Nothing to Lose, Everything to Gain

by Ryan Blair

  Fred Warren was just such a mentor for me. When he first took an interest in SkyPipeline, he saw a company with a lot of potential being run by a kid who had very little experience. He recognized that with a little training—sometimes in the form of encouragement and sometimes in the form of tough love—I had the potential to be a very successful entrepreneur.

  Fred did a lot for me. He introduced me to leaders of several successful companies so I could see how they managed their businesses, how they leveraged deals, and how they interacted with colleagues and customers. Occasionally he would call my attention to a situation he felt needed to be addressed, but that I might not have had enough experience to recognize or know how to handle appropriately.

  The lessons were tough ones to learn sometimes. But because of the wisdom he was able to offer from decades of experience, I was able to avoid a lot of rookie mistakes that might have cost me far more time and money than I could afford. I did make a few million-dollar mistakes under his mentorship; however, I made several more good million-dollar decisions. Sometimes I was thickheaded, sometimes I would argue with him, and sometimes I would fight with him. But looking back, I realize that he was usually right; now I give Fred a lot of credit for teaching me how to be a CEO. My relationship with him lasted just about three years. I got just enough of Fred to know what I didn’t know, and he got just enough of me to make several million dollars.

  As Fred would say to this day, “I broke my pick on you, Ryan.”

  I can name at least twenty people who have given me specific lifechanging wisdom and advice that I have used to become a better person. Some of my mentors spent more time with me than others. Some I learned from only once, but they have forever contributed to my life: my very first technology mentor, my first venture capitalist mentors. Others were longer term: my mother and my stepfather, of course, and even my deadbeat dad. The lessons these people have taught me about what to do, how to think, and what to value—as well as mistakes to avoid—have shaped the person I am. There have been countless others who have changed my life and are still changing it today.

  Recently a man who saw me speak at the University of Oregon drove twenty hours one way to have a thirty-minute meeting with me, and had even offered to intern for ninety days with me if I would just mentor him. He then drove back twenty more hours. Now, that took tenacity and total commitment, and I was impressed. I gave him ninety days of mentorship and continue to give him an opinion or two when asked. In short, if you really want it, then give it everything you have and don’t hold back.

  And finally, use your powers of observation. Sometimes the things we learn from our heroes aren’t the lessons we expected. For instance, I used to be really impressed by the typical status symbols in our culture. I was absolutely in awe if someone had a Ferrari parked out front, or was sporting a Rolex. That meant they had made it—that meant they were truly successful, right?

  Several years ago, I held an event at my place and one of the attendees happened to be Paul Allen, the cofounder of Microsoft and certainly the richest, most successful person who had ever set foot in my home. But the most impressive thing about Paul Allen wasn’t the way he was dressed or the car he drove. It was his humility.

  The artist whose paintings I have hanging on my living room walls approached Paul while he was curiously examining one of the pieces. I happened to be standing with Paul as they struck up a casual conversation about art and work, and I overheard my artist friend ask Paul what he did for a living. He smiled cheerfully and replied, “I’m in the computer industry”—certainly a very humble answer for a man who has every right in the world to brag about himself, and an example to follow.

  You can tell a lot about a person by his or her prized possession. Besides the artwork I own, the items I collect are not what would fetch a fortune at Sotheby’s. Rather than things intended to impress someone else, my collection reminds me of the people who taught me to be a better businessman, employer, philanthropist, and person.

  I have first-edition signed copies of the two books that meant the most to me when I was first starting out: Think and Grow Rich by Napoleon Hill, and How to Win Friends and Influence People by Dale Carnegie. I collect all kinds of artifacts of greatness. I have letters from JFK, jerseys signed by championship teams, and a framed copy of John Wooden’s pyramid of success. I have photos with Coach Dale Brown, who has been like a father to me. I have a picture of my mom and me when I was six years old—it was the day she told me that I could be anything I wanted to be. These are the things I surround myself with. Their purpose is to remind me to ask myself daily whether or not I am living up to the lessons learned from each person along the way.

  And sometimes when I fall off track I only need to look at the books on my shelf, or call the mentors in my Rolodex to smarten up.

  8

  FIRST THINGS FIRST

  Back when I had just started my career, disaster struck. In a panic I rushed into my boss’s office to explain. “The servers didn’t come back up,” I said. There’d been a power outage at the data center where I was in charge, and even though we’d got the power back on, some of the servers still weren’t responding.

  My boss was tough, and I knew those servers generated thousands of dollars an hour in revenue; I thought for sure I was going to lose my job. He just looked at me and said, “That’s the problem, but what’s the solution?” He then told me that if all I ever did was bring him problems, and not solutions, I would lose my job.

  I banked that lesson and I still apply it, to this day. As entrepreneurs or company executives, we need to be solution oriented. Businesses exist in the first place as solutions to problems.

