Chapter 14: Entrepreneurial Models for Rapid Progress

Chapter 14

Entrepreneurial Models for Rapid Progress

 

Money speaks sense in a language

all nations understand.

— Aphra Behn

                                                            

Help Wanted:

100,000 Breakthrough Billionaire Entrepreneurs

Everybody likes and respects self-made men;

it's a great deal better to be made that way

than not made at all.

— Oliver Wendell Holmes

Success draws emulators like flowers attract bees: Everyone wants to enjoy a piece of sweet-smelling success. There’s no better way to stimulate broadscale applications of 2,000 percent solutions than by encouraging those who want to rise fastest to great wealth to employ those methods. Everyone will then want to follow in those 2,000 percent business-model-innovating footsteps. These successful entrepreneurs will become models for the most talented of new business leaders who will, in turn, translate the model-innovation ideas into still newer and better practices.

What is the potential multiplier effect? Where a teacher may only be able to tutor one student at a time, a successful entrepreneur’s visible and universally applicable innovation may be literally copied by millions of small organizations within a few years. Why? Some of these breakthroughs will receive enormous attention in the media and attract new business leaders who are hungry for success.

How can even more copying be accomplished? The 400 Year Project can highlight and publicize underappreciated innovations, and that increased visibility will stimulate even more people to notice and follow the example. If prominent business reporters write about the value of an underappreciated breakthrough, and the multiplier effect can become quite large.

Sponsoring a global solution search to stimulate low-cost, low-risk breakthroughs is an example of this copying process. For many organizations, a great way to create a number of 2,000 percent solutions is by having a contest where the most talented people in the industry will feel encouraged to share their ideas for a chance to win prizes and gain reputations for brilliance. In The Ultimate Competitive Advantage, Carol Coles and I wrote about such a successful contest conducted by Goldcorp in the gold mining industry. Soon after, all major gold mining companies began using similar contest methods to find more gold. Encouraged by the gold mining examples, Procter & Gamble (P&G) began conducting similar contests to locate new product ideas and to find better technical solutions and now runs such contests routinely. We wrote about P&G’s practice in The 2,000 Percent Squared Solution, which should help to gain more awareness for using such contests. By the time that 100 companies are doing something similar to what P&G has with contests, we can expect that thousands of other organizations will soon follow. Where thousands follow, hundreds of thousands will not be far behind. Pretty soon, learning breakthrough solutions through these contests will be standard practice.

Adding 100,000 to the number of billionaire entrepreneurs seems like a big challenge, doesn’t it? After all, Forbes estimated in 2007 that the dollar billionaire count was fewer than 1,000. Fortunately, the distance to creating 100,000 billionaire entrepreneurs isn’t quite so large as it seems.

Very successful enterprises built on breakthroughs can spawn more than one billionaire entrepreneur. Microsoft, Intel, and Berkshire-Hathaway have all done so. In the future, might not even more successful companies create 50 to 100 billionaires each?

In addition, there are now lots of entrepreneurs whose investment stakes are worth over $50 million. One breakthrough based on a 2,000 percent solution to profitably expand revenues could turn any of those entrepreneurs into a dollar billionaire. There are millions of entrepreneurs who have stakes worth over $3 million. The right breakthrough based on a 2,000 percent squared solution can turn these leaders into dollar billionaires.

Let’s also consider the way the world is probably going to develop: There will be a shift in billionaire status to those countries with the largest populations. China and India should be loaded with billionaires, but aren’t yet. There are probably a million entrepreneurs in those two countries alone who could become dollar billionaires by combining two complementary 2,000 percent solutions (the ones in The 2,000 Percent Squared Solution).

And we know that it doesn’t take long to create such 2,000 percent solutions. With proper focus, all the solutions needed to create 100,000 additional billionaire entrepreneurs could be in place within two years by people reading and applying the English and Chinese editions of The 2,000 Percent Solution. Surely some of the hundreds of thousands of young people who apply but are not admitted to prestigious business schools (from which billionaires hardly ever graduate) will choose instead to take the more profitable shortcut to success through creating multiple, complementary 2,000 percent solutions.

