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Brick No97: Why we start-up in business
By Matt Weston, Friday 24 September 2004 Let it be said that I always like to give you both sides of the argument. That's why the surest way to appear in this newsletter is to disagree . . . vehemently . . . with what I say. See brick #87. As the late, great Brian Clough famously quipped: "We talk about it for 20 minutes and then we decide I was right." And today, in a break from the norm, I'm going to introduce you to the other side of the coin first, before I show you why I'm right. I'm going to hand you over, ladies and gentlemen, to Michael E. Gerber, author of the one million copy bestsellers "The E-Myth", and "The E-Myth Revisited" And then, to back up Gerber's argument, I'm going to hand you over to all the VCs and investment bankers who also think you should flush all of your personality out of your business if you want it to succeed. Gerber first. From "The E-Myth Revisited": " Don't you see? If your business depends on you, you don't own a business - you have a job. And it's the worst job in the world because you're working for a lunatic! " And, besides, that's not the purpose of going into business. " The purpose of going into business is to get free of a job so you can create other jobs for other people. " For the first hundred pages of "The E-Myth Revisited" Gerber's argument is wonderfully put. But then he turns it into a hammy sales pitch for the Business Format Franchise, using McDonalds as his star pupil. (Typical quote: "In this light, every great business in the world is a franchise"). Every business - Gerber advocates - should be started as the prototype for 5,000 more just like it (whether you choose to franchise it or not). In Gerber's words: "the model will provide a uniformly predictable service to the customer". My turn. (1) My experience isn't that most small owners (you and me) go into business to "get free of a job so you can create other jobs for other people". Sure, the first clause is a common motive. But "so you can create other jobs for other people"? You tell me. (2) What Gerber is saying is that you should strip away anything that isn't easily replicable (or clone-able) from your business. And that must surely include your personality. How can that be cloned if "the model will be operated by people with the lowest possible level of skill"? Second up, the Exit Strategy. Michael E. Gerber wants you to flush all your personality out of your business . . . so you can reproduce and reproduce and (erm) be the next McDonalds. (Some) VCs and investment bankers want you to do the same thing, flush all your personality out of your business . . . this time so you have an easy Exit Strategy. (Definition of Exit Strategy) The argument of some (not all) outside investors is that your Exit Strategy is the most important part of your business plan. Of course it is, to them. And the theory goes that to reduce the risk-factors in any sale (and therefore increase the price buyers or successors are willing to pay) you should flush out all elements of your business that are dependent on you (and your personality). Me again. (1) The Exit Strategy is the business equivalent of the property developer's cream/ magnolia/ white box. "If you want to sell your house", they tell us, "paint the walls neutral colours." Gerber and the VCs are really suggesting that you slather your personality, your systems, your product and your employees in cream paint. (2) Cream walls might sell houses. But - unlike businesses - houses don't need to draw in customers and revenues in the meantime. The danger - and I've seen this happen - is that you get so fixated on the exit that you forget you're in the business of serving customers. (3) Kill the cream. I say colour your business pink, purple, plum (!) with your personality. Your personality gives you your niche. Do Gerber and the VCs really think we start up to run a personality-less business? In my opinion a successful business is one that is joined at the hip to a vibrant, colourful personality. Remember to sign up: back to top |
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