by Paul Jarvis
In Japanese, shinise is the word for a long-lasting company. Interestingly, about 90 percent of all businesses worldwide that are more than 100 years old are Japanese. They all have fewer than 300 employees, and the ones that still exist never grow quickly or without great reason.
Onsen Keiunkan, by contrast, has barely grown at all. Still operating with fewer than forty rooms and six hot springs, they’ve survived by recognizing that growth isn’t required for long-term success. Making every customer feel like they are the one and only customer, the hotel has been dedicated to service in a way that has drawn intergenerational patronage (which isn’t something many companies ever see). They have done some updating, of course, redoing the rooms in the 1990s and digging a new well, but these iterations have been slight and carefully thought out.
Onsen Keiunkan has survived, not in spite of being small, but because of it. They didn’t expand into a hotel chain, or turn their interests to real estate investing, or follow the whims of market booms. They haven’t taken on investors or gone public.
To put this all into perspective, Richard Foster, a lecturer at the Yale School of Management, found that the average life span of a business on the S&P 500 is only fifteen years total.
Onsen Keiunkan, on the other hand, has been in business and operating for 1,300 years.
BECOMING TOO SMALL TO FAIL
The ideas, research cited, and lessons in this book point to a broader philosophy of business achievement: business success does not lie in growing something quickly and massively, but rather in building something that’s both remarkable and resilient over the long term. This isn’t to say that success happens only after the first millennium has passed, but that success is about finding a way to sustain a business as long as it needs to be sustained. As we’ve seen time and time again, nothing is too big to fail. With bigger scale come bigger dangers, bigger risks, and much work to become and remain profitable.
Instead, you can focus on building something that, in effect, is too small to fail. You can adapt a small company of one to ride out recessions, adjust to changing customer motivations, and ignore competition by being smaller, more focused, and in need of much less to turn a profit.
Success, then, ought not to be measured by quarterly profit increases or ever-growing customer acquisition, or even by your ability to create an exit strategy and leave with more than you entered with. Instead, as Natasha Lampard of the popular internet conference “WebStock” says, you can focus on an “exist strategy” — based on sticking around, profiting, and serving your customers as best you can. Your success can be measured by being profitable quickly as you stay small and build real relationships with your customers — not because you’re an altruistic hippie, but because it pays off over time. Long-term, loyal customers will sometimes hang around for generations, continuing to financially support your business.
A better problem to solve — one that requires real ingenuity — is how to avoid dealing with everything that comes up by just adding more to the mix. Solving business problems by simply adding more is like putting a Band-Aid on a cut — yes, it might stop the bleeding, but covering it up doesn’t help you deal with why the cut happened in the first place. To add more is basically an effort to fix an existing problem without first looking at its cause.
If you figure out why you need more, you can come to better conclusions, ones that might actually help both your business and your customers. Maybe you can turn down growth that doesn’t serve your company. Maybe you can create and sustain a tiny business that doesn’t overwork you or your staff and doesn’t ignore customers and still profits wildly. Maybe instead of taking investments to grow, you can remain the same size.
Instead of solving problems with more, perhaps you can determine what is basically enough. Ricardo Semler, whom I quoted at the start of this book, believes that profit past the minimum isn’t essential for business survival. He likens going for profit at all costs to seeing a jail with empty cells and assuming that not enough prisoners have been rounded up yet. In effect, what’s best for the government that runs the jail isn’t a spike in the crime rate so that more people can be punished, but a greater effort to make sure crime doesn’t happen in the first place, thereby creating more taxpayers and more profit for them.
My mind keeps coming back to the two studies showing that growth is the main cause of failure in so many startups, and even many top corporations. The truth is, very few startups last for a long time. Most of them don’t even last a few years let alone fifteen years, and certainly not 1,300 years. When they grew, many of them simply became too big to succeed. Big companies can find it so much easier to fail, with their higher burn rates, the rampant acquisition they require to hit profitable status, and their huge teams full of people you hope are pulling their own weight, but who knows? There are too many people on them to know for certain.
Determining what is enough is different for everyone. Enough is the antithesis of growth. Enough is the true north of building a company of one, and the opposite of the current paradigm promoting entrepreneurship, growth-hacking, and a startup culture.
