I have been reading Lost and Founder by Rand Fishkin which is his story about his startup company (Moz). A lot of what he writes hits me in the gut for several reasons. To start, we are about the same age and have had a lot of similar experiences with a similar path of learning. His company focuses on SEO (search engine optimization) and my online business (including this site) has always been reliant on SEO. Over the years, we have worked with Moz some and Rand and I have talked a few times.
Beyond those similarities, I get emotional when reading his thoughts about the real, dirty side of his business–the mistakes and regrets from an attempt to grow the business very big in a few years and exit with a small fortune. As a result of his efforts, he is well known in his industry and the largest shareholder of a $45 million company; and yet you feel the raw pain in a lot of what he writes.
When I read his book, I think to myself how dumb his decision making sometimes was. But I don’t judge. A lot of my decisions have been every bit as dumb and I know the same pain and regrets. While we took different paths (Rand used venture capitalists and I used debt), I used to feel the same need to grow fast, too; and I know what happens. I know what it is like to make huge, expensive mistakes, letting partners and employees down. I know what it is like to run out of money but have to gloss it over and hold things together. I know what it is like to try one idea after another with none of them seeming to work.
If you are not an entrepreneur, you may not understand that. Things always look rosy from the outside. Leaders of multi-million dollar companies don’t usually advertise the problems. They can’t because it would hurt the business. If you happened to see Rand speaking at a conference a few years ago, he was probably not volunteering that he was broke and had shoddy credit. It was true, though. I have been on stage when broke, too.
When you are a leader of people, your mistakes hurt those people. That is my biggest regret. You hear that in Fishkin’s writing, too. But there is another regret he expresses as well: he sees through the venture capital startup shell game that chews up and spits out entrepreneurs, and he realizes now that he pursued business growth at the expense of the lifestyle his business could have given him.
Whether it is venture capital or debt or just being a workaholic, entrepreneurs fall into that trap. The idea is that if you sacrifice a lot in the short term, you end up exiting the business down the road with a huge payday. Sometimes that works. I am not saying that no one should take that path. However, even if you win, you are often stuck with bittersweet memories when you think about what you sacrificed and who got hurt in the process.
I have been an entrepreneur for a long time and fortunately, have survived my stupidity and learned some things that I benefit from now. I have never built a $45 million business; but I have built multiple multi-million dollar businesses. At present, I have a $2.5 million dollar business in my basement run by my kids. That is not a big business but it is far and away the best business I have ever built because it is a lifestyle business. Let me give all of you entrepreneurs and would-be entrepreneurs a bit of advice: think twice about growing fast and build a lifestyle business instead.
What is a lifestyle business? It is a business that is focused on lifestyle instead of growth. Debt and outside investment is discouraged. A lifestyle business is a business that helps you have the lifestyle you want and pays for it. It is a business than enhances your life outside of work rather than destroying it. It is a business that you own rather than a business that owns you.
Almost always, a lifestyle business is going to be smaller. Growth is going to be slower and more natural. You are going to probably have a lot fewer employees and no fancy buildings. You won’t get written about in Inc. magazine.
On the flip side, you well may do far better financially. Your expenses will be lower and your net margin higher. You won’t have to share the profits with investors and if you eventually sell, you keep all of the proceeds. Even more importantly, you sleep better and can escape the office more, travel more, and volunteer more. You will get to live outside work and invest time in the people you love. Your stress level will be way lower.
There are plenty of entrepreneurs that will turn up their noses at what I am preaching here. They will say that lifestyle entrepreneurs are not really entrepreneurs at all. Of course, they are usually broke and maybe on medication for stress. Don’t listen to them. One of the best bits of advice I ever got about business goes like this: the best way to get rich quick is to get rich slow.
Yes, there is a period of my life where I regret a lot of things and I am passing on what I learned from that. Don’t make the same mistakes I did. You get only one chance at this life. Don’t blow it by convincing yourself that you need to work yourself to death for a few years for the chance of getting ridiculously wealthy.
It is probably not worth it.