by Paul Jarvis
IS THE TRADITIONAL WAY OF DOING BUSINESS BROKEN?
Traditional ways of working — in offices with strict rules and corporate hierarchies — are giving way to gig-based, remote work with more autonomy. The business world is constantly being disrupted with new automations and technologies, and this is a good thing. Changes in how we work give us a chance to scale with the bare minimum in investments, people, and time.
Traditionally, having a small business was thought of as a good starting point, or as what happens when a business finds only limited success. But there’s a new breed of business that starts small and stays small, and not for lack of vision or strategy, but because these days one person (or a tiny team) can accomplish a lot. Technology is constantly improving, allowing us to do things like automate sales funnels, or drop-ship physical products with no need for warehouses and staff, or print-on-demand without investing in machinery and storage.
WordPress, the software that powers 26 percent of all websites on the internet, closed its gorgeous San Francisco office, not because the company was out of money (it’s extremely profitable) but because employees were barely working at the office, opting instead to work at home. The 15,000-square-foot WordPress office was being used by approximately five people a day; having 3,000 square feet to work in is definitely a bit too much space. Because technology makes it easy to work from anywhere, on any computer, less spending on overhead (like offices and the things that come with offices) is required.
Pieter Levels is a digital nomad and Dutch programmer who is challenging the status quo of business tradition. Working from any location around the globe with an internet connection (currently in a village in Thailand), he builds software that competes with VC-funded Silicon Valley companies with teams of twenty or more people. Pieter runs his online service, Nomad List — a community list of cities around the world ranked by how easy and fun it is to work from them — and earns $400,000 a year without employees or even an office. With the New York Times, Wired, CNN, and Forbes having all reported on Nomad List, Pieter needs no PR or marketing team, just a focus on a great and always improving service. Because the company is just Pieter and a handful of contractors he uses as he needs them, he can implement ideas as he has them, test them to see if there’s a market fit, and quickly pivot if there’s not. He’s able to be top of his industry, above much larger companies, as a team of one — and he currently doesn’t even have a traditional mailing address. By automating what he can with existing software, he’s even able to be offline for weeks at a time and still have steady revenues.
Through careful planning and strategically executing personalized sales funnels, people like Brennan Dunn, who runs an email automation and training consultancy, are able to launch products without even lifting a finger. Brennan can leave home, not even bringing a computer, and still have record sales because he’s built a system that drives ideal buyers to his website, converts them into subscribers, sends them personalized emails that change content based on their actions or behavior on the site and list, and finally turns them into buyers. It’s a process that generates revenue whether or not he’s present, and it’s all done through software (email service providers like MailChimp or Drip) that costs a few hundred dollars a month to use. Brennan started down the traditional path of hiring employees, having an office, and scaling people, investments, and resources to get his business to succeed. But now that he’s scaled back to having no office and only a handful of remote contractors, he spends less time on work — and far less on overhead — and generates more revenue by using off-the-digital-shelf technology.
Tools that used to be expensive enterprise software — or hadn’t even been developed yet — today are cheap, easy to master, and easy to use without spending a lot of time on them. For example, I can run a 30,000-person mailing list that generates the bulk of my income by spending approximately an hour a week on it. I can create a document that’s both editable and shareable around the world for free with Google Documents or share any file, of any size, using a service like Dropbox. I can replace an entire IT department with one on-contract systems administrator in Berlin who works one to two hours a month for me, and I can learn everything I need to know about the visitors to the websites that run my business with free analytics software. Technology has made it easy to do what used to cost thousands or require a team of people. The new reality of business makes it easier than ever to be a company of one and not have massive growth as an end goal.
Working for Yourself: Too Risky?
Risk isn’t just the name of a famous, amazing, and all-consuming board game — it’s what most people think is involved in working for yourself! And sure, there is definitely risk that can’t be mitigated in working for yourself, but we should challenge the idea that being your own company of one is riskier than working at a traditional company.
Just as the traditional way of doing business is changing, the outdated, fear-ridden assumption that entrepreneurialism is a hazardous venture needs to change as well. In today’s world, there is no longer the single track to security of going to school, getting a degree, and finding and keeping a job until retirement. Jobs and career tracks are no longer as secure as they were decades ago. Quite simply, the days of throwing retirement parties for employees of fifty years and sending them off with a gold watch and a great pension are long gone.
Miranda Hixon, founder and principal of MilkWood Designs, does workspace design for small startups in the Bay Area. Think of her work as intentional workspace design based on a company’s specific internal style and communication style — basically the physical manifestation of a company’s culture. Her role with clients can include buying or custom-making beautiful furniture pieces, planning the organization of a space, and adjusting a space as a company experiences growth spurts or downsizing.
