Building A Business & Learning When To Move OnTBOP2017 ⋅ 3:34 ⋅ Filmed May 12, 2017
So you want to build a successful business and sell it. Good plan, right? Not necessarily. In this clip of Derek Ball’s Q&A, he talks through the real priorities upon which entrepreneurs and business owners should be focusing. But don’t just take his word for it; Derek invoke the wisdom of Amazon’s CEO Jeff Bezos to explain what successful entrepreneurs think about and how they operate to build the businesses that blow us away.
TC: Do you manage differently, if you've 'built to sell' as opposed to 'built to keep'?
[00:07] DB: I think that's one of the lessons I've learned having gone through this a few times. If you've built it to sell it, you're probably not going to be successful. You ultimately have to build a good business. It has to have good customers and good economics. If all you're thinking about is 'how I'm going to sell this in 5 years?', you're focused on the wrong things. You really need to be focused on what's going to make the people who are coming and giving me their business, 'how am I going to make them successful?' Because if you make them successful and you build a good business and the economics sustain it, then they'll be a lot of people suddenly interested in your business. If you think you just need to get bigger enough that someone is going to buy me, you're probably going to miss the ball.
When Do You Move On?
[00:46] TC: When you do know when it's time to leave an idea or to leave a project or to leave a company because it's not working? Because every entrepreneur believes to their boot straps that, 'if I just push on one more day, really going to work'. It's the problem with entrepreneurs, the good ones know when it's time to drop something and move on to Plan B. And the ones who fail tend to be the ones who stick with something a bit too long. How do you recognize that point?
[01:18] DB: Excellent question and a tough one to answer. It's not that there's a set of rules that you can follow. I'm definitely guilty of persisting with things too long especially earlier in my career. One of the mantra that I heard very quickly and one of my favourite leaders in innovation is Jeff Bezos of Amazon. He believes a few things. Start faster. Fail faster. He says when you feel you have 70% of the information you need in order to know whether you should something, you've already waited too long. You should have been going already. He said, go hard and if it's not working, quickly scrap it and move to something else.
[01:58] DB: I think that your gut is going to tell you pretty quickly [that] it's not working. When you get into trouble is when you don't listen to that when you really believe because your brain overrides your gut. So I've learned that my gut has been a pretty reliable indicator and if something's not working, I need to shift gears quickly for a few reasons. You have limited resources. You are burning through with the capital and the good will and the energy of your team. If you're ultimately not getting traction with it, you need to move on.
[02:27] DB: If I was going look for an indicator, it's traction. I had a chance to chat with the found, who was up here yesterday, from Scent Trunk, and he was walking me through his business. Much later in his deck, he told me, “Hey, in February we kind of got out there with our product. We now have 2,000 customers. We had 1,000 the first month. 2,000 the second month”. “Whoa, what? You're telling me in two months, you've gone from 1,000 customers the first month to 2,000 the next month. Do you think that's sustainable?” He said, "Yeah, I think we're going to keep growing that." That is unbelievable because you have no idea how hard it is to do. That is your leading indicator that you're onto something real because he doesn't just have customers, they are paying him. They are voting with their wallets. If he had launched that and said, 'we've got it out for two months now and we only have four people that bought' that's the evidence saying something is not right.