One evening, early in 1972, a young itinerant truck driver living in a small Pennsylvania farmhouse was told by his wife that she was pregnant.
That evening, in a fit of desperation, he wrote one of the best selling songs of the 1970s. By the end of the week, he had written several new songs, which were included on the two Top Ten albums he released the following year.
Pressure is good. Every system needs it to properly perform; airplanes, bloodstreams and the earth’s atmosphere. Just as it spurred the young musician, it is also a vital ingredient in a startup’s success.
This young man was Jim Croce. Years later his wife Ingrid recalled:
“I remember when I told Jim we were going to have a baby. The look on his face was a combination of utter fear and sheer ecstasy. But once Jim got over the initial shock of becoming a father, he found a new sense of urgency to make his career successful as a singer and songwriter.”
“… Jim felt this was his last chance, before the baby came, to make music his profession and provide for his family, too. That night, he sat down at our kitchen table and recorded the haunting melody and words for ‘Time in a Bottle.’ The next morning he played it for me.”
Jim was a typical “overnight” sensation, having started his musical career 8-years earlier. However, after learning of his impending fatherhood and feeling the pressure to provide for his family, Croce pulled together enough material for two albums which collectively contained five Top Forty hits, two of which went to Number One.
Where’s The Love
The American psychedelic rock group Love was one of the most popular Los Angeles bands during the late 1960s. Their notoriety was heightened by playing gigs left open by other local bands that signed record deals and were forced to hit the road to promote their records.
The traveling bands had to live on tour buses, eat lousy food and play in clubs where they were virtually unknown.
Conversely, Love played to packed houses at marquee LA clubs, such as the Whiskey A-Go-Go, London Fog, Rainbow and Roxy. At the end of each gig, they went home to their own beds (or the beds of their groupies). In either case, they did not have to deal with the travails of sleeping on a crowded, smelly bus as it hurtled down the highway to the next gig. No doubt about it, the guys in Love thought they had it made.
Fast forward one year. The LA bands The Doors, The Byrds and Frank Zappa’s Mothers of Invention became international stars. Love was still playing the Sunset Strip, earning a share of the door and free liquor. According to Ben Edmunds, in his liner notes to Love’s Forever Changes, “…the local gains made in the short term by not touring were more than offset in the long run by (their) stunted career growth.”
Love went on to record a number of albums, including the critically acclaimed and aforementioned Forever Changes. However, their cumulative sales were modest. Love’s decision to be “the hippest band on LA’s Sunset Strip” forced them to play small clubs, to small audiences, for the remainder of their careers. Conversely, some of the bands who rolled the dice and dealt with the hardships of life on the road achieved significant success, which allowed them to eventually tour at their own pace and take extended breaks from the road and the studio, during the remainder of their musical careers.
Love took the temporary path of least resistance and were rewarded with a lifetime of struggling to earn a living. If they had traveled and promoted their albums and failed, other than the temporary discomforts of the road, they would have been no worse off. To paraphrase Billy Shakespeare, “It is better to try and fail then to have never tried at all.”
Worth Their Weight In Diamonds
It takes tremendous pressure to create the hardest substance found in nature. However, a very small percentage of coal is transformed into diamonds, which is why the gems are so valued. Entrepreneurs who succeed despite the immense pressures of a start-up are rarer than diamonds and thus are worth a whole lot more.
Every job has “pressure.” Cashiers at 7-11 experience pressure when the Slurpie machine breaks down on a hot day. The issue is not the existence of pressure, but rather how you deal with it. Charles Barkley put pressure into its proper perspective when he was asked if he felt pressure during the final seconds of close game. His response? “Come on man. Basketball is a game. Real pressure is losing your job on Christmas Eve with a house full of kids to feed.”
If your motto is, “If it’s to be, it’s up to me,” then the pressure of a startup might crush you, rather than mold you into a gem. As described in Founderitis, an exaggerated sense of self-importance can cause the pressure to mount to such an extent that it will eventually have a detrimental impact your performance. However, if you maintain a healthy balance of humility and pride (see Humble Pride), pressure can serve as a positive source of motivation which sustains the necessary sense of urgency required to win in your marketplace.