Growth, as we’ve seen from the studies and stories presented in this book, is not an unalterable law of business. Instead, growth doesn’t have to inevitably follow success or profit, especially for a company of one. When you become too small to fail, you also become small enough to make your own choices about your work. Real freedom is gained when you define upper bounds to your goals and figure out what your own personal sense of enough is. You’ll have the freedom to say no to doing the expected, or to opportunities that don’t serve you.
There’s a satisfaction in reaching the point of enough in your business, and then knowing that you don’t have to explore every new potential opportunity that comes up. This freedom allows you to run your company of one in your own way — a way that gives you a life you enjoy, fills your days with tasks you actually want to do, and brings you customers you actually want to serve.
THIS IS JUST THE BEGINNING
This book has been an exploration of the concept of a “company of one” by looking at research and examples of people who have asked, “What if …?” What if growth doesn’t matter? What happens when we put an upper bound on our goals? What if business and capitalism itself are turned on their head?
As I started out on this journey to explore companies of one, I figured I was alone in my belief that growth isn’t always the best course of action for business. But then, as I explored the idea more, I realized that a silent movement is happening. Companies of one around the world are starting to succeed, making substantial profits, without rapidly hiring employees or taking venture capital. Companies like Buffer and Basecamp are thriving and profitable, and people like Tom Fishburne and Danielle LaPorte are challenging the status quo and building smaller but amazing businesses.
Remember that technically everyone is a company of one — or at least, they should be. Even if you lead a team at a business that isn’t yours, or you are an employee at a massive company, no one else truly cares as much about your career as you do. Indeed, it’s your sole responsibility to look out for your own interests, and it’s up to you to define and then achieve whatever success means to you.
Most of us know that the perception that being an entrepreneur is riskier than being a corporate worker is misguided, since at a large corporation these days employees have little control as to how it’s run, how it focuses on profit (or on growth), and how secure their jobs really are. Yes, starting something on your own can be a little risky too, but I’ve found that most entrepreneurs are the most risk-averse people I know. They iterate on ideas and move slowly when it comes to risk, but move quickly to create profit (since they need profit in order to pay themselves).
By becoming a company of one, or just by adopting the key aspects of this mind-set, you can develop the resilience required to thrive in any job, at any company, or with any project or business you start on your own. By making sure your bus
iness works when it’s as small as possible, you can ensure that it will work if and when it grows.
There’s a point — and it’s different for everyone — where you realize that having more won’t affect your quality of life. When your “enough” happens, it should be liberating. What’s the difference, really, between having $90 million and having $900 million? (Honestly, I wouldn’t know.) If you’re not sure you’ve reached that point, question why you want more, or why what you have isn’t enough.
Accepting the mind-set of a company of one doesn’t have to be an either-or decision. Don’t feel that you have to take it or leave it. Instead, I challenge you to consider how specific ingredients in the overall recipe put forward in this book could benefit the way you work or the way your business operates. Perhaps you can adopt some ideas and leave the rest. As long as you’re questioning concepts and determining what’s best for your own business and customers, I’ll be happy.
Today more than ever, behemoth corporations need to learn how to be more nimble and maverick, more like a company of one. And people who are just starting down their own path, toward their own business, need to know that there’s another path forward. In fact, there are infinite paths, and unless you start asking questions about each pathway, you may not enjoy where you end up.
Everything in this book derives from my belief that all companies, of every size, should be “lifestyle” businesses, not trapped in the paradigm of how “real” businesses operate. In fact, every business, theoretically, is a lifestyle business, in that each represents your choice of how you want to live. If you want to work in the fast-paced corporate world, you have to accept that your life will have little room for much else. If you choose the growth-focused venture capital world, you have to accept being beholden to two groups of people: investors and customers (and what each wants could be vastly different). And if you work in a company where enough profit is acceptable, then your lifestyle can be optimized for more than just growing profit.
In sum, all business is a choice about the life we want outside of it. One choice isn’t better than any other; all are simply choices, guided by our own internal and deeply personal factors. This book presents one choice. It may not be the choice you’d make on how to run your life and your business, but if it is, I hope that this book has given you both a bit of insight and a small light to guide you.