Beyond that 2,000-percent-squared-solution direction is the more exciting opportunity: to put three 2,000 percent solutions together (as Michael Dell did with Dell Inc.) and build a billion-dollar enterprise quickly from scratch. The necessary 2,000 percent solutions include a business model for expanding the market by 20 times, reducing costs by 96 percent, and eliminating 96 percent of financial needs from the way business is currently done. An entrepreneur would only need a personal stake of $125,000 to turn into a billionaire with this approach. Most home owners in the United States could raise that much personal capital with a home-equity loan. Despite Michael Dell’s excellent example, his innovations have not yet been widely copied. What else can be done? Although this book isn’t about how to become a billionaire entrepreneur, the rest of this chapter focuses on key elements of breakthrough entrepreneurial success so that you can see that creating 100,000 more billionaire entrepreneurs is well within the realm of possibility long before 2035.

Future Billionaires Form a Master Mind

Henry Ford whipped poverty, illiteracy, and ignorance by

allying himself with great minds … .

Through his association with Edison, Burbank, Burroughs, and Firestone,

Mr. Ford added to his own brain power the sum and substance of

the intelligence, experience, knowledge, and spiritual forces of these four individuals.

— Napoleon Hill

Napoleon Hill’s writing in Think and Grow Rich (Aventine Press, 2004) has long inspired those who want to take control of their lives to accomplish more. Of that book’s many lessons, the one that most people have a hard time following is putting together a master mind group of great thinkers to help one another work on their most important goals.

I am regularly asked to join such groups. Normally I’m too busy, but every once in a while I agree. I’m mostly curious to see what will happen. To date, I’ve noticed that such groups tend to have a lifespan of about six months. In the beginning, everyone is convinced that the group will provide vast benefits. By the end of six months, virtually no benefits have been gained and people drop out very quickly.

Why have few benefits been gained from those groups? Most of the people in the group turn out to be unable to add much value to one another beyond encouragement. So it’s more like being part of a support group for Success Wannabes Anonymous than a group of talented, successful people who can help one another succeed even more.

With those experiences in mind in late 2005, I decided to form a group of entrepreneurs who wanted to work together so each could create a billion-dollar company or nonprofit enterprise. Rather than make the group available to just anybody, I checked out those who were interested both for their talent level and for their apparent ability to persist. We call the group The Billionaire Entrepreneurs’ Master Mind.

Fifty weeks a year, I write a briefing document on an aspect of creating a billion-dollar enterprise and include assignments to apply the concepts in the briefing. Those in the master mind group can write out their answers and send them to me for comment. Then, every two weeks, we hold a conference call to discuss these concepts and how to apply them. In addition, members have the opportunity to revise and publish their business models and plans twice a year for comment.

Our work began by creating the right psychology to establish a billion-dollar organization, something few entrepreneurs have. That point was evident as many people who were invited into the group felt obliged to explain in some detail why they would never want to create that much success: Clearly, all had self-esteem problems that would take more help to overcome than joining such a master mind could provide. The solution that these “satisfied” people had chosen was to define what they already had as great success. Apparently, these successful people planned to just sit in that spot for their rest of their lives, a case of being stalled by having no improvement goals.

After 19 weeks were devoted to mental conditioning, we focused on ways to grow markets by 20 times. That’s a subject in which I have a lot of experience, having often considered the question for various consulting clients. From that past work, I’ve identified dozens of methods that can be used individually and together to cause a market to zoom from its current size to being more than 20 times larger. An enterprise that’s prepared to satisfy that rapid increase in overall demand will have little trouble in becoming a billion-dollar enterprise.

Our next focus will be on reducing costs to employ offerings by 96 percent while growing markets rapidly. After that, we will move on to consider how to reduce the capital needed to fund such an enormous expansion. From there, our master mind members will set the agenda to wherever they want to learn more. 

For me, this group has been a marvelous laboratory for learning more about the process of helping 100,000 entrepreneurs become breakthrough billionaires. Those who are disciplined to work on the key tasks at least an hour a week make fine progress, but some people have trouble doing that. Pressures or other interests intrude to divert their attention.