Growing up in the 1980s, Miranda dreamed of wearing power suits to a corporate job. (Hey, both were the rage back then.) When she was a child, her father, Steve Hixon, began working for himself after being laid off from a large architecture firm. The job he was forced to leave was supposed to be stable and secure, but when businesses or economies change, large companies downsize — something most employees have no control over.
Miranda’s father ran his new project management business from the family garage in the suburbs of San Francisco — a windowless room the family referred to as “the Box,” as in, “Where’s Dad? Is he out in the Box?” In this not-so-luxurious home office was the one and only family computer, and stuck to the monitor was a Post-it that read “OVERHEAD = DEATH,” which was his philosophy for running the business. Far ahead of his time, he kept things small by using a network of freelance architects, engineers, and estimators, and only as he needed them. Since the company was just him, he was also able to pivot several times when shifts in the market and specific types of work he enjoyed doing led him to niches to focus on. Keeping his company of one small (just him) enabled him to set his own flexible hours, so he could coach Miranda’s swim and basketball teams on some days and then work in the evenings instead.
Miranda made her first foray into a postschool career with startups in Silicon Valley. While she enjoyed the friendships, travel, and community these jobs gave her, she also found herself hitting a glass ceiling fairly hard. Although the mostly white, wealthy, and male leadership preached total inclusivity and open values to their communities, she was constantly met with resistance on her own career growth. This led her to venture out on her own, where she could be more autonomous and have more control over the limits to her career — or scrap them altogether.
Her father’s “OVERHEAD = DEATH” mentality seeped into Miranda’s subconsciousness, and she runs her business as he ran his. She hires painters, movers, installation workers, and carpenters only as she needs them, and from a pool of trusted people with whom she’s worked in the past or who have been referred to her directly. She also pays them above-average wages to incentivize them to work on smaller projects or on week
ends. Because she pays them what she feels is fair, they do better-than-average work, for which she can charge her clients a premium. And by keeping her business small, she’s able to work in a niche — smaller startups — that interior design firms with lots of employees and overhead have to avoid as they chase higher revenues.
Her childhood vision of power suits in corner offices died off, not because shoulder pads are no longer in vogue, but because she realized that constant growth often brings on stress and anxiety. When you hire employees, you’re responsible for them. You’re their source of income that goes toward paying their mortgages, feeding their families, and even sending their children to college. That’s a heavy responsibility. But keeping people on contract as freelancers makes you responsible for them only for a specific project, and you know that what you’re getting paid includes what you’ll pay them.
Miranda has found a way to have enough responsibility to succeed on her own terms, but not so much responsibility that she becomes stressed and has to spend lots of time managing others. Able to retreat for long stretches of time to a yurt she built in the Sierra Nevada foothills, she finds that her overall life is less stressed as well.
I’ve worked for myself for nearly twenty years and have had stable, increasing income every single year. That’s in direct contrast to many of my friends who have worked at larger companies or startups and been laid off or downsized every time the economy changes. In the United States, the number of non-employee establishments (people who work for themselves and have no employees) with an annual revenue of $1 million grew by nearly 6 percent in 2015, according to the U.S. Census Bureau. It found that 38,029 companies (of one) were bringing in seven-figure revenues, doing everything from the usual high-tech and scientific work to equipment repair and laundry services.
The Census Bureau data shows that each year it becomes easier and less risky to work for yourself and still make a decent living. You can outsource or hire freelancers to cover tasks that were traditionally done by an employee. And unlike a corporation, you, as the boss, can’t be downsized or hit a gender-based glass ceiling. As long as you’re doing great work that’s in demand, working for yourself has no limits — or, as we’ll see next, only smart upper limits that you put in place yourself.
UPPER BOUNDS
Most businesses set goals and targets, but few consider having an upper bound to them. Paying attention instead to the lower bound of a goal, they focus on ever-exceeding increases in areas like profit and reach and set goals like, “I want to make at least $1 million this quarter,” or, “We need to grow our mailing list by 2,000 people per day.” They set the minimum threshold they want to reach, with the implication that if more happens, that’s even better.
What if we set upper limits to our goals instead? For instance, “I want to make at least $1 million this quarter, but not more than $1.4 million,” or, “We need to grow our list by 2,000 people per day, but not more than 2,200”?
In most areas of business, there’s a magic zone for sustainability that relates to the concept brought up at the start of this book about having “enough.” If growth happens too quickly, problems can arise — like not being able to hire fast enough to keep up, or not having enough infrastructure to handle increased volume. The lower limit can be important, for example, if you need to make enough revenue to be profitable. But more than that? How useful is it to make more than you need to be profitable? How does it benefit you, your business, or your customers if you blow past your company’s goals?