Driving The Mouse
Jonathan Lusk, the author of The Mouse Driver Chronicles, makes it clear from the outset that he and his co-founder, Kyle Harrison, viewed their adVenture as a proving ground for their entrepreneurial skills. At no time did they intend to create a significant, self-sustaining business. By their own admission, their primary objective was to avoid the “dot com” path taken by most of their fellow Wharton Business School graduates and create a company that made and sold a tangible product.
However, the very fact that the Mouse Driver Founders were unwilling to take on pressure at various points in their adVenture’s life had a significant negative impact on its growth and ultimately on its valuation upon exit.
For instance, Jonathan and Kyle worked out of their shared condo to avoid paying rent. This is clearly a prudent strategy during a venture’s early stages. However, at some point, the incremental cost of rent is justified by the benefits derived from a dedicated workspace. Rather than stacking inventory in their living room and having no space for employees, Jonathan and Kyle could have greatly accelerated Mouse Driver’s growth if they had taken on the pressure of an office lease earlier in their adVenture’s life.
In addition, their reticence to hire employees mitigated their pressure while decreasing the company’s overall sense of urgency. When you hire smart, motivated entrepreneurs, they will not allow you to take the path of least resistance. They will demand that you take chances and drive the company toward ambitious objectives. Such high-achieving employees will also expect and demand that the Core Team make decisions that maximize the company’s underlying value as opposed to opting for choices that reduce the Core Team’s stress.
I am not criticizing Kyle and John. In fact, I highly recommend The Mouse Driver Chronicles, as it provides an insightful window into life at a startup. It also illustrates that the path of least resistance often results in less-than-optimal outcomes.
One night in the mid-1970s, a young comedy writer stoically watched Johnny Carson as Johnny bang his balled fist on his desk and laughed until tears welled in his eyes. Johnny was laughing at one of the young writer’s jokes. Over thirty years later, the comedy writer characterizes this moment as one of the worst of his professional life. Why?
The young writer was despondent because he had sold the joke to a comedian for $20. All of America was laughing at the man who simply delivered the joke while all the young writer had to show for it was $20 and a bruised ego. It was at the moment that Dennis Miller realized he had to become a comedian in order to financially survive in the entertainment industry. At first blush, this does not seem like much of a leap. However, Dennis was not a natural performer. He was petrified of the stage, which is why he was comfortable working as a behind-the-scenes joke writer.
Despite his fears, Dennis put himself under considerable pressure and began performing his own jokes. By his own admission, he was initially terrible. The difference between writing jokes in private and publicly performing the same jokes night after night and making them “funny” each time, is tremendous.
However, the pressure of performing at local comedy clubs in Pittsburgh and later in high-profile clubs in NY and LA honed Dennis’s trademark wry and dry delivery that eventually landed him a role on the popular TV show Saturday Night Live. If Dennis had allowed his fear of pressure to overwhelm him, he would still be writing jokes for others and the “joke” would be on him.
Lifestyles of the Rich and Retired
Jim Croce, the Doors, the Byrds, Frank Zappa and Dennis Miller all put themselves under enhanced pressure in the near term with the hope that they would eventually achieve a level of success which would later allow them to live a life of relatively low stress. In contrast, Love traded a lack of near term pressure and travel for a lifetime of stress, eking out a modest living as itinerate musicians, constantly traveling from gig to gig.
Entrepreneurs often must decide which path to take – the one of least resistance or the more challenging one with the chance of earning a larger reward. Lifestyle entrepreneurs decide to limit the growth of their businesses such that they never become overwhelmed by stress. Bank Robber entrepreneurs, as described more fully in Bank Robber or ATM Operator?, work in extremely stressful situations in the hopes that they will eventually achieve a significant degree of personal and professional flexibility.
Lifestyle businesses are often quite profitable and require little to no capital to start. Such businesses include consulting firms, ad agencies, PR firms, retail establishments, franchises, mail-order businesses and most sole proprietorships.
