“It was the age of belief, it was the age of disbelief,” wrote Charles Dickens, in an homage to 2011.
While we sit here shaking our heads at the latest valuation of Groupon or Pandora, the honest ones amongst us have to admit there’s a bit of whimsical enjoyment to think what it would be like, just for a day, to run our companies like we did in 2000, before the walls came crashing in from the implosion of a dot-bomb, and before the air was sucked from our lungs as we tried to breathe through a sock that was once a puppet.
While no one would deny that the sushi that comes from the pockets of investors tastes fresher than the kind we pick up from the take-out place on the way home, lest we forget, the food poisoning we get at 3am is a lot worse from the former than the latter. With that said, here are four ways to make sure you’re not running your company into the annals of history, to be mocked in the near-future as the next “theglobe.com.”
One more thing: Before you think “Oh, I’m a small business – This doesn’t apply to me”, remember this: AOL started out as a company that let sixteen Commodore 64 users talk to each other.
1: Focus on building something. Don’t focus on the exit.
I know this goes against the holy scripture written in the Book of Venture, but let’s face it – There’s never been a sustainable business built without the passion and drive to change something, or make something better. If the only passion you have for your project starts with the word “Exit,” and ends with the word “Strategy,” you’re fooling yourself. I’m not saying you should run your business without a long-term goal, but that part should be only one aspect of your plan. To build a business with the sole goal of IPO’ing it a few years later actually causes damage to the universe. Or, to put it in non-granola terms, “a sustainable model will make a lot more money in the long term than a model only based on getting to an IPO.” And come on – MBA programs are currently filled with former dot com CEOs who went public, and in the end, didn’t make a penny.
2: As you grow, always make 96% of your spending mirror how you spent money during the first six months of the company’s life.
Remember the day you quit your job to focus on your “baby?” Remember how ordering a few pizzas for yourself and the two other employees was considered a special occasion? Don’t forget that. You might be making money. You might even be turning a profit! But remember – it can all go away. There will always be time to spend the money you’re making. The “live fast, die young, and leave a beautiful corpse” mentality of the 80s doesn’t fly anymore, and neither do the corporate jets from that era. There’s a multi-millionaire CEO of a major car company in Europe who drives a beat up 15-year-old car. (I Googled this story for an hour and couldn’t find it, but I know I read it in the Times a few years back.) Just because you’re making a ton of money, doesn’t mean you have to spend it with reckless abandon. I remember the PR firms in 1999-2000 who had multi-million dollar offices to impress clients. The first thing I thought was “Wow – this office comes from a retainer… That’s a lot of retainer.” Impress people with your work. That Tesla will always be there. Your capital in reserve might not be.
3: Keep networking. But do it right.
During the first boom, almost every client at my firm asked us, at one point, to throw a mega-party. Something that showed their prowess. Something that showed how powerful they were, and how just frickin’ awesome their company was. And they were the client, and I was a much younger CEO than I am now, so we complied. And we spent tons and tons of money on their behalf. (boxing ring in a club with actual boxers? Hiring fifteen former Playboy centerfolds to “mingle…” I’m telling you, I want to write a book and call it “who the hell did we think we were?”) But the point is the same: Networking can happen in your office, with 20 people, and a few bottles of a decent white wine. Or it can happen at a ten person dinner at a decent restaurant. “Over the top” parties and events mean only one thing – You have too much money, and it’ll come back to hurt you.” Want to throw a “legendary bash?” Wait until you’ve been public for five years, and call it a thank-you bash.
4: Not everything needs to cost a ton of money.
My PR firm did really well in the dot com boom because every new start-up in the world was told they needed one. So they hired us, or one of the many others like us. And yeah, we got them press, and probably got them press they couldn’t have gotten on their own back then. Back then. Today, there are tons of other options: HARO (the company I started to level the PR playing field,) or LinkedIn, or Facebook, or finding out what reporters are covering your space and sending a quick “Hi” email. And it’s not only PR. Almost every industry for which you’d hire an agency to do the work has tools out there that let you do it yourself. And sometimes, doing it yourself is better. I’m not saying to give up all outside vendors. Hell, I’m just smart enough to know that I pay an accountant and lawyer a ton of money because I’m not smart enough to do that stuff myself. But there are things I’m smart enough to do well, and that’s a nice chunk of change I don’t have to spend on hiring an expert. So evaluate wisely.
At the end of the day, it’s all about just being a bit smarter. It comes down to what all of our mothers once said to us: “If your best friend jumped off a bridge, would you jump, too?”
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