I’m the poster child for how to make money without directly selling. A lot of my contemporaries sell e-books or white papers. I do none of those things. For years I put out my content at scale and built my brand. Eventually, I built up enough leverage that people wanted to hear me speak, and I could charge good money for my time. They wanted me to write books, which I was able to sell to a big fan base. I was able to start a social media agency. I provided value with the content that I relentlessly pump out. You need to do the same.
* * *
When you have a new business idea, how long does it take to implement? Do you run with it? Strategize for a while? Consult with others?
* * *
So you’ve decided to take the leap on a business idea. Congratulations! Taking that first step forward is one of the hardest parts of the process.
Now what? How fast do you need to move? Well, that depends. I have sat on businesses for an insanely long time, years even, before I executed on them. Before we started VaynerMedia, AJ and I thought about it for ten or eleven months to make sure we were making the right decision. You could say we let the idea marinate. In the meantime, we almost decided to move forward with a fantasy sports site. But in the end, VaynerMedia won out.
And then there was the time Jérôme Jarre and I had dinner, and literally the next day we had formed a talent agency for Vine stars called GrapeStory.
The key is to make sure you look at your idea from lots of different angles and ask the important questions. If you’re working with a partner, you should be communicating constantly and hitting your ideas, concerns, and thoughts back and forth until you’re both satisfied with the answers.
One thing to which all entrepreneurs should pay close attention is the timing of an idea. Ask yourself (and your business partner, if you have one): Am I ready? Do I have the time to do this right? The biggest failures in my business career have been when I bit off more than I could chew. I’ve mentioned I had an intensely busy 2009 (new baby, new agency, new book). Because of those obligations I wasn’t able to give my full attention to the online wine review website Cork’d, which I’d bought in 2006. It didn’t see the end of 2009.
So choose your battles. Don’t rush anything. Map your life and make sure this is going to get you where you want to be. And stay open to serendipity. You never know what can happen before that one idea comes to fruition.
* * *
How do you avoid letting a new business run its new social media plan by itself?
* * *
Well, that’s easy. This is a continuous game. I face this all the time, but I’m not worried. I know everything about Snapchat stories. I know what’s evolving on Facebook. I guarantee my clients will never know as much about social media as I do. The best way to stay indispensable is to stay ahead of your clients and always have something more to give.
* * *
What is the best way to scale a business with an inherently low profit margin?
* * *
I answered this question with Jack and Suzy Welch when they were guests on the show, and we were all in agreement. You need new products, new innovations, and a new angle. Take the assets you have and deploy them to grow the business—just make it a better business, even a different business, than the one you started with.
This is what I did when I went into my dad’s business at $3 million in revenue and made 10 percent gross profit before expenses. The liquor business is notoriously hard because there’s a wholesaler in the middle that takes 25 percent of the 50 percent that a retailer normally takes. So here’s what I did. I took the low-margin items that were driving the store’s business and bet on them. I took all the Santa Margaritas, the Kendall Jacksons, the liquor items that were low margin, and used them as marketing lures to get people into the store. Those low-profit-margin items were the honey. But then I merchandized the store and built a brand. Customers came in to buy a bottle of Kendall Jackson, but then I sold them a different, higher-margin chardonnay because it was a better wine. They liked it. They came back for more. And while they were there they noticed other higher-margin items, and tried those, too.
Use your low-margin items to drive your business, then use those pennies to invest in advertising and build from there.
* * *
What’s your best piece of advice for a first-generation American entrepreneur, venturing out on her own, away from her family business?
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I have two pieces of advice.
1.Be practical. How much money do you have to stay alive, and for how long? Do you have enough money to cover rent, expenses (anticipated and unexpected), and overhead for a year? You should.
2.Be prepared to sacrifice. The minute you decide to launch a new business, you also make the decision to do nothing else but that for the next year, and maybe even two years, but build your business. Every minute of every eighteen-hour day should be dedicated to this endeavor. Your business success will come at the expense of family time, friend time, vacations, and any other hobbies or activities you once enjoyed. This business has to be your entire life, or it will die.
I think a lot of people go into business for themselves underestimating how hard it really is to make your dreams come true.
DAWN SWICK-RENSHAW
@DAWNSWICK
www.stoneycreeksocialmedia.com/
* * *
If you could go back to any time in your life and know then what you know now, when would that be and what one thing would you change in your business life?
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This is something I rarely think about, so it’s nice that writing this book gives me the opportunity to go back and address it. I would probably go back to the early 2000s when I was buying “wine” and many other words on Google AdWords. Looking back, I would probably have spent 90 percent less money on ads in Wine Spectator, billboards, and radio, and I would have poured it all into Google AdWords. Most people weren’t paying any attention back then, the inventory was wildly underpriced, and the demand curve was in my favor. Even back then, there was enormous customer activity on Google that led to transactions, and I feel like I left way too much money on the table. It’s why I’ve been so emphatic about Facebook ads during this generation. This, too, will go away.
