This is the transcript of a presentation I’ll be giving at a joint schools careers night in Sydney tomorrow. The hosting school are my old high school, SHORE.
I’m here this evening to discuss small business.
It’s my personal opinion that a business degree will prepare you for running your own business little more than your HSC already will.
Your prospective universities may disagree.
Running a business is an expression of entrepreneurialism, and is not something that can be taught or learnt in a class room. They may be able to teach you financial ratios, an obscure set of legal structures and some basic marketing techniques, however each of these are somewhat superfluous to the core of running a business.
Many of the business people I value the most have either never attempted university, or more often, never completed it. The success of these individuals and their lack of (completed) formal tertiary educations should not however be interpreted as a free pass for anybody to skip uni, jump in head first and expect an equivalent outcome. Nor should it devalue the relevance of finance, law, marketing and the myriad of other business-related professions that I have skipped over. Instead, they each highlight what is at the very core of a successful business person; the individual themselves. If business success was a simple as following as defined set of parameters that you were taught in a classroom, the free market economy would simply fail to exist in the first place.
Running a business is a tough road. It requires one to act in many roles and demonstrate a diverse range of skills over an extended period, all whilst maintaining balance and focus. Larry Page and Sergey Brin suspended their PhDs to found Google. The pair’s success serves to highlight what I see as a very important aspect of the individual; the partner. All too often, starting a business is seen as something done by an individual.
Running a business demands a set of behaviours that one person will often struggle to deliver consistently. Particularly during the start-up phase, it can be a struggle to maintain focus in the right areas and avoid the wrong areas, particularly when you’re so passionate about getting it perfect instead of getting it done. Having a business partner can deliver the balance required, as well as a sounding board for ideas and the always needed set of helping hands. I know that I wouldn’t have achieved but half of what I have today without my business partner Tom.
In our business, Tom also provides a complementary set of skills. He’ll leave a lunch with three business leads and I’ll be asking him what the host’s name was again. Our partnership allows me to focus on building out product, and Tom to focus on the capitalization, two processes that require distinct skill sets.
There’s another description I quite like, which is that if you can’t convince one person to join you, you probably want to revisit your idea. I can’t remember exactly where I heard that, but I suspect it may have actually been one of my teachers here.
Someone who I see as being in dire need of a business partner is Mark Zuckerberg, the founder of Facebook. In 2006 Microsoft tried to buy Facebook and arranged an 8am breakfast catch-up. His office responded that “this simply would not be possible, as Mr Zuckerberg would still be in bed at that time.” Around this same time he was still attending trade fairs handing out a business card that read ‘I’m a CEO … bitch’.
Whilst we can all appreciate the humour, Facebook has failed to achieve anywhere near the profits required to match the US$2.2 billion that Microsoft laid on the table. I have some suspicions that Mark would be better served building the website we know and love and leaving someone else to make the deals.
Another business you might be familiar with from your computer lab periods is CollegeHumor.com. Launched by two US college mates spreading fliers around their campus, traffic grew organically – and quickly. At the three-month mark, the site was attracting 600,000 visitors per week, largely thanks to a video of a man sitting on a tree stump being hit on the back of a head with a shovel.
What started out as a joking search for advertisers to pay for their beer ended up as an online media business attracting advertisers like Coca Cola and Dreamworks. Had the business failed, Josh and Ricky would have lost little more than their initial $200 investment and their $30 per month internet bill. No doubt, they would have held on to their now extensive collection of funny videos.
Josh Abramson, the site’s co-creator once commented that “the greatest thing about starting a business in college is that there is very little risk.”
He’s right; and you’re in that sweet spot right now. You don’t go broke when you’re 18; you just go back to your parent’s place for dinner. You might miss a night out on the town; but you won’t miss a mortgage payment.
You’re all sitting at the peak of your risk capacity, and shouldn’t be afraid to take advantage of that. I’ve certainly had my fair share of failed ideas along the way. Most just lost time, some lost money and I certainly had varying amounts of cash in my wallet along the way. All of them were good fun though, and all of them prepared me better for the subsequent, and successful, attempts.
All of the businesses I have mentioned so far have been web based, but this does not make them purely technology businesses.
Lots of people author good content on the web, but that doesn’t make them good at promoting it. Google does that for them.
Plenty of people can make a funny video, YouTube demonstrates that. The simple act of publishing the video doesn’t make it popular with college students though. College Humor does that.
In their simplest sense, each of these businesses operates on the divide between two different skill sets. Generally, I find this to be the space where the most opportunity exists.
Brendan Powning is a 42 year old rigger on construction sites, with a side hobby of electronics. With 20 years of experience on construction sites, he’s seen countless tools go missing and no great solutions. Using his basic electronics skills he developed an inexpensive motion sensor that could be buried alongside the entrances to construction sites and activated from a mobile phone. Now, every time somebody drives on to one of his constructions sites out of hours, he gets a text message and can investigate.
Having being featured on the ABC’s New Inventors, he’s now developing a successful business around this device. Whilst not an overly complex or unique idea, it took the rare crossover of construction site experience and basic electronics skills for the idea to eventuate and be practical.
Think about the activities, sports and hobbies you participate in today, and where the frustrations exist in each of them. As its simplest level, business is about providing solutions and finding the frustration is generally a good place to start.
This can all sound a bit ominous though; finding an idea, finding a business partner, and then (hopefully) finding your first customer. Picking the trifecta is hard, and it should sound at least a little bit ominous because if you’re successful in doing so you’ve done bloody well.
You don’t always have to do that though. There are plenty of useful ideas out there already; more often than not from people who will fail to execute them. Similarly, there are plenty of people ready to achieve, but still looking for that golden idea.
Think about which group you are in now; then find the other.
One of the businesses I run is a based in male fashion PR and export. I don’t know any designers, I don’t know any fashion editors, and I don’t know any fashion trends until they turn up in Chatswood Westfield. I do know how to build a website, my business partner knows how to market it, and our strategic partners know how to make it look good. Our involvement is silent, based around enabling someone else’s idea using our skills.
Stepping back for a moment, you may have noticed that I haven’t actually used the phrase “small business” since the very beginning of this talk. The techniques, behaviours and skills required in running a small business are equally applicable to operating larger businesses. The experience gained from making those front-line business decisions along the way has given me a respect for the wider organisational context. What may seem right and justified to you at one time is but a single point of view in the tug-of-war that is running an enterprise. Attempting to understand this wider context without having experienced it is an exercise in futility. The consulting role that I am currently engaged in may be one of technical strategy, but I won that role more so from my capacity to engage with the business as opposed to technical flair.
Closing on that statement, I’d like you to leave this evening thinking of business as both an end-game, as well as a flexible opportunity to develop a highly valuable set of skills.
If you’d like to review this talk at another time, the transcript is available from tatham.oddie.com.au, and I’ll ask Mr Scouller to circulate that address.