In addition, there is much raw material for future books and workbooks to be derived from these briefing documents and reviews. No decisions have been made about when, if ever, the knowledge might be shared. In the meantime, members are having a ball becoming billionaire entrepreneurs by establishing big, breakthrough enterprises through the simple steps we are spelling out.

Billionaire Reading Lessons

If I had read as much as other men,

I should have known no more than other men.

— Thomas Hobbes

If you can learn from others’ successes and mistakes, you can obviously make faster progress. In creating the weekly briefing documents for The Billionaire Entrepreneurs’ Master Mind, I occasionally draw lessons from business books. Rarely, however, do I find a whole book full of relevant advice and information. Instead, there may be a question, an example, or one idea that’s important for entrepreneurship. Let me share this caution: Most of what you’ll read about becoming a successful entrepreneur will be harmful because the material will lead you to think and act as other people do, methods that rarely lead to breakthrough results.

That’s a hard lesson for some people to appreciate. Here’s an example: A new student of mine at Rushmore was fired up by his plans to earn a Ph.D. degree. Even before starting the first class, he began asking me to pick out dozens of books that he should study cover to cover and magazines that he should read rigorously every month. This gentleman was most disappointed when I suggested that he read nothing other than the planned texts and related materials at first. Otherwise, he would be filling his mind with harmful dross instead of spun gold.

There are many reasons for difficulties in finding helpful business books that high-achieving entrepreneurs can read cover to cover and apply:

• People who write about their own experiences mostly do so to feel good by patting themselves on their yearning-for-appreciation backs. Distilling what they experienced into useful lessons for you is seldom very high on their agenda. Even when such lessons are provided, the authors usually want to draw lessons just from their experience and rarely consider anyone else’s experiences. Being so emotionally close to their experience, some self-describing authors actually get it wrong … or cannot separate the wheat from the chaff in their 89 lessons for you.

• Few business books are written to help your enterprise make breakthrough success. Most business books happily focus on accomplishing what you do today a little bit better. Spend time on slightly improving those tasks, and you won’t get around to working on breakthrough success.

• Many professors and most consultants view writing articles and books as opportunities, at least in part, to gain lucrative contracts from major companies. As a result, these authors tend to focus on what the 50 biggest organizations might need and will recognize as being valuable to hire someone to help with. Since the authors need clients with big budgets, they also focus on what the biggest bosses in the biggest companies are interested in. After you become a billionaire, these authors will begin talking about things that may sometimes be relevant to you. However, their ideas won’t have much application for how to become a billionaire by creating a breakthrough or two in the first place.

• Without careful study, it’s easy to mistake effects for causes and to focus on factors that are neither causes nor effects. A lot of the entrepreneurial literature uses quantitative measures and examples to provide so-called proofs that relatively unimportant factors are actually critical to success. If you doubt that point, pick out a few hundred books about starting up businesses successfully and see how many of them cite Southwest Airlines as an example of their points. Why does that happen? Any organization that succeeds will leap to an author’s mind when needing a way to show that the author’s ideas are valid. If a successful company has ever used the practice, then these authors may conclude that practice must account for the bulk of what made the company successful in the first place. For an example of how ludicrous this approach is let’s consider Herb Kelleher, Southwest’s legendary founding CEO, who drank a lot of whiskey and smoked nonstop. I fully expect to see a book someday that cites whiskey and cigarettes as important to leadership success. I’m only half kidding in making that observation. After all there was once a book about the leadership secrets of Ulysses S. Grant who was known to have a glass of whiskey and a cigar that favorably quoted Abraham Lincoln as being in favor of having generals who drank, as long as they won their battles.

There’s another problem with learning by reading about entrepreneurial success: The entrepreneurs may not know why they succeeded. For instance, in 1997 it was all but impossible to find an Internet startup that wasn’t doing well. Many of the same businesses were doing extremely poorly in 2001, if they were around at all. Clearly, the management practices didn’t change all that much, but the entrepreneurial environment certainly did. In the early days of many industries, almost everyone succeeds despite many of their activities being based on poor practices.

Let me make a suggestion: If you have the choice between spending time talking to customers about what they are doing with offerings like yours or ones you want to provide and reading a business book about being an entrepreneurial success, go talk to the customers.