  The bigger your company gets, the more you are going to be faced with slow sales, fast sales, scaling issues, employee issues, competition issues, crises, chaos, and more problems than you ever could have dreamed. It’s going to be overwhelming.

  I remember when things would go bad and I would shut my office door and not come out. And then I would look at the Mark Twain quote that hung over my desk, one of my personal Golden Rules that you’ll remember from chapter 4: “The secret of getting ahead is getting started. . . .”

  So I’d start by writing down the problem and every remedy I could think of to solve it. Then I would analyze each solution and eliminate those that didn’t solve the problem fast enough, or efficiently enough (for example, the solution might cost too much money), until I had a plan of action. Today over my desk there is a simple maxim I came up with to calm myself when I’m overwhelmed: “The path is all math,” meaning there’s an equation that will lead to your answers. You just have to find it. The equation will lead to the shortest, most efficient solution and will then prioritize the tasks necessary to get the problem solved.

  As I’m writing this, ViSalus is growing very fast, and we’re having scaling issues. We went from adding twelve thousand customers a year to nearly twice that number a week. One of my mentors used to call problems like this happy trouble, but there’s nothing particularly happy about building a business model that works so well that your infrastructure can’t support it.

  For example, in our call center, we’re experiencing significant hold times because of the vast number of calls we receive daily from distributors and customers. It’s worrisome because the hold times can be half an hour long, and people are starting to complain. An entrepreneur who won’t last long is one who will respond to this type of crisis with emotion, perhaps by throwing bodies at the problem, overhiring and killing profits.

  The path is math. Hire someone to look at the data and study the analytics. When is the highest call volume occurring, and where is it coming from? Is there a way to survey the customers to find out why the majority are calling? Can their questions be answered via e-mail, online chat, or in some other way?

  I used this example not to try to teach you how to scale a call center, but to show you that the problem can be solved with math, not emotion. That’s it.

  Al
so “inspect what you expect” and follow up on action items; make sure that everyone knows what’s on your mind. Even if I have to sound like a broken record, my employees will hear the company’s number one priority until the problem is solved.

  The technique I use to manage my day today is similar: I obsess over the most critical goal or obstacle until I can’t think about anything else. That’s why I titled this chapter “First Things First.” Write down a list of everything you believe is critical to the success of your business and then focus on the one item that will save you the most money or generate the most money. Work on the task until it’s completed or until some outside dependency requires you to wait (such as getting a quote from a vendor or the arrival of a shipment), then work on something else and come back to the first when the outside dependency is fulfilled.

  It sounds simple, but it isn’t—especially if you’re like me and you’re creative. You want to do all kinds of other cool stuff instead. Don’t be afraid to kill a project halfway through if you realize that it’s not the company’s highest priority.

  At ViSalus, we were in the middle of developing a product called Neuro Sport. We paid for the scientist, sent it to test markets, boxed it, and branded it. We believed in the product and we were ready to launch. Suddenly a competitor started infringing on our trademark. I took a step back, looked at our resources, and asked some questions: Do I really want to risk launching this product and having to rebrand it later? Do I want to spend my time fighting over a brand that represents less than 1 percent of my revenue? On the other hand, after all this work, do I really want to pull the plug?

  In the end we yanked the product, revamped the entire energy drink line, rebranded it, and by the time this book is on the shelves, the revenue lines for it will be far greater than 1 percent. We’ll have much better results than we would have had if we’d continued down our path with the original strategy.

  If you find yourself reading this and realizing that you may have taken the wrong approach to some of your own decisions, don’t worry, because “sometimes the fastest way forward is to go backward.” That’s why the motto above my desk is “The path is all math.” Don’t get emotionally attached to projects. It’s math, not emotion. As Steve Jobs said, “Focus is saying no.” And that one principle has added more than $200 billion to Apple’s market cap since he retook the company. And all too often we creative types like to say yes. The more things you say yes to or try to do, the less productive you are.

  I have a mantra for my personal life and my companies: “Focus should be a four-letter word.” Try it and watch. When a person comes to me with a new idea and it’s clearly not a priority, instead of dropping the f-bomb, I say to him or her, “What the focus are you talking about?” or “Go focus yourself.”

  Remember, entrepreneurship isn’t about the size of your task list or how fast you can get through your inbox; it’s about the things you need to do, and doing them well. At least it is if you want to be the kind of entrepreneur who makes an impact, and especially if you want to be the kind who makes money. If you have a thousand things on your list, how do you put a price tag on any of them? Only a few things are going to move the needle. Take no pride when you’ve done a hundred things, but none of them improved your bottom line.

  If you were to take only one thing I tell you and apply it to your business and your life, apply these words: if you say yes to too many seemingly good ideas, then you have one bad idea of a company and a poor management culture. I’ve learned this lesson the hard way. I tried to do too much and, well, I did too much. I didn’t focus on my company’s core competencies or the largest value creator on the list, and it cost me millions, in cash and in lost opportunities.