I’d also go back to that moment for another reason (and this is something I don’t think I’ve ever even said out loud). A lot of the applications that Eric Kastner and I created in Wine Library’s early days—things like emailing people with abandoned shopping carts, or targeting emails based on user’s searches on the site—became industry standards half a decade later. What’s more is that a lot of the companies who built the tools for other companies to execute on those ideas went on to become $500 million or even billion-dollar companies. Many of my own actions were so early that if I’d been smart enough to turn them into products or services instead of just in-house tools for Wine Library, I might own the Jets right now.
* * *
What are the biggest mistakes you see young entrepreneurs make?
* * *
It might take the rest of my life to list them all.
Okay, I’m joking. Sort of. No, seriously, I see many Millennials doing great things. But I also see a lot of you making one mistake in particular that I think is making you dangerously vulnerable, and it’s this: You’re building businesses that only work during best-case market scenarios.
It’s not entirely your fault. If you are twenty-one years old today, the last real economic downturn was in 2008—when you were fourteen. You’ve never had to do business in any economic landscape but one on the upswing, in which it is super-easy to raise money to build a business. You’ve been trained as excellent peacetime generals.
The problem with that is that today’s current market conditions are not allowing young entrepreneurs to cultivate strong business discipline. This is a great time to be starting a business and trying to sell it, but what happens when the bad times eventually roll around again? The best bus
inesspeople aren’t just good peacetime generals, they’re fierce wartime generals, too.
So how do you prepare for war during peaceful times? Start thinking worst-case scenarios. Imagine a stock market collapse. What will you do if all of a sudden everyone snaps their wallets shut because they’re too scared to invest?
Protect yourself before you have to face that situation. Here is what young entrepreneurs must do ahead of time if they want to build a business that can weather every storm.
1.Build solid teams. In the midst of rapid growth, don’t lose sight of the importance of longevity. Invest in your teams, celebrate their victories, listen, and be a good boss so that when rough winds hit, you can rely on their skills, loyalty, and intellectual capital to help you keep the ship upright.
2.Build good products.
3.Excel at sales.
Without sales you’ve got nothing, in good times or in bad. Do whatever you need to do to build the most kick-ass sales department you can find.
Young entrepreneurs are operating during a very sunshiny moment in time. Don’t let your skill set be limited by it. Because bad times are coming. The good news is that good times will follow. And then the bad ones will return. And then get chased away by the good.
Get it? Be ready for every possible outcome. Only entrepreneurs with the grit will rise to the top, and stay there.
* * *
How do I overcome the perception of being “too young” when I’m pitching VCs?
* * *
I have no pity for any young person coming into the business world today. Twenty years ago the only thing you would have been allowed to do in the business arena was serve coffee. That all changed because of tech. No one today is going to dismiss a young person unless that young person hasn’t got the goods.
The secret to raising money is to sell your idea to people willing to buy. If you’ve been told you’ll get forty-five minutes for a VC pitch, and you can feel it isn’t happening, cut things short and leave. You have better things to do with those thirty minutes. And once you leave that office where you were basically told you couldn’t win, get out there and prove them wrong.
Let me assure you of one thing, however. If someone tells you they’re not giving you money because they think you’re too young to do what you say you can, they’re not telling you the truth. They’re being nice. Every VC in the game will be pumped to give a twenty-year-old money if they believe in that twenty-year-old. If they don’t, it means they see a flaw in your idea or your execution. What you do with that feedback is up to you.
* * *
As a successful solo entrepreneur, do I have to grow my business bigger than I can handle alone?
* * *
Depends on what you want in life. Are you fulfilled and making the money you want? Not everyone is a good manager. Plenty of entrepreneurs have grown their businesses only to realize that once the scope of their role changes they aren’t enjoying themselves anymore. You don’t want to make more money just to give up your happiness. There’s got to be a sweet spot in your growth where your money and happiness are aligned. I’m lucky—what I love creates a lot of wealth. But lots of people would hate living the way I do. So figure out what you need to be happy, and grow your business just enough to get you there.
* * *
What fundamental skill do many entry-level marketers lack?
* * *
Who cares? I never worry about what you don’t have, but about what you do. Because I believe in betting on your strengths. Everyone is different, and everyone will bring a different set of skills to the table. If you’re trying to get an entry-level position, you have to figure out what skills you have that will bring value to your employer, and then hone those skills to the best of your ability. If you get an interview, go in knowing who you are and spend all your time talking about how you can bring value to a brand, company, or department. Someone is going to see you’ve got what he or she needs.
