Josh Padnick’s Blog

When I was younger, I thought being a mega-successful entrepreneur like Richard Branson or Michael Dell was a matter of cleverness.  If you were just clever enough to figure out the right market opportunity, then you could make millions.

How wrong I was.

Take Richard Branson.  For his very first entrepreneurial undertaking — when he was still just a teenager — he purchased young Chrismas Trees, planted them during the spring, and then resold them at a profit during Christmas time in the winter.  I actually do think that’s pretty clever, especially for a kid.  But really that’s as far as “clever” alone will take you.

Branson’s next undertaking was the founding of Student Magazine.  At that point, he had to have the leadership and people skills to:

• Recruit a staff
• Sell advertising
• Inspire the staff to produce the magazine
• Negotiate business deals

…and so forth.  And in spite of all of that, they were always short on cash, barely broke even, and still ultimately had to close down eventually (though not before snagging interviews with John Lennon and other really high-profile people!). 

Student Magazine was actually brilliantly innovative at the time.  Before then, at least in the UK, there was no such thing as a magazine that targeted students.  Today, there’s plenty of media targetting kids (ahem, WB), but at the time it was a really novel idea.

Anyway, eventually Branson quit the magazine and decided to run a record store — the original Virgin Music.  Branson and his cohorts actually called it Virgin because they figured they were all virgins at business (and they liked the edginess).

Over time, Branson had to:

• Negotiate a lease for the space
• Negotiate with record companies to get music in the store
• Recruit staff
• Motivate staff
• Keep a cool environment while still making a profit
• Help sell records to customers
• Figure out what the hottest new records would be so he could stock the store right

Actually, for that last one, Branson didn’t even do it himself.  He had an assistant whom he described as brilliantly gifted at predicting the latest trends in music.  Based on his expertise, Virgin always stocked very hot and edgy artists.

Branson eventually went on to expand the record store to multiple locations, to raise money to purchase a mansion which he turned into a recording studio, to start a music produciton company, to sign major bands like the Sex Pistols, and eventually to sell it all for somewhere in the neighborhood of $500 million.

Incidentally, I’m getting all my information from the very entertaining read: Losing My Virginity: An Autobiography of Richard Branson.

Anyway, as I got my own experiences in entrepreneurship and continued reading about others, I started learning that so much of entrepreneurship is people skills.  “Clever” is important, but really only in the visioning stage.  Coming up with a really cool vision really does require a deep understanding of the market, and the creativity to figure out where the industry is going.

But once you’ve got a vision for a business, then what?  I have a vision to create a new kind of retail experience where you use technology to figure out what kind of look you want.  Ok, great.  So, do I have the gumption to go out and:

• Get funding
• Recruit a staff
• Train a staff
• Motivate a staff
• Attract customers
• Etc.

Clever started with the vision, and then it took a seat while “tenacity”, “optimism” and people skills stood up.

The takeaway for me is just that to develop yourself as a successful businessperson or entrepreneur, it’s not enough to just know theories of business (the long tail, crossing the chasm, etc.) or to be smart.  It’s also not enough to know your business fundamentals (the concept of a budget, operational planning, sales & marketing, management concepts, basic planning skills).  You also have to develop people skills and emotional resiliency. I think part of being a great businessperson is also about being great at things besides just business.

So the next time you’re out just having fun with friends, as far as I’m concerned, you’re also working on your business skills!

One of the things I really love about my life is I’ve met more entrepreneurs than I can count. One of the coolest things about entrepreneurs is that they seem to have zero demographics in common. In other words, I’ve met entrepreneurs…

• From both wealthy homes and poor homes
• Of pretty much all ethnic backgrounds
• From pretty much all educational backgrounds
• Of pretty much all ages
• In equal proportion from both sexes

Of course, as with any group, there are things in common. I guess “traits of an entrepreneur” is destined for another posting.

This post is about a very important difference I’ve seen in all entrepreneurs, and here’s what it comes down to:

All entrepreneurs I’ve met are ambitious; some of the entrepreneurs I meet are also grandiose.

What do I mean by grandiose? Well, take me as an example when I started Omedix. My goal was — prepare for buzzword overload, here…

To revolutionize healthcare by creating next-generation web solutions that integrate with every electronic medical record system and practice management system, and offer a “network” of practices that functions as a de facto national health exchange

Reality Check?  I was 24 years old, with zero experience building a company and no money.

