Lessons shared to me by the ultra-wealthy

[burtscap]

That's all and good but the millionaire fastlane teaches us that the best business plans are written in tissue papers. It's more about executing than having a perfect business plan. We learn more from doing and experiencing rather than creating a perfect plan, which actually sets some people back from executing. The best business plan is your track record. Execute first, and learn as you go along. All of these are from the writings of MJ DeMarco.

Agree.
I worry inexperienced entrepreneurs may take this too far and become reckless.

The truth is (from this no-experience entrepreneur ), entrepreneurship is more about careful preparation than actually performing some grand action.

Its about forming an idea, educating yourself about this subject, researching the market, analyze the angle of attack & your competition, testing the market, adjusting.. Etc etc before actually taking that 'action' and launching something.

I suppose you can call the aforementioned 'action', but its more quiet & stealthy, and not the 'IMMA PUT A MIL INTO THIS IDEA LOLZ' kinda way.

 

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[amp0193]

That's all and good but the millionaire fastlane teaches us that the best business plans are written in tissue papers. It's more about executing than having a perfect business plan. We learn more from doing and experiencing rather than creating a perfect plan, which actually sets some people back from executing. The best business plan is your track record. Execute first, and learn as you go along. All of these are from the writings of MJ DeMarco.

I think you pasted your reply in the wrong thread

 

[USN-Ken]

Great post!
Fun read, man!

 

[amp0193]

To reach the next level you must fundamentally alter your business.

Lesson 2: What got you here, won't get you there.

Who knew that the lesson I truly needed to hear in 2023, I shared here 3 years ago.


Anyways, onto...

Lesson 8: If you want a sellable company, build a brand

Know intimately your target market and what pain points they have and solely dedicate yourself to them. Ignore everything else.

EVERY decision you make, you make with this brand identity in mind.

A strong brand identity informs product development. Invest in designing unique products (create IP) specifically tailored to meeting the specific needs aspirations of that specific group. Tailor all of your marketing specifically to them and what they want to hear and how they want to be spoken to and ignore everyone else.

Choose a product category with HIGH gross profit margins. Then leverage your brand identity and better product to be the premium offering in the category, and command gross profit margins of 90%+

With this brand created you now have something that competitors and knock offs can never take away from you. BRAND, plus having a strong leadership in place, is what makes your company sellable for top-of-the-market multiples.


From a friend who founded and exited a $100M physical product business and still owns a decent chunk of equity in the Billion dollar public company.

I love how simple this advice is. Business isn't rocket science.

 

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[Roy2023]

This thread will be a compilation of advice / stories shared to me by some incredibly smart and successful people.


First story, from a billionaire:


"My father taught me everything I know about business.

He started out selling watches. Cold calling stores door to door.

He had built a nice little business for himself, and was ready to bring on help, so he brought along someone new to train.

They arrive in a new town, and visit the general store.

My father asked the manager "Is there anyone in town that you think would want to buy my watches?"

The manager, who's skepticism had vanished after realizing he wasn't being pitched to replied: "Oh, well, how about me?"

"So my father goes into his normal pitch. Different premium features for this or that. Best in quality, yada, yada.

And the manager is loving it and asks "How do they come?"

Now, my father was used to selling watches 1 or 2 at a time, and was happy to sell just a couple in a day.

However, before he was able to answer, the trainee butts in to say "They come by the tray". (a tray, being 12 watches).

So the manager says "Ok, I'll take 1 tray".


Lesson 1: Make bigger deals.



What is "the tray" for your business?


If you sell to hotels... are you cold-calling individual hotels... who may or may not be even allowed to make a decision? Or are you getting a deal made at the corporate level, to get set up in all the hotels?


More lessons to come.

Good stuff

 

[David4431]

Who knew that the lesson I truly needed to hear in 2023, I shared here 3 years ago.


Anyways, onto...

Lesson 8: If you want a sellable company, build a brand

Know intimately your target market and what pain points they have and solely dedicate yourself to them. Ignore everything else.

EVERY decision you make, you make with this brand identity in mind.

A strong brand identity informs product development. Invest in designing unique products (create IP) specifically tailored to meeting the specific needs aspirations of that specific group. Tailor all of your marketing specifically to them and what they want to hear and how they want to be spoken to and ignore everyone else.

Choose a product category with HIGH gross profit margins. Then leverage your brand identity and better product to be the premium offering in the category, and command gross profit margins of 90%+

With this brand created you now have something that competitors and knock offs can never take away from you. BRAND, plus having a strong leadership in place, is what makes your company sellable for top-of-the-market multiples.


From a friend who founded and exited a $100M physical product business and still owns a decent chunk of equity in the Billion dollar public company.

I love how simple this advice is. Business isn't rocket science.

This high level strategy is on point - thanks a lot @amp0193 for sharing! I want to share a couple of observations from my own experiencing building a physical product business and also ask you a question.