* * *
How can I converge my vision of being a YouTuber with my parents’ vision of me getting a university degree?
* * *
Once you graduate, people will be interested to know what school you attended, but very few will ever, ever ask you to tell them your GPA. Do what you must to make sure you meet all the requirements to graduate and focus the rest of your time on building your brand, so that once you’ve got that diploma in hand, you’ll feel good knowing your parents can sleep at night, and you’ll have laid the groundwork to becoming a YouTube sensation.
KEVIN ASP
President of InboundMed.com
* * *
If you have a Plan B, does that mean you are setting yourself up for failure? Should you never have a Plan B because you should be confident in your Plan A?
* * *
I believe in having a hard-core Plan A alongside a deeply practical Plan B. You’d be crazy not to at least consider what you would do should your entrepreneurial venture fall apart. After all, you’ve got to eat. For most people, the solution would be something very ordinary like going back to school, taking a boring day job, or moving back in with your parents. And that’s fine.
You shouldn’t go into your Plan A with blind faith, but I wonder if sometimes the people who fall short of their dreams didn’t take too much comfort in their Plan B. If I had to break down the energy I have and have witnessed in other successful people, I’d probably say we allocate something like 97 percent into our Plan A, and 3 percent into Plan B. A lot of people who want to play things safe probably invest their energy more 75/25, or even 50/50. And that’s deadly. Forgive me for sounding kind of Zen, but if you’re focusing that much on your backup plan, you’re putting out too much failing energy.
What was my Plan B? I think in the back of my mind I knew I could always make a living buying stuff at garage sales and selling it on eBay.
Although, when I say the thought was in the back of my mind, I mean it was way back there, in the deep dark place where I dumped every Spanish verb I never learned. Because if I’m totally honest, I was always sure I’d win.
CHAPTER 3
EDUCATION
* * *
IN THIS CHAPTER, WE’LL TALK ABOUT THE CLASS I’D LIKE TO TEACH, THE VALUE OF AN MBA, HOW TO GET A MENTOR, AND WHAT PROFESSORS CAN DO, IF ANYTHING, TO ENGAGE THEIR STUDENTS.
* * *
The answers to the questions in this chapter might make you think that I’m not a fan of the current education system. You’re going to think I don’t see any value in it because I was a bad student, and there’s probably some truth to that. It is deliciously ironic that I, an F student, have received invitations to speak at Harvard, Yale, and Stanford.
School was never my thing. That’s an unusual thing for an immigrant to say, especially a Jewish immigrant. Traditionally education was my people’s (and most people’s) ticket out of the ghetto. But I sucked at it. We’re not talking B’s and C’s with the occasional D popping up its ugly head. We’re talking a long, remarkably consistent stream of D’s and F’s. There were just so many more interesting things to think about than the Pythagorean theorem or grammar, like the ton of cash I was making selling baseball cards. I just didn’t have the patience or the interest to study what was in my books. I knew that wasn’t where I was going to learn what I needed to know to succeed.
If only more people had the same self-awareness and self-confidence. As a forty-year-old man today who spends most of his time with successful entrepreneurs and professionals, I’m fascinated at how little parallel there can be between one’s level of education and success in the modern business world. I would never be so naïve or misguided as to suggest that time spent in a top university can’t help get you closer to financial success, and I know that diplomas are entry-level requirements for thousands of jobs. But I passionately, emphatically believe that the American university system has lost its value proposition in face of the speed and intensity of the current business marketplace. When you also factor in the unfair
debt structure of college loans and how severely they can set young people back, I think it’s time we really start having conversations about whether a college degree is appropriate for everyone.
It’s a hard conversation to have because the American college dream has been so well branded. Even when kids know in their souls that they don’t belong in school, parents can’t let it go. Many grew up hearing that a college degree is necessary for any upward mobility or interesting career, and they are terrified their kids will find their options limited without those degrees in hand. They haven’t yet recognized the massive changes that have occurred in the business place. You also have other scenarios where parents are at a total loss on how to guide their kid because he got a great-grandmother’s entrepreneurial DNA instead of their own more traditionally inclined DNA. But what pisses me off is how often parents’ self-esteem is unhealthily attached to the accomplishments of their kids. They force their kids into an inhospitable educational ecosystem and terrible debt just so they can get their hands on the right bumper sticker. That’s despicable, and I hope anyone struggling against this will read this chapter and find the courage to strike out on their own and follow their heart. I am a purebred entrepreneur but I have no interest in making either of my kids become one. If they choose to go a more traditional route, I’ll support them. Truly, though, by the time my kids will be college-age, the free education that will be available on the Internet will be incredible. My kids’ generation may be the last generation that holds university to such high esteem.
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