There’s having the cajones to follow your dreams and achieve what others said couldn’t be done…and then there’s grandiose. To me, the critical distinction between “cajones” and “grandiose” is that with cajones you have a plan, you know what you’re signing up for, you know the risks, you know there’s a chance of failure and a chance of success, you know almost EXACTLY what your “risk proposition” is…and you still choose to go for it. That takes courage.

But grandiose is different. Grandiose is being so enamored with your vision that you never bother to consider the risks, or wanting your company to work so badly that you don’t think through the financials, or wanting to succeed so much that you disregard the challenges required to achieve your vision. In short, grandiose is being so obsessed and in love with your vision that thinking about the day-to-day realities it will take to achieve it becomes, well, boring.

What’s interesting about this is that many of today’s great companies started off as very simple visions. Take Dell as an example. Michael Dell started his company by purchasing computer parts on his own, and then manufacturing computers for friends & family in his college dorm room. At the time, it was cheaper to build than to buy so he made a small profit.

Eventually, he became so busy that he dropped out of college. Eventually, he moved out of his garage and into an office. Eventually, he began sourcing other products (like mouses, monitors, etc.) and eventually he began advertising every week in computer magazines. Eventually he pioneered the whole “built to order” concept as well as the “just in time” inventory concept and, well, he built a multi-billion dollar company.

Going all the way back to the first computer he built, Michael Dell did NOT start by raising capital to go build a factory. He just did something that added value for somebody, and then he took it to the next logical step. Was he grandiose? I don’t think so. Did he have cajones when he chose to drop out of college so he could “build computers for people”? Yeah, I think so.

By contrast, most of the first-time or aspiring entrepreneurs I meet sound the way I did before I had any experience: you’re going to take over the world, and you’ll figure out the details later.

I guess what I’ve come to realize is that, while the vision is sexy and while the vision is what the media and American folklore love to latch onto (”One great man…had a vision…that one day…premium coffee would be available on every street corner”), the real substance is in those so-called boring details.

I was so obsessed with my own vision when I started Omedix that I didn’t even bother to make a budget! I mean, honestly, that is the FIRST thing you do when planning a business, and it took me — get ready — about a year before I did that. My logic at the time? We’re going to be so successful eventually that short-term losses don’t matter. That’s not cajones; that’s grandiose.

I find that the best entrepreneurs are not risk TAKERS, but risk MITIGATORS. They eventually take the risk, but only after they really know what they’re doing. They’re also total realists…about everything. What will this cost? How long before we make money on it? And so forth. That sexy grandiose vision stuff: I think it starts out pretty simple to be honest.

I’m not trying to malign the notion of a passionate vision. In fact, I think it’s visionaries that ultimately push the world forward. But at the end of the day, what will it realistically take for your vision to become reality? How will it make money? If your vision requires $100 million, 7 years, and partnerships with every major company in your industry, is that really the BEST next step? Why not start smaller, or consider partnering with someone who has that kind of experience, or starting a business that COULD grow into that but won’t start that way. Why be grandiose, when you can just be courageous?

I guess what it comes down to is that dreams are wonderful and amazing and inspiring, but if we leave them as dreams without ever hatching a plan to turn them — step-by-step — into realities, then all we have are daydreams. There’s nothing wrong with daydreaming of course, but it takes real courage — real cajones — to step outside the dreamworld and start planning your first few steps.

When I first started Omedix, I was very ambitious and very clueless. I was willing to work hard to get what I wanted, but I didn’t know what I wanted or how to get it; I just thought that surely I had to work hard to get it.

Fast forward about 2 years and I was actually starting to feel kind of burned out. I was so sick of working and working and working…and I felt like I didn’t have all that much to show for it. It’s hard to describe but here’s the way it felt:

Imagine you’re sitting in some newfangled car and you want it to go fast. You’ve been told that in order to make the car go, you have to push on the gas pedal. You happen to notice about 10 different levers on your right and you don’t know what they do or why they’re even there. When you press on the gas the car barely moves. When you push harder it moves a little bit faster but it’s still pretty slow. Plus, pushing so hard on the gas is making you tired.