1. The strategy you illustrated above also works for products with lower profit margins (<90%). But the higher the margin the better of course.

2. My personal opinion is that you need at least a decent amount of capital to pursue this strategy. Or you have deep market / product knowledge and experience in your target high margin product category... you might have to be a little scrappier to make things happen in this case but I can definitely see this working out if the operator is strong.

My question: How do you personally go about brand building for your business? What has worked and what has not worked in your opinion? Basically, if you could only do 2 things to brand build for your business, what would it be?

Thank you for taking the time to share your insights!

 

[amp0193]

1. The strategy you illustrated above also works for products with lower profit margins (<90%). But the higher the margin the better of course.

The margin comment he drove home to me because it 1) allowed them to bootstrap rapidly to $100M and beyond without any outside capital and 2) the high margins were super attractive to private equity and that plus the stickiness of the brand, and it's resistance to knock-offs, he got insane multiples when he sold.

I do realize that 90% is absurdly high and rare. But he said it was a criteria he wanted from the very beginning when he was selecting a product category to get into. My business will never have margins anywhere near that, but the rest still applies, in terms of clarity and focus, and having a premium offering that is exceptionally high profit margin... as good as you can get.

2. My personal opinion is that you need at least a decent amount of capital to pursue this strategy.

yes. Costs money to develop products.

More risk/investment, more reward.

He started off doing a mix of private label / fba stuff before finally figuring out a niche that had high margins and had unmet needs, then went all in on development, hired designers in house, etc.

Basically, if you could only do 2 things to brand build for your business, what would it be?

Just one thing:

1) Be able to define what you do and who you do it for in one sentence. A lot harder than it sounds. Took me 6 years to figure it out. Never again will I start a business without having this defined on day 1 though.

Everything decision you make (marketing, communication, product development, operations, opportunities to pursue, resource allocation).. it all points back to that north star.

Without that north star I have aimlessly wandered from shiny object to shiny object, changing things on a whim, pursuing a new strategy every year, investing time and money into deals that didn't need to be done, etc.

With it, things compound, and tight communities start to form around your brand, and customers become loyal, and they know what you are about, and you know what you are about, and you become the go to recommended brand for X.

 

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[David4431]

Just one thing:

1) Be able to define what you do and who you do it for in one sentence. A lot harder than it sounds. Took me 6 years to figure it out. Never again will I start a business without having this defined on day 1 though.

Everything decision you make (marketing, communication, product development, operations, opportunities to pursue, resource allocation).. it all points back to that north star.

Without that north star I have aimlessly wandered from shiny object to shiny object, changing things on a whim, pursuing a new strategy every year, investing time and money into deals that didn't need to be done, etc.

With it, things compound, and tight communities start to form around your brand, and customers become loyal, and they know what you are about, and you know what you are about, and you become the go to recommended brand for X.

I like this. It isn't an answer that I would intuitively expect. But it makes sense when I think about it and its ramifications.

I have something similar to this - a mission statement for my company. But I don't have the "who" necessarily defined though so I think that I have some more work to do here.

Really appreciate you sharing your insight and experience!

 

[amp0193]

I like this. It isn't an answer that I would intuitively expect. But it makes sense when I think about it and its ramifications.

I have something similar to this - a mission statement for my company. But I don't have the "who" necessarily defined though so I think that I have some more work to do here.

Really appreciate you sharing your insight and experience!

Mission statement is cherry on top. That's the "why". And it's important too. That keeps you personally motivated to keep going when shit gets tough. And it will. It also helps sell employees on working for you (a higher purpose).

But if you have the best product that exists for X customer, they will buy your stuff even if they don't give a shit about your mission to save the whales.

What you're doing. ("anything" is not an acceptable answer)
Who you're doing it for ("everyone" is not an acceptable answer)
and why you're doing it. (whatever is a strong enough reason to keep you and your team motivated).

 

[Vasudev Soni]

Awesome thread so far. Please post more of these @amp0193

 

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[amp0193]

1. The strategy you illustrated above also works for products with lower profit margins (<90%). But the higher the margin the better of course.

From Twitter today:

 

[amp0193]

Advice from a mentor with a 9-figure net worth who's invested in nearly 100 companies. Many of those investments failed and went to $0. They offered this lesson on what stands out about the ones that didn't (and now invests only for these character traits in the founder... and is completely agnostic to the product being sold).

Lesson 9: The 4 Traits That Set Apart Entrepreneurs Who Succeed

1. Clear Vision - You know where you want to be

2. High Energy and Enthusiasm - If you're base-line is high energy, you're more likely to make it through the low points

3. Competitiveness - Not being ok with losing

4. The Ability to Fail Well - The most important of the 4. The ability to get hit on the head and stand straight back up. You see bad times as an opportunity.