Fascinating Customers

Profit in business comes from repeat customers,

customers that boast about your product and service,

and that bring friends with them.

— W. Edwards Deming

Several times a year, I teach adult education courses in entrepreneurship. During the first few minutes in each course, I ask the students to write down a little about themselves. One of my questions asks them about what they have studied and learned about customers so far. Rarely does anyone write in anything there other than “nothing.” Yet these same students will have complex ideas about what kind of business they want to offer.

Where did those new business ideas come from? Typically, these students are unhappy customers of some existing organization. Because they are unhappy, they assume that pretty much everyone else sees things in the same way. Solve those self-perceived concerns, and they feel that they’ll have the proverbial better mousetrap that inventors are always trying to design.

If almost everyone takes this approach, why do some entrepreneurs succeed and some don’t? Based on having interviewed hundreds of successful and unsuccessful entrepreneurs, it’s my sense that a few entrepreneurs think like the average customer and most don’t. The ones who succeed are usually the ones who think like the average customer. It’s an orientation not unlike sensing how to dress and act to be considered cool in high school. If you can also organize people to deliver what the average customer wants, success is assured. Is it any wonder that one of the most common backgrounds for those who head successful small businesses is that of having been a high school football coach? Anyone who can get a bunch of aggressive, big teenage boys to cooperate with one another must have something pretty special going.

The most successful entrepreneurs I have ever met are fascinated by everything their customers think and do and then go about doing things that fascinate their customers. By contrast, many corporate chieftains I’ve met would like nothing better than to never meet another customer. Rather than seeing customers as the source of success, they see customers as annoyances who are almost beneath being worthy of notice. One CEO’s favorite question about any new product was “Will the dogs eat the dog food?” and that company only sold products consumed by humans. I always wondered how much more that man could have accomplished as the head of a pet food company.

I’m highly confident that there are at least 100,000 entrepreneurs somewhere who find the bulk of their potential customers to be fascinating and whose instinct is to fascinate those potential customers. Everyone else should simply keep looking around until they find offerings that provide that kind of mental and emotional connection and mutual gratification for masses of potential customers and themselves.

Only you know what fascinates you, but there may be areas that you would find fascinating that you haven’t discovered yet. So keep trying new things until you find an area so interesting you’d do it full time as an unpaid hobby.

What does it take to fascinate most customers? Well, you have to start by paying attention to them. Most airlines, stores, and hotels haven’t figured that out … or they make a good pretense of not knowing the answer. Instead, you get the feeling that you are an item to be bolted onto some other item on an assembly line, as rapidly and cheaply as possible. At the airport, you stand behind 137 people to check in your bags while awkwardly lugging them around turn after turn in the long line. When it’s your turn at the counter, the baggage agent looks down at a computer screen as soon as possible, cross-examines you about your packing, and scrutinizes your driver’s license as though you were crossing the Iron Curtain at the height of the cold war. And then you go to the security checkpoint where you are made to feel like an escaping inmate under surveillance by a no-nonsense team of prison guards.

Your attitude makes a lot of difference. When you pay attention to customers, you should be looking to see what you can do to help the customer in a respectful, considerate way. A wandering airline agent could take pity on those with huge loads in long lines and help these struggling passengers take their baggage over to an empty portion of the counter for quicker processing.

Being interested in the customer is a good idea, as well. You learn about what people need when you ask them questions about themselves. For example, while you are checking in that passenger’s baggage you could ask the passenger if there’s anything she or he is concerned might break inside the luggage. If the answer is yes, you could advise on how to reduce the risk and help secure the items. You could also ask the passenger where he or she is going after leaving the airport at their destination and if they’ve ever been there before. If it’s a new destination and you know about the area, you could print out some sightseeing recommendations. Your airline could give you a way to preload some materials to make that easier for you to share.

Are you excited to apply all of those fascinating customer lessons? If yes, you’ll be in good shape just as soon as you find a large set of customers who fascinate you … and you start fascinating them.

Better and Cheaper

There’s nothing in the world that some man

cannot make a little worse and sell a little cheaper,

and he who only considers price is that man’s lawful prey.