So then you decide to start adjusting the levers. You push one lever all the way down and notice that the windows go down and the car is now going in reverse. You push another lever all the way up and now the car keeps on turning in circles. You play around like this for, say, 2 years, until you get the exact configuration of levers so that the windows are just the way you want them, it’s easy to push on the gas, and your car is moving speedily along.

I suppose that’s a bizarre metaphor, but imagine when you’re still in the beginning phases of figuring out the car and you’re feeling very ambitious. That’s great and all, except that “try harder” is not the problem. The problem is that you weren’t pressing on the gas with the right lever settings in the first place.

One thing I’ve discovered about myself and about so many other entrepreneurs and aspiring entrepreneurs is that you don’t bother becoming an entrepreneur unless you’re ambitious in the first place. When you start your own company it’s the most exciting thing in the world and ambition is at full force. But you can very easily burn yourself out by just stomping on the gas without bothering to configure those levers the way they need to be configured.

I’ve seen different people handle that challenge differently. Some people never realize there are levers in the first place, they exhaust themselves pumping the gas, their car goes nowhere, they get frustrated and they quit. Other people spend so much time tweaking the levers without ever trying the gas that their car also goes nowhere and they too are tired.

The successful ones, it seems, press the gas a little to see what happens, and then try adjusting those levers. They ask questions of people who’ve driven this car before. They read up how others configured their levers. They try some lever configurations no one else has tried. In some cases they nearly crash the car, but then they stop, regroup, adjust the levers yet again, and then press the gas a little to see what happens.

When you finally get the configuration just right, “ambition” becomes a wonderful thing again. Suddenly the harder you pump that gas the faster your already-fast car starts going. Now you actually get REWARDED for your ambition!

Incidentally, when you finally get the levers configured well, your car looks sexy, and you’re moving fast, people watch it go and say “Wow, that guy’s got it made. Look how lucky he is.” Little do they know about the levers that had to be configured so exhaustively before it works the way it’s supposed to. Little do they know the levers rattle sometimes and have to be re-adjusted, or updated to match new road conditions.

Anyway, enough of my ridiculous metaphor. My point is that ambition is really just a willingness to expend a great deal of energy to achieve your goals. When you’re in a setting like high school or college or an established corporation where the levers have already been configured for you and you’re just given a gas pedal, you really can “win” by working harder. That’s how your car is set up.

But when you setup a company, your car goes nowhere until it’s configured and if you’re not careful your ambition can wind up exhausting you.

Ambition is a good thing; a great thing, actually. But I’m starting to learn that ambition is not infinite or inexhaustible.  We get tired.  We get burned out.  But what keeps you going is when you see your car moving.  You know that if you can just push yourself to pump the gas a little harder you’ll recover your energy while your car is coasting along.

I’ve now learned never to pump the gas too much until my levers are where I want them to be.

I may write more on this later, but just a quick thought:

“Business is nothing more than managing constraints and doing a good job of predicting the future.”

Although I love what I do, one of the more frustrating aspects of running a business is that YOU are always the bottleneck for everything. The reason we don’t produce sites faster is because I, personally, have to review them. The reason sales are at X but not Y is because I personally have not yet hired the right salesperson and because I personally am too busy to proactively follow up with every single lead. The reason we haven’t developed our new products faster is because I personally have to do some user interface designs but have been busy with other things.

It sounds awful even just writing all that! Actually, the obsession with “I personally” is ultimately I think the completely wrong attitude when it comes to growing a company, but that’s the topic of another post I’ve been germinating lately.

Anyway, one unfortunate side effect of being the bottleneck is that it creates a feeling that I’m never finishing everything I want to, which is stressful. In school, we were always taught that finishing 100% of our homework was a good thing. You worked and worked until you finished what you had to do, and then you go have fun.

But what if you’re in a situation where you will literally NEVER finish all your work?

That was by far one of the most frustrating aspects for me of entrepreneurship. I was never “done”; I was never “caught up”. My personal productivity was always less than the amount of things that needed to be done.

So what do you do with a situation like that? Do you just raise the white flag and mentally adjust to “I’ll do the best I can”? Do you enlist the support of others to lighten the workload? Do you try to alter the whole dynamic of it all (stepping “outside” the problem)? Well, yes.

I actually have adjusted my attitude on this to three Key Ideas:

(1) I can only ask of myself that I do my best.

