want to know the truth about most "fast growing" startups?
I will bet my first morning cup of coffee (and that is a valuable thing) that at least once a week you are finding yourself comparing yourself to other seemingly fast growing companies and think, "They are ALREADY there? How the heck did they DO that?"
You figure their product must be awesome to have such growth. It sounds cool anyway. So you sign up.
And it's not awesome. In fact, it's confusingly not awesome.
You wonder why the heck they are so successful, and what you are doing so wrong.
Here's the dirty secret. They are most likely venture-backed (in some way, shape or form), and they've spent a large chunk of their funds on marketing. They probably have all the fancy platforms for data, content, analytics and ads, all driving customers to them.
It's really easy for us to feel discouraged by this. Because we quite literally cannot (or should not) spend money in this way. You're not alone, it's prohibitive to almost everyone. The mean gremlin voices in your our heads tell us that we will just plod along and be a tiny nothing business forever. Or worse, eventually disintegrate into nothingness.
But here's the thing,
These companies are buying customers (not cheaply either). Buying customers like this mean they have to deliver their actual service as cheaply as possible to try to make up for the cost and get up to scale with volume.
So in a nutshell, they pay a lot of money to get customers on-boarded to a mediocre product with non existent customer service. Churn and burn, burn and churn.
And what is crazy about this is a lot of venture capitalists will encourage you to run your business this way. They'll argue for automating things that don't make sense, and discount the value of good service and cultivating a relationship with a client that goes beyond sending them push notifications on a mobile device.
Doesn't that sound like the type of company you want to get up every day and work in? I mean, come on, doesn't it sound fun to create a mediocre product that people don't actually really use or like so that you can make a VC happy and meet your acquisition and growth targets? As an added bonus, you'll get to lay awake at night worrying about churn.
The only way to build a truly awesome business is to have a product that people want and need, deliver good quality and a good experience, and treat people well.
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I learned very early on that I'd never be able to run this type of company.
When I first graduated from college, I really wanted a fancy internship at a glossy PR firm, but I couldn't get a job anywhere. So I got a job working at Enterprise Rental Car, because it was the only job I could get, and they weren't going to make me wear a vest (My criteria was clearly very stringent!) When the recruiter called to offer me the job, I cried when I accepted it.
I have to admit, I thought I was better and cooler than renting cars.
Enterprise was an awful job, but a great place to work (if that makes any sense). The most amazing thing about that company is how the spirit of their founder, Jack Taylor is in everything they do.
To understand this, you have to look at the inspiring way Enterprise grew. From their inception, they grew quietly. By design they ignored the spotlight (Airport rentals, where the "big guys" Hertz and Avis were and competition was hot and expensive). Instead, they served customers who needed rentals while their cars were in the shop. Enterprise arranged to bill insurance companies directly, (they invented insurance Rental Car Coverage), and opened up cheap unassuming offices close to autobody shops in neighborhoods.
By the 1990's, Enterprise had surpassed Hertz and Avis. Those guys, with their clunky operating models literally had no clue it had even happened. I'm not joking, it was nearly 20 years before they realized Enterprise was a threat. Talk about sleeping on the job! By the time they realized, it was too late. Enterprise was expanding faster than Starbucks, (not an exaggeration, in the early 2000's Starbucks was opening 1.5 new stores a day, and Enterprise was opening 1.8 new branches a day).
Today, they are a privately owned, family company that also owns Alamo and National. Enterprise Holdings is the largest car fleet in the entire world. They are literally a juggernaut.
How the heck did they do this? It must have been some sort of advanced business wizadry, marketing magic with expensive consulting firms and all the bells and whistles, right?
Nope, it was quite literally this:
Take care of your customers and your employees first, and the profits will follow.
Jack Taylor woke up every day, and did something people needed and wanted (insurance replacement rental cars), it was as unsexy back then as it is now. He treated customers well in every possible aspect, and taught everyone how to do the same, and he took good care of his employees.
This is how you build enduring value. Not trendy parties, cool t-shirts, slick interfaces, headlining media, trendy offices, or any marketing fancyness. (In fact, 60% of banner ad clicks are by accident. No business (particularly cash flow challenged ones) should throw money after accidents on purpose. Call me old school.)
For all it's un-sexyness, renting insurance replacement cars to customers made Jack Taylor a billionaire. Forbes estimates Jack Taylor's (and now the Taylor family's) net worth at $5.3 billion. But, it could be several times more, because the company is private and they do not have to disclose. Talk about freedom, right? Jack Taylor is also on record having donated close to $1 billion to causes he cared about.
Jack Taylor recently passed, and the news of his passing touched me as it did thousands of others.
Sure I am vigilant about margins, I worry about costs, I worry about revenue, all the things everyone worries about. The bigger my company gets, the bigger everything gets. One minute I think I've got it figured out, the next minute I'm hoping that I can at least manage to get my shoes on the right feet.
I know we don't have the investor's dream business model of a SaaS unicorn. In the world of photography, we do one of the least sexy things. But what we do is a valuable thing that customers need and want, we care about treating them well. We dream of building a business that can build great lives for our employees, and give to the community.
As someone who needs positive re-enforcement, it sounds silly, but it really was hard for me to admit that I was not creating the next cool thing that would get written about in Tech Crunch. But once a week I hear of another "hot platform" and "it-company" closing up shop. The ironic thing about these businesses is much of the time I had been told in the past I needed to be more like them to get venture funding.
99% of the time their failures are because they failed to gain meaningful traction, which you need to do to put yourself on the road to creating enduring value. Want to read more about this, check out the post: Burst out of the Gates, How to Make it Happen in 90 Days.
Create enduring value, stay true to your customers, and don't run yourself ragged doing it. It took Jack Taylor several decades to become a billionaire, and he started at the age of 35. So if you're just setting out on that journey you'd better settle in, you've got a lot of years ahead of you.
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