  In my entire career I’ve never looked back and thought I should have said yes to something. In fact, it’s quite the opposite. My million-dollar mistakes, as you will find out, are rooted in not saying no often enough. An example is from 2008, just as the economy was melting down, when I had my company focused on launching twenty-some-odd products. At the peak of the failing economy, I was shoving new flavor mixers and holiday catalogues down people’s throats when everyone else was worried about the future. And on top of everything, I was running PathConnect at the same time. I was adding things to my plate when I should have been focusing on the most important thing: adapting to the economic shift. It’s partly age and experience, but I run things much differently now.

  Just say no—if the idea is good enough, it will come back.

  The key is to be intimately involved with your business to the point where you understand its intricacies well enough to know what needs to happen immediately and what can wait, and to be detached enough to view the situation objectively so your decisions are not clouded by emotion.

  Our business model is extremely complicated at ViSalus. We have customer/distributor ratios, legal costs, R&D, international shipping costs, a constantly growing compensation plan payout, capital needs, inventory, a supply chain—there are no less than sixty different variables on any given day that contribute to our business model, but only a few that drive it.

  I once sat in a boardroom with Bob Goergen when the topic of expanding ViSalus into Europe was brought up. It’s an intricate and expensive process at best, but I was all for it. I wanted to expand, and grow fast. I loved the idea of conquering the EU.

  Bob said, “Ryan, this is what I like to call a ‘bet the company’ project.” If it fails or you miss your window, you’ve risked your entire business. He was absolutely right; if we’d pushed for the expansion, we wouldn’t be in business today. When the recession hit, it would have been right when I would have been on the ground trying to conquer the EU, as I lost the USA.

  As a CEO, you need to be the foremost expert in the multiple variables that drive your business. Someone has to know the business so well that when you look at projects, you understand the impact each will have. And that person is you; no one else will have the same instincts.

  WATCH YOUR WALLET

  All too often we assume as entrepreneurs that our employees are treating our money as though it were their own. Sometimes, of course, they don’t. At SkyPipeline, one of my employees made an error with an account, and we lost a customer as a result. I took the employee aside and explained the lifetime value of the customer and how a careless error had cost us more than $100,000 in the long run. The employee had no idea that a thousand-dollar-per-month account was worth $100,000 to the company. Needless to say, he didn’t make any more hundred-thousand-dollar errors. Your job as the CEO is to insist that the highest priority for each employee is to save you money, make you money, or both.

  It’s extremely helpful to ask your board of directors, other advisers, and employees to help prioritize the things that will keep your business growing and prospering. Sometimes they can see the forest through the trees when you can’t.

  But sometimes your employees won’t save you a buck—or make you one, for that matter—because it might mean extra work. In previous companies there have been days when I’ve approached my management team with a project I believed in and been met with subtle resistance. And I’ve been left wondering, is it because they don’t agree with the value of the project? In reality, the reason they resisted the idea was because nobody wanted to do more work. They were thinking, this is going to take my entire weekend. And they started stalling, or persuading others not to do it.

  When this is the case, start by reminding the team of the company’s priorities; if they persist, a simple reprimand is in order. And if they continue, then you have to fire the employees, because plain and simply, they don’t have the priorities of the company at heart. It’s one of my Golden Rules that compensation drives behavior and sometimes the threat of losing compensation will drive people to action. Conversely, if employees discover ways to save money or make money, they deserve compensation even if it’s in the form of recognition as simple as a public thank-you.

  In the early days of ViSalus, we
had a hiccup in our computer system on a day when we wrote and sent out a commission check in the amount of $70,000. There was a computer error again the next day—the computer was saying that the check hadn’t gone out—so one of our staff members sent out another $70,000. Two checks to the same people for a total of $140,000!

  By the time we caught it, the checks had been cashed. The people on the other end must have said, “Great, they sent us two checks!” The excuse was that it was a computer system error. That’s a wonderful excuse, and a legitimate one, but if you own the company and you’re funding it, you would have to put an additional $70,000 into your business because of a system error. Someone might just as well have stolen $70,000 out of your wallet.

  There are no excuses for that type of error. You have to watch every check that goes in and out of your business. You must put controls in place to ensure that money isn’t running out the back door while you’re trying so hard to bring it in through the front. I’ve known countless entrepreneurs who have had their money accidentally lost, deliberately embezzled, or incompetently spent on idiotic things because they weren’t paying attention to their wallets when other people had access to them.

  So to recap, don’t lose sight of the principles by which you created the company, and don’t let the details of running it tear your focus from the big picture. Obsessing over things is good when it comes to solving highpriority problems one by one. With each step, make sure that your people are right behind you. And when the ideas they bring to you are out of line? Just say no! I’ve scrapped projects so often that I could have filled a landfill with the collateral damage. I don’t regret a single time I’ve said no. My point is, watch your wallet, be just as proud of what you do as what you don’t do, and focus on first things first.