By definition, I can’t possibly do better than “my best.” So it stands to reason that all I can expect from myself is my best, and anything beyond that is simply unreasonable. This was a pretty helpful realization because it relieved me of the stress of trying to get everything done and instead made me realistic about what COULD be done.

(2) Enlist the support of others.

If I want our company to increase revenue by 5x this year, can I work five times as many hours? Can I work fives times as productively. Well, no. And yet there are companies that have grown by more than 5x in a single year. Where does the magic come from? It can only be through leverage: by enlisting the support of my colleagues, by enlisting the financial support of investors, by squeezing more juice out the oranges our vendors send us, by capitalizing on the relationships we have with our clients, etc. I’m still not nearly as good at this concept as I’d like to be, but I’m starting to realize it’s the ONLY way that great companies are ever built.

(3) Make the mental choice: Is your life a series of stresses or a series of adventures?

And finally, after a long talk with my Dad one day, he summed it all up for me so well: “You can either choose to view life as a series of stresses, or life as a series of adventures.”

Wow.

It’s so true. I realized after he said that that there will ALWAYS be something to stress about. Those stresses don’t get in the way of life; they are PART OF life! And so, when the next stressful event comes up, we can choose to be stressed (which is natural, and often healthy even), but we can also choose to see it as a fun little adventure. I mean, in the grand scheme of things, here in the USA most of us have our safety, a roof over our heads, and food in our stomaches, not to mention friends and family. At the end of the day, whatever we’re stressing about isn’t really life or death most of the time.

So those are my three big Key Ideas. I don’t practice them perfectly yet, but at least when I go to the office tomorrow and realize yet again I won’t be able to get to everything that I want to, I’ll have some perspective on it!

Maybe it’s bad form to take business inspiration from a movie about the rise of a drug lord, but, bear with me for a minute here.

I just finished watching American Gangster, which depicts the true story of New York super drug dealer Frank Lucas who — and this is not a typo — amassed over $250 million in wealth from the sale of heroin. I thought the movie was very well done anyway, but they also did a good job of showcasing Frank Lucas’s talents as businessman, even in the world of drugs and organized crime. Some of the business higlights:

• Before Lucas, heroin was imported by a single supplier, diluted to allow for more distribution and resold to a number of dealer-organizations. Essentially, heroin was a commodity.
• Lucas found a way to import directly from his supplier. By controlling the supply, he avoided the dilution and also avoided paying the middle man. He could therefore offer a “better” product at a cheaper price.
• Lucas actually branded his product by stamping every packet of it “Blue Magic”
• The movie even shows Lucas taking charge when he felt that one of his distributors was committing “trademark infringement” by buying the pure heroin wholesale from Lucas, diluting it, and then reselling it in diluted form under the same brand name.

I have a few thoughts from the movie, but before I share those, let’s travel to another “strange place” where you would probably never expect entrepreneurship. I give you For Those I Loved by Martin Gray.

What’s that book about? It’s the memoir of a Holocaust survivor. The book was absolutely fascinating, but what made it even more engrossing for me personally was that Martin — the autobiographer and protagonist — was an entrepreneur at heart. And what was really cool was that I realized he had an entrepreneurial instinct early on in the book, and he later went on to found his own antiques importing company and did quite well.

So what gave away Martin’s entrepreneurial instincts early on? In 1942, Martin and his family were forced to enter the Jewish Ghetto in Warsaw Poland. Among the many reprehensible acts of the Nazis there was to restrict the intake of goods to the Ghetto. Only so many loaves of bread, so much water, so much meat, etc. was allowed into the Ghetto each day. Considering there were 500,000 people, the goods imported were far less than what was needed. Martin and his family were beginning to starve, so Martin innovated.

The Waraw Ghetto was in a central part of Warsaw, and many of the locals living outside needed to pass from one side of the Ghetto to the other. So the Nazis operated a streetcar that passed through multiple times per day. The streetcar was patrolled by both Nazi soldiers and local Polish policemen, known as “The Blues” because of their blue uniforms.