There’s only one rule for being a company of one: stay attentive to those opportunities that require growth and question them before taking them. That’s it — one rule. The rest is entirely up to you. But if you ever stop questioning the need for growth, you run the risk that the beast of growth will devour you and your business whole.
The company-of-one movement is constantly growing (bad joke, I couldn’t help myself). If you’ve got a company-of-one story of your own to share, I’d love to hear it ([email protected]). I read every email and reply to as many as I can — I promise.
The more products, the more markets, the more alliances a company makes, the less money it makes. “Full speed ahead in all directions” seems to be the call from the corporate bridge. When will companies learn that line extension ultimately leads to oblivion.
— AL RIES AND JACK TROUT,
The 22 Immutable Laws of Marketing
Notes
PROLOGUE
people would rather get electric shocks: Timothy D. Wilson, David A. Reinhard, Erin C. Westgate, Daniel T. Gilbert, Nicole Ellerbeck, Cheryl Hahn, Casey L. Brown, and Adi Shaked, “Just Think: The Challenges of the Disengaged Mind,” Science 345, no. 6192 (July 4, 2014): 75–77.
1. DEFINING A COMPANY OF ONE
The word “intrapreneur”: Gifford Pinchot III, “Who Is the Intrapreneur?” in Intrapreneuring: Why You Don’t Have to Leave the Corporation to Become an Entrepreneur (New York: HarperCollins, 1985), 28–48.
In a recent study: Vijay Govindarajan and Jatin Desai, “Recognize Intrapreneurs Before They Leave,” Harvard Business Review (September 20, 2013), http://www.meritaspartners.com/wp-content/uploads/2013/12/Recognize-Intrapreneurs-Before-They-Leave.pdf.
42 percent of jobs are at risk: Creig Lamb, “The Talented Mr. Robot: The Impact of Automation on Canada’s Workforce,” Brookfield Institute for Innovation + Entrepreneurship, Toronto, June 2016, http://brookfieldinstitute.ca/research-analysis/automation/, 3–8.
within the next ten to twenty years: Council of Economic Advisers, Economic Report to the President: Together with the Annual Report of the Council of Economic Advisers (Washington, D.C.: White House, February 2016), https://obamawhitehouse.archives.gov/sites/default/files/docs/ERP_2016_Book_Complete%20JA.pdf.
employee satisfaction goes up, and turnover goes down: Cali Ressler and Jody Thompson, Why Work Sucks and How to Fix It (New York: Portfolio, 2010), 11–36.
more than one-third of jobs in America: Edelman Intelligence, Freelancing in America 2016, commissioned by Upwork and Freelancers Union, October 6, 2016, https://www.slideshare.net/upwork/freelancing-in-america-2016/1.
2. STAYING SMALL AS AN END GOAL
74 percent of those businesses failed: Max Marmer, Bjoern Lasse Herrmann, Ertan Dogrultan, and Ron Berman, “Startup Genome Report Extra on Premature Scaling,” Startup Genome, San Francisco, CA, August 29, 2011, http://innovationfootprints.com/wp-content/uploads/2015/07/startup-genome-report-extra-on-premature-scaling.pdf.
the Kauffman Foundation and Inc. magazine did a follow-up study: Jason Wiens and Chris Jackson, “The Importance of Young Firms for Economic Growth,” Ewing Marion Kauffman Foundation, Kansas City, MO, September 2015, http://www.kauffman.org/what-we-do/resources/entrepreneurship-policy-digest/the-importance-of-young-firms-for-economic-growth.
left the company: Joel Gascoigne, “Change at Buffer: The Next Phase, and Why Our Co-Founder and Our CTO Are Moving On,” Buffer Open, February 10, 2017, https://open.buffer.com/change-at-buffer/.
earns $400,000 a year: Pieter Levels, interview by Courtland Allen, Indie Hackers, July 2016, https://www.indiehackers.com/businesses/nomad-list.
the number of non-employee establishments: U.S. Census data cited in Elaine Pofeldt, “How to Find Your Million-Dollar, One-Person Business Idea,” Forbes, May 27, 2017, https://www.forbes.com/sites/elainepofeldt/2017/05/27/how-to-find-your-million-dollar-business-idea-by-tapping-new-census-data/#3ac375a343d9.