James Clear, a successful blogger on the topic of habits and productivity, tells the story of Southwest Airlines being faced with an interesting problem way back in 1996: the airline had methodically expanded from a tiny regional carrier to having a bit more of a national presence. And at a time when most other airlines were losing money or going under, over 100 cities were begging Southwest to service their location. However, that’s not the interesting part. What’s interesting is that Southwest turned down over 95 percent of those offers and began serving only four new locations. It turned down exponential growth because company leadership had set an upper limit for growth.
Sure, Southwest’s executives wanted to grow each year, but they didn’t want to grow too much. Unlike Starbucks, Krispy Kreme, and Pets.com, they wanted to set their own pace, one that could be sustained in the long term. By doing this, they established a safety margin for growth that helped them continue to thrive at a time when the other airlines were flailing.
Southwest is interesting because its leaders did what they could to sustain their business, and not more. From an evolutionary point of view, there’s probably a good reason to want to accumulate more and more. With more food, more water, more protection against predators, and so on, we may be less likely to die (probably by being eaten by something larger than us). So in the past, not having an upper bound to our goals served us well and kept us fed, protected, and evolving. But now, in modern society, having goals that grow and grow without limit can often be problematic. Most of us don’t have to worry about food or protection, but we’re still wired to want to collect more and more without end. This mind-set carries over to the businesses we create and run as well.
Culturally, growth feeds our ego and social standing. The bigger the company you own, with more profits and more employees than the next person, the better you might feel. James Clear figured that 10,000 subscribers to his new blog’s newsletter would be the magic number that would signify his success. But then he hit 10,000 quickly and nothing in his blogging business changed. He adjusted his goal to 100,000 subscribers, but still, when he quickly hit that number, nothing changed. As much as we don’t want to be, or admit to being, guided by external factors and peer pressure in setting goals, to some degree we are. It’s good to feel accepted and valued by a group. If our goals were completely internalized at all times, we wouldn’t chase growth as much as we do. Even James now focuses on upper and lower bounds for his business and lets his goals be guided partially by the reasons for his work (as well as a little bit by external and peer factors).
ENVY: THE ULCER OF THE SOUL (AND OF BUSINESS GROWTH)
Socrates said that envy is the ulcer of the soul, meaning that we can easily become negatively affected by the success of others. Who we are and what we actually want become overshadowed when we internally compare ourselves to others. We idolize people like Steve Jobs, Elon Musk, and Oprah and think that their path to success — creating massive empires — is our own key to happiness and career fulfillment.
For some reason, when our business is just us, or when it isn’t growing, we feel a societal pressure to keep up with other, larger businesses in order to be seen as “making it.” After a person answers the question “What do you do?” by saying that they work for themselves, the second question is typically “How big is your business?” You may be slightly embarrassed if you have to answer that the business is just you and that you have no plans to grow. Really, though, running a business of any size is hard work. Having made it sustainable and profitable, whether it’s big or small, should be something to be proud of.
External pressure and even some internal wishing for growth mostly comes from this envy. We see another business and assume that, if it’s large, that business has made it. Even very transparent companies typically share only their gross numbers or MRR (monthly recurring revenue), which is only a small part of the picture and doesn’t account for what their actual profit or margins are. A business that’s making $500,000 a month could be hemorrhaging key staff due to overworking, and its burn rate could be $550,000 a month — making it unprofitable and potentially unsustainable once the VC money runs out.
Envy is hard to manage, as it’s a socially unacceptable emotion, even though it’s something most people feel. Envy also takes the focus off your work, your business, and your customers. When we give in to envious feelings, the best we can hope for is second best, since we’re focused on copying someone else’s path and not forging our own
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Envy is also based on a false comparison, like comparing uncooked ingredients to a delicious baked pie. Envying others, we see only the end result or the final product — the delicious dessert. But in ourselves, we see all the not-so-tasty starting ingredients and are aware of all the real work required to combine them into a successful end product. We too often compare our sometimes messy selves to only the best and shiniest part of others and come up short. Remember, every business has not only its successes but also its failures.
But there is one way that envy can be useful: as a tool to recognize in ourselves what we truly value. For example, if I’m envious that you make more money than I do, then I need to recognize that making more money might be important to me, work toward figuring out if that’s truly the case, and then, if it is, determine how I can best make more of it. Once we learn what triggers our envy, we can focus on how to rethink or move forward.
In an ancient language from India called Pali, there’s a term, “mudita,” which seems like the opposite of envy, because it means “to delight in the good fortunes or the accomplishments of others.” (Interestingly, it has no counterpart in English.) Outside of altruism, mudita is useful in business: we can be pleased that people like Musk or Oprah exist and thrive, while at the same time not letting their prolifically growing empires affect what we do or how we see our own businesses. We can be open to the insight that others have their own business successes but are not the sole factor in steering our own.
We don’t need an attitude of world domination and crushing it in our work in order to make a great living or even have a substantial impact. Our work can start and finish small while still being useful — focused on moving toward better instead of more.