Martin found a way to jump on the streetcar as it passed through the Ghetto in a way that avoided detection. He was then taken straight to the outside, and was free to buy as much food as he could pay for. His next problem was to get back in, and here’s how he describes his solution:

…I waited for the streetcar at the stop before Teatralny Square. I was going back [to the ghetto], willingly, and full of vigor, air, and white bread. At the last stop before the ghetto, the Blue jumped on the platform of the second car. I was there, close by him. He was a plump man, he took no notice of me. I barely glanced at him but I stayed by him: I still had some money. It was a gamble. He tugged at the leather bellpull: the streetcar moved off again. It was a gamble. I touched his hand and without a word slipped him some notes. He crumpled them up and pocketed them, without looking around.

Martin now had a product — food — and plenty of buyers. The rest seems to take care of itself for him:

I went down Gesia Street, clutching my bread, holding my cakes. People were looking at me.

“How much?”

The man placed his hand on my sleeve. He was elderly, wearing a smart hat and coat.

“Don’t stay here, come with me.”

He nudged me into a porch. I was on my guard; a few stairs to the right, up which I could escape, reassured me.

“I’m buying,” he said. “How much?”

“I’m only selling the bread.”

“How much?”

I named a figure which seemed enormous.

“They each weigh two pounds.”

He wasn’t even listening, he pulled out his wallet. Outside was the grayish-black crowd, outside was the sound of footsteps and voices.

“I’m a buyer,” he said. “Every day, if you can.”

So Martin had actually sold his goods for a profit. Here’s Martin’s own summary of his morbidly exhilarating day:

I looked in my hand: it was full of zlotys [the local currency], my zlotys. I’d gambled on the streetcar, gambled on the German, gambled on the Blue, gambled with my life, and I’d won; here were my winnings.

Now, what’s so interesting about that little vignette is that Martin didn’t stop there. He then found a buyer on the outside so that he didn’t have to go to shops and buy the food himself (and risk detection). He paid the buyer a small fee, and simply rode the streetcar in and out to pick up and deliver. He had to pay off the Blue to avoid detection, but that seemed to be okay. And once he had the goods, selling them was a non-issue.

Fascinatingly enough, he scaled his “business”, employed other resources, developed a steady stream of buyers, and actually amassed a decent amount of wealth in this otherwise starving prison.

Now THAT is entrepreneurship.

What do I take away from drug lords and the oppressed? I take away that “business” as we have all become so accustomed to it today is just a modern platform for deeper entrepreneurial instincts. Frank Lucas (the druglord) had a horrific childhood and grew up surrounded by drugs, but he was also enterprising. He applied his business skills in the only forum available to him. Martin did the same.

Richard Branson’s first undertaking was the founding of Student magazine in the 60’s or 70’s. It was the first magazine of its kind and distributed throughout the country. It sure sounds pretty cool, but he actually started that because he had dropped out of secondary school and had nothing else to do.

Before Mark Cuban started his first company — a computer consulting company for small businesses called MicroSolutions — he was working at the equivalent of CompUSA in the 80’s. He became knowledgeable about computers and software and started become a great resource for customers. One day a customer asked him to meet onsite to discuss a large purchase. Cuban chose to show up late at the office so that he could meet with his customer. He was fired on the spot, and then went on to start his own company.

For myself, I think what I’ve always wanted more than anything else is the feeling that I’ve become successful on my own, without handouts or “advantage” or “connections”. I could have gotten higher-paying and more prestigious jobs out of college than hunting for work as an amateur web designer who sucked at graphic design, but in my world with the impulses I had, that was the only real “forum” available to me.

The other takeaway for me from all of this is that there ARE in fact fundamentals of business. Obviously, Frank Lucas never got an MBA. Obviously, Martin Gray, never had formal training in “supply chain management”. But their instincts gravitated to the same principles:

• Determine what service you’re going to offer
• Determine a consistent, scalable way to deliver it
• Sell it at a profit
• Establish a brand name and customer loyalty
• Keep growing

I don’t presume to capture all of business knowledge into 5 little bullet points, but this post is not about the fundamentals, per se, but about the fact that they exist at all…and sometimes in the strangest of places.

My sister recently forwarded me information on Kiva.org. Kiva identifies people in third-world countries who are struggling to make ends meet, but have endeavored to better their situation not through charity but entrepreneurship. It arranges “micro loans” to basic small businesses so that they can get off the ground.

Muhammad Yunus actually won a Nobel Peace Prize in 2006 for pioneering the idea of micro loans and in my opinion it’s the best kind of charity because I’m not putting money toward short-term alleviation but a person’s long-term “personal infrastructure” on top of which they will become self-sufficient and, one by one, make the world a better place.