— John Ruskin

Unfortunately, much of the copying instinct is to take something that’s wonderful and reproduce something that’s not as good. Sometimes that’s viewed as a way to squeeze out a little more profit, a goal that many unsuccessful and somewhat successful entrepreneurs put ahead of fascinating customers. In other cases, the poor copy results from a desire to earn a good profit at a lower price than the original.

The breakthrough billionaire’s lesson is to make something that’s better and cheaper to produce, sell, and use. How can you do that? Take the stupidity out of the original and substitute something more desirable. Here’s an example: I’m always reminded of how much everyone in our high school envied one guy who drove a new Jaguar XKE. That car was really beautiful … but the XKE had drawbacks. If there was more than a foot of water on the road, the engine would die and it took a long time to dry out before it would restart. Also, the car would only go about 23 miles before needing a repair. These flaws easily doubled the cost of owning such a car. A better and cheaper copyist could have designed a car that was even more beautiful, but which was more reliable. Such a car could even have been sold for a higher price than an XKE and still saved the owner money and lots of time. Sell it at a lower price because of reduced costs due to an improved design and higher production volumes, and the market would have been greatly expanded as well.

One of my favorite examples of this principle can be found in the opening pages of The Ultimate Competitive Advantage (see pages 5-8). Ray Hughes, a golf caddie from the Isle of Man, is profiled for the way that he profitably creates more successful corporate outings and marketing meetings for the same fee that most travel agents receive for merely booking the events. Mr. Hughes provides his services so well that his clients increase the value of their meetings enormously while actually spending less. Why? Mr. Hughes is usually on the spot looking out for the client while the travel agent is sitting in some other city banging away on a computer. He also knew where spending less would create better experiences. For instance, the most expensive dining room at a resort may not be the one with the best food and most fun.

Why is making something cheaper important as well as improving what’s available? It’s simple. In many cases, you won’t be given the chance to show that you can provide something better unless you can make an obvious case for what you provide being cheaper. After all, if you were the customer, wouldn’t an offer of something better and cheaper be a lot more fascinating than something that’s just better or just cheaper? I’m skeptical of people who claim to have produced a better product. I also don’t find anything simply cheaper to be fascinating. As a result, I usually don’t pay much attention to such cheaper offers; my current provider will usually offer something similar within a few weeks or months.

The ideal combination of better and cheaper only comes along once in a blue moon and will undoubtedly fascinate customers.

Help!

Where the broom does not reach,

the dust will not vanish of itself.

— Mao Tse-tung

Ask anyone what an entrepreneur is supposed to be like and the image of John Wayne as a cowboy hero will probably be described. Entrepreneurs aren’t sissies; they can take it. Entrepreneurs don’t need any help; they can get rid of all the problems by themselves. Entrepreneurs can rise above all problems. And on it goes.

Do you know any successful entrepreneurs like that? I don’t.

The successful entrepreneurs I’ve met have high hopes, lots of energy, seemingly unlimited resilience to setbacks, and steadfast confidence in themselves and their team. Invariably, the entrepreneurs have a long list of things that they don’t know the answer to. Many times that list of needed answers is longer at the end of the day than at the beginning.

Successful entrepreneurs I’ve met have one other quality: They are eager to get help from anywhere they can find it. In fact, the way I meet many successful entrepreneurs is through their having sensed that I might be able to help answer a question. They call, e-mail, or arrange a visit to check out what I can do to help them.

All the unsuccessful entrepreneurs I’ve met have been sitting in their offices where they patiently explained to me that they had all the answers for how to succeed and had already dealt with every contingency that could occur. While they are willing to help me learn from them, it’s obviously impossible that they could learn from anyone else. Whenever I hear that explanation, I try to get out of the room as fast as possible. I know they probably won’t be around six months from now.

Over the years, I’ve noticed that where successful entrepreneurs look for help has changed. Once entrepreneurs would focus on hiring the best people they could and rely almost solely on those people. Now they are likely to seek help from people they cannot hire whom they would like to involve. The successful entrepreneur increasingly operates like the foreman of a general contractor does in selecting and orchestrating the work of talented subcontractors and expert professionals. This kind of successful entrepreneur can develop a complex sense of how people and activities should ideally fit together, long before the connections have been made.