Venture Capitalists shun such businesses because it is difficult for them to earn their required rate of return. Although Lifestyle businesses are often profitable, they generally do not result in a liquidity event that would allow the Lifestyle Entrepreneur to take three years off and live in Bora Bora (nor can they fund the Venture Capitalist’s new Ferrari).
The manner in which pressure is distributed over time at these two types of ventures is shown in the two graphs below. In the first, the pressure of a Bank Robber venture initially increases and remains relatively high until such time as an exit is imminent. Upon an exit, the pressure is reduced greatly and the Core Team usually has a great deal of personal and professional flexibility.
At a Bank Robber venture, pressure increases initially but decreases upon an exit
At most Lifestyle ventures, the pressure never approaches the level experienced at the typical Bank Robber endeavor. Certainly there is pressure at the outset of any new venture. However, once the operation is stabilized, the pressure usually decreases until it reaches a point of relative equilibrium. Lifestyle entrepreneurs often enjoy somewhat flexible schedules while generating an adequate, even a potentially lucrative income. However, the wealth created at a Lifestyle business is often insufficient for the Core Team to depart from their venture and pursue other personal and professional interests. In many cases, Lifestyle businesses are highly dependent on the continued involvement of the Core Team, which minimizes the team’s flexibility over their personal and professional schedules.
At a Lifestyle venture, pressure decreases quickly but is seldom eliminated
As described in Small Ideas, Big Benefits, entrepreneurs can learn a great deal from mini-ventures. However, at some point, in order to transition a mini-venture into a full-fledged adVenture, the Core Team must be willing to make decisions that will greatly increase their level of personal pressure.
Lifestyle businesses and mini-ventures are like houseplants. They are protected from the vagaries of weather, pestilence and competition with neighboring plants for sunshine, water and nutrients. Their growth can be readily controlled via pruning, fertilizing, and modulating sunlight,, and they are under the direct control of the their owner. If properly attended to, their risk of encountering an untimely demise is relatively small.
On the downside, Lifestyle businesses (like houseplants) require diligent care, constant watering and feeding. The Founder cannot take an extended vacation without hiring help or asking a friend to water the houseplants. If the opportunity is relatively small, the Founder may have difficulty hiring a Core Team that can share the care and feeding duties. Growth is limited by the physical constraints of the “pot” in which the plants reside. Because of these limitations, Lifestyle businesses seldom achieve a level of sustainability in which they can survive on their own.
Plants in the wild are subjected to all the potential calamities from which houseplants are protected. However, they are not confined by the constraints which are inherent in affording houseplants protection from the elements. Once wild plants become established, they are self-sustaining and can grow for decades, ultimately achieving tremendous size and scale, just like a Bank Robber business.
Founders of Lifestyle businesses can enjoy the benefits of their “houseplants” as long as they are also comfortable that their businesses may never achieve a self-sustaining state. In addition, Lifestyle Entrepreneurs must realize that their Lifestyle ventures will likely never grow to a size that will generate a significant financial windfall.
“If you come to a fork in the road, take it.” – Yogi Berra
There is no right or wrong decision when choosing to pursue a Lifestyle or Bank Robber adVenture. The key is that each entrepreneur must understand the type of adVenture that best suits his or her risk/reward proclivities. An entrepreneur seeking high risk and an outsized reward will be frustrated with the limited upside associated with most Lifestyle businesses. An entrepreneur who wants to mitigate their risks and control every material aspect of their businesses will be ill-suited to operate a Bank Robber business. The key is to understand which type of entrepreneur you are.
Sometimes pressure comes from an outside, uncontrollable source, such as Jim Croce’s surprising news or the entrance of an aggressive competitor into your market. In other instances, entrepreneurs must overtly place themselves under pressure in order to instill the sense of urgency necessary to ensure their adVenture’s success. The key is to understand the amount pressure you are willing and able to live with, both in the near and long term.
Copyright © 2008 by J. Meredith Publishing. All rights reserved.