I selected “Keo V” from Cambodia as my micro loan recipient since she’s a mother of 4 and already has a business. She just needs a little capital to buy a van and then she’ll have a growing enterprise!

Update: I received this email from Kiva on 12/13/07:

This is an update on Keo Vannak:

Thank you for your loan. It has been disbursed to Keo Vannak by CREDIT MFI — World Relief in Cambodia. We are excited to watch this business grow. Over the next 12 months, CREDIT MFI — World Relief will be collecting repayments from this entrepreneur and posting progress updates on the Kiva website.

I have to admit, it’s pretty amazing to think that a few trips to Starbucks for me constitute a life-changing loan for a whole family halfway across the world. I think I might make some more microloans. This is really fun!

That’s what Seth Godin asks in his new book The Dip. It’s a question my sister got me thinking about not so much in relation to what I do, but about people in general.

And got me thinking it has. How many times do we engage a professional and really feel that this person is one of the TOP professionals in what they do? How inspired do we feel when we encounter such a person?

This idea got reinforced in the most unexpected of places recently. It takes a man to admit it, but someone recently gave me a gift to get a massage at Massage Envy. I was a bit trepidacious about it, but I figure I work hard, and it couldn’t be that bad, so maybe it’s okay to indulge.

Embarrassed as I am to admit it, I realize now I had some unconscious prejudices about a masseuse. I assumed that if they were highly ambitious they would have undertaken a more “clinically significant” field like becoming a nurse or doctor. I assumed that it wasn’t that hard to become a masseuse. I assumed the massage field was mostly for people who weren’t sure what they wanted to do, but thought they could make some money doing this.

I knew very little about the whole idea of massage so I found myself asking the masseuse a lot of questions. It quickly became apparent that she took an enormous amount of pride in her work. She worked out 5 days a week to stay in good shape since she felt it allowed her to have increased strength. She closely watched her diet and water intake to ensure she was always well-nourished and well-hydrated. She studied up on various schools of thought in massage. She explained that she felt all these things made her clients that much more likely to choose her.

I’ve encountered $300/hour attorneys who don’t take that kind of pride in their profession. It dawned on me that it kind of doesn’t really matter WHAT you do, but something truly magical happens when, for whatever it is that you do, you resolve to be the BEST at it.

It started making me sensitive to how much of the “I want to be the best” factor different people have at different jobs. If the masseuse was a 10, I rate most professionals I encounter a 6. They work, it pays the bills, they enjoy it, and then they go home and live their lives. I suppose there’s nothing wrong with that approach, but, well, that’s what will give you a 6. I think the 9’s and 10’s internalize their work so much that how good they are at it becomes a point of personal pride. Going physically home doesn’t always mean going mentally home.

I think “liking what you do” has an enormous amount to do with it. Even though my company provides numerous visual design services by employing some very talented visual designers, I myself HATE doing visual design (mostly because I’m so bad at it). If I endeavored to be the best visual designer around, I could only tolerate it for so long. But being the best, say ASP.net 2.0 programmer I know, would be very challenging, but an exciting challenge.

I guess in the end, it makes me think about what I want for myself. When people ask me what I do, when I ask myself about what I do, how do I feel about the quality of what I produce? How proud am I of my skill at my profession, vs complacent that I’m “doing pretty well”? It made me realize that for me personally, the desire to create the best company in our industry, to offer the best service, to offer the best value, to provide the best product, those are things that would make me feel great.

I’ll be honest. We’re not there yet. I personally am not there yet. But it’s a goal that’s starting to overtake my mindset…we’ll see what happens.

I just read a great article on FoundRead:

Check it out

I could not agree more with this, and major props go to Chris Michel for admitting it took him years to fully absorb a seemingly simple lesson.  There’s a certain angst we all have when we first start and aren’t sure what to do with ourselves.  I like how Chris points out that activity in the absence of defined, measurable outcomes is just haphazard random motion.

Cool stuff.

3 years of hard work to figure it out, and 10 minutes to summarize it all. There’s something sobering about that.

I finally wrote out my very own guide to entrepreneurship. I don’t think there’s anything groundbreaking in it, but considering that there are so many books out there, hopefully the shortness and simplicity of this will be its appeal.

Check out the Guide

Enjoy!