A Bright New Future Starts

Future.

That period of time in which our affairs prosper,

our friends are true, and our happiness is assured.

— Ambrose Bierce

Becoming a successful entrepreneur is a lot like becoming a world-class musician: It takes a lot of practice. Many entrepreneurs realize this necessity and plan to start a number of companies over time, hoping that one at least will become a big success. Naturally, some entrepreneurs succeed the first time and those are the ones we remember, but it’s unusual. What’s even more unusual is for someone to repeatedly succeed with different new businesses. That occurrence was once so rare in Silicon Valley that many people refused to believe it was possible.

Now we know better. There are people who have started up two, three, and even four successful new businesses. I’ve met a few of these people. What struck me about each one of them is that they were more excited about some new opportunity with higher potential for tomorrow than about the prospects for what they were already succeeding at doing. In other words, they didn’t get mentally tied down to where they had been and what they had been doing.

The excitement wasn’t based on feeling confident they would succeed or wanting to prove how smart they were. Instead, they described something more akin to a spiritual quest. Their concept for tomorrow was so inspiring for its human benefits that it seemed like a sin not to pursue it. Because tomorrow’s success was going to be far more important to others than to the entrepreneur, the leader usually saw himself (these were all men) needing to do a great job. Otherwise, the entrepreneur would be disappointing those who needed his help.

For most people, tomorrow is far off and vague. The repeatedly successful entrepreneurs I met saw tomorrow as no different from today. They also saw achieving the giant potential promise of tomorrow as something to be continually balanced against working on today or some other aspect of tomorrow.

Some might equate what I’m describing with being a visionary. That’s not really it. I’ve met some amazing visionaries and none were effective entrepreneurs. In fact, one CEO I worked for routinely spelled out for me how dozens of major industries would develop over the following 20 years. He was rarely wrong. Yet he was a terrible entrepreneur. Why? He seldom had any idea of what had to fall into place before those future developments would occur. He also tended to see human stalls as being smaller than they were. During the time we worked together, he was always at least 12 years ahead of the market. That’s too far to be in front unless your innovation will sweep away all the remaining barriers to acceptance of the development. Even if you succeed in developing the right offerings that customers will ultimately crave, the initial sales volume you can generate won’t come close to justifying the development expense. When more favorable consumption factors come together, chances are that customer needs will have slightly shifted and your pioneering innovation won’t look so attractive.

The serially successful entrepreneurs see instead what people are ready to consume immediately in huge numbers, but which just isn’t being provided yet. They also see that everything is in place to put the offering together at a reasonable cost and to run with it. This is more like the housing contractor who focuses first on building a home that people can’t wait to buy. Once certain of the market, the contractor focuses on putting up the framing. When that’s ready to go, the contractor knows it’s time to put on the roof. After that, the windows go in. And so on. The house doesn’t wait for years between stages.

* * * *

As you can now see, the pathways for creating large numbers of billionaire entrepreneurs are visible and feasible for ordinary people to use if they stay focused. Wander off those pathways or never know about them in the first place, and the enterprise will stumble rather than soar. Surely there are at least 100,000 self-disciplined people in the world who will turn those entrepreneurial pathways into freeways for breakthrough improvements. I look forward to meeting and congratulating each of them. When those pathways become high-speed roads to progress, the 400 Year Project will have created an important part of the critical momentum needed to push the whole world forward to 20 times faster progress between 2015 and 2035.

There’s another, even more exciting, prospect that these breakthrough billionaire entrepreneurs can create: Some of them may decide that they can be more successful by helping their employees, partners, suppliers, distributors, customers, and end users to learn how to create 2,000 percent solutions. Once that happens, rapid expansion in learning should quickly follow. In fact, this method of expanding the base of those knowledgeable in 2,000 percent solutions could serve as a total substitute for the tutoring approach described in Chapter 13. It will be interesting to see which method of learning turns out to be the more effective one.

Copyright © 2007. 2012 by Donald Mitchell.