#44/111: Rework

What is it about?

Jason Fried and David Heinermeier Hansson wrote about their recipe of running 37signals. They explain what differentiates them from a lot of other software companies and why only profit matters.

Key points?

Stay simple: Not just their product is affected by this paradigm, they try to keep their organization simple and even their books. A major problem of later-stage products, like Excel, is that they are so big and bloated.

Be real: You probably know these our values pages of corporate websites. Often, they are utterly long and sadly only a few read them and even less people work by these standards. The simple solution is don’t talk. Act!

Hire for real work: So you need a PhD in Physics from the best three universities who works 18h a day? Really? At 37signals they don’t care about your educational background. Can you do the job? Yes? Shows us. If you will succeed, you will be hired. Stay simple, don’t hire somebody just because she is too good not to be hired.

Conclusion

I loved this book because I’m not a big friend of high critical mass startups, i.e. “we just need 500mio users to get profitable!”. This book is down to earth, upright and refreshing. As hard as it be, we probably don’t get one million customers, we probably won’t get $250m in founding and there will be no exit with $10bn. Rework is for people who realize this but aren’t discouraged. Recommendation.

#36/111: The Knack

What is it about?

What should you know before starting a business? Norm Brodsky and Bo Burlingham try to answer this question. They focus on some topics from money management to hiring. The Knack is especially targeted at former sales persons.

Key points?

Know your metrics: Most sales people focus on the sales volume only. This doesn’t work for your business is your profit margin is too low. Brodsky recommends to calculate your profit margins by hand to get a feeling for the numbers.

Search a niche in an old market: You should focus on an old market because you don’t have to generate demand and often the leading companies are pretty rigid. If you can find a niche which undermines these companies, you can earn a fortune.

Keep your old customers: You already know that it’s easier to sell to your existing customers than to new ones. So try to generate more profit from them.

Build a culture: You will reach a point where it is impossible to do everything by yourself. If you hire people try to hire for cultural fit. This way you will trust them more and they will know what’s important for your business.

Conclusion

The first quarter was extremely good. He told a story from two friends of him who wanted to start a business and he explained lots of steps and how they developed their company. Sadly, stories of other people decreased and it become more and more egocentric. The name of the book is a bit misleading, maybe it would be better if it was named “My Business Life by Norm Brodsky”.

#19/111: The E-Myth Revisited

What is it about?

Michael E. Gerber reveals an important fallacy of being an entrepreneur. He thinks that most entrepreneurs are technicians (e.g. engineers, copy writers, biologists) who think that they just have to do the work they’ve done before as employees.

Key points?

You should work on your business, not in it: The problem, so Michael Gerber, is that most new entrepreneurs just do their old job. This mostly leads to exhaustion and too much time working. The solution is to work on your business, i.e. building a business model which could be replicated even without you.

Establish a culture: The first thing to do is to find your biggest aim. What do you want to do? What should your business do? It’s about building a culture which lives in every employee and every product.

Make yourself futile: Before you hire people you should try to document as much as possible. Start out with your organization chart (yes, even for solo founders) and define what each position have to do. You could build checklists with each step that has to be done. Eventually, you built a documentation system, which allows you to run the business without you.

Hire open and inexperienced people: You could hire some experienced managers or technicians but they maybe too expensive. Rather aim for open and inexperienced people. They will rather accept your culture and learn how to do things by your company manual.

Test, Test, Test: If you documentation leads to garbage your employees will deliver garbage. You have to test as much as possible to achieve the highest success. What should your employees wear? How should they welcome people? To whom should they sell? Try to find the best solution. Though, the world isn’t fixed. You/your employees have to test new methods and update the manual if these new methods are more successful.

Conclusion

I would call me a non-bureaucracy guy but I’m kind of falling in love with the concept of scaling businesses. It’s about the simplicity of using checklists instead of 1500 pages forms ;). Seriously, this methods allows even disorganized people to work in a business and deliver constant results. Furthermore, he wrote the book as a conversation with a woman who runs a small bakery, which helps to learn the main points of his book. Lovely!