3. WHAT’S REQUIRED TO LEAD
Research from the University of Lausanne business school: John Antonakis, Marika Fenley, and Sue Liechti, “Can Charisma Be Taught? Tests of Two Interventions,” Academy of Management: Learning and Education 10, no. 3 (2011): 374–396.
found that introverted leaders: Adam Grant, Francesca Gino, and David A. Hofmann, “The Hidden Advantages of Quiet Bosses,” Harvard Business Review (December 2010), https://hbr.org/2010/12/the-hidden-advantages-of-quiet-bosses.
empowered, self-directed, or autonomous teams: Drita Kruja, Huong Ha, Elvisa Drishti, and Ted Oelfke, “Empowerment in the Hospitality Industry in the United States,” Journal of Hospitality Marketing and Management (March 3, 2015).
“a little bit about a lot”: Meghan Casserly, “The Secret Power of the Generalist — And How They’ll Rule the Future,” Forbes, July 10, 2010, https://www.forbes.com/sites/meghancasserly/2012/07/10/the-secret-power-of-the-generalist-and-how-theyll-rule-the-future/#57821b312bd5.
stop hustling: David Heinemeier Hansson, “Trickle-down Workaholism in Startups,” Signal vs. Noise, May 30, 2017, https://m.signalvnoise.com/trickle-down-workaholism-in-startups-a90ceac76426.
Workaholism: Wayne E. Oates, Confessions of a Workaholic: The Facts About Work Addiction (Nashville, TN: Abingdon Press, 1971).
the term “power paradox”: Jerry Useem, “Power Causes Brain Damage,” Atlantic, July/August 2017, https://www.theatlantic.com/magazine/archive/2017/07/power-causes-brain-damage/528711/.
qualities that lead to the leadership roles: Useem, “Power Causes Brain Damage.”
when people take the time: Rik Kirkland interview with Adam Grant, “Wharton’s
Adam Grant on the Key to Professional Success,” McKinsey & Company, June 2014, https://www.mckinsey.com/business-functions/organization/our-insights/whartons-adam-grant-on-the-key-to-professional-success.
4. GROWING A COMPANY THAT DOESN’T GROW
five times as much as keeping an existing one: Graham Charlton, “Companies More Focused on Acquisition Than Retention: Stats,” Econsultancy, New York, August 30, 2015, https://econsultancy.com/blog/63321-companies-more-focused-on-acquisition-than-retention-stats.
finding new customers: “Cross-Channel Marketing Report 2013,” Econsultancy, New York, August 2013, https://econsultancy.com/reports/cross-channel-marketing-report-2013.
“You can’t sell your way”: Gary Sutton, Corporate Canaries: Avoid Business Disasters with a Coal Miner’s Secrets (Nashville, TN: Thomas Nelson, Inc., 2005).
Steve Martin has had similar thoughts: Steve Martin, “Steve Martin Teaches Comedy,” MasterClass, https://www.masterclass.com/classes/steve-martin-teaches-comedy.
5. DETERMINING THE RIGHT MIND-SET
B-corporation: “Certified B Corporations,” B Lab, accessed October 4, 2017, https://www.bcorporation.net/.
risk of slowing sales: “Seventh Generation Staffers Line Dry Their Laundry,” Seventh Generation, Burlington, VT, July 1, 2010, https://www.seventhgeneration.com/nurture-nature/seventh-generation-staffers-line-dry-their-laundry.
$250 million in revenue: Beth Kowitt, “Seventh Generation CEO: Here’s How the Unilever Deal Went Down,” Fortune, September 20, 2016, http://fortune.com/2016/09/20/seventh-generation-unilever-deal/.
Branson summed up purpose: Richard Branson, “5 Ways to Build a Project with Purpose,” Virgin, July 16, 2014, https://www.virgin.com/richard-branson/5-ways-build-project-purpose.