork, you’ll also be able to think of your business in a solid, this-is-really-going-to-happen kind of way. Much like selecting a name for an unborn baby, settling on a name for your business can make the reality seem more real. It can help you wrap your brain around the excitement and the size of the undertaking you’re about to face.
If all else fails, you can combine the name of the street you grew up on with your middle name, and then you’ll have a business porn name. Mine would be Bella Vista Jerry. Sounds like a Mexican ice-cream truck. Maybe my future is calling.
GAME THEORY
All jokes aside, as you pore over names and sort through options in the back of your mind, you should also start on the practical side of the business plan by compiling a comprehensive list of funding sources. Look back at what you listed during the phase of evaluating your assets to begin figuring out how to tailor your plan to land investors’ interest. You need to figure out what is going to make your business plan stand out from the hundreds of other business plans that get pitched to investors each day. What is your niche in the market? What need are you filling that no one else is? What can you do better than anyone else?