Some will already know Derek Sivers from his blog sivers.org. Sivers started CDBaby, a CD distributor for independent musicians, in 1998. He sold it 2007 when the company had $100m in revenue. He tells his story of CDBaby in detail in this book and it’s quite interesting.
Sivers was a musician before starting CDBaby and he created a small online shop for his CDs and other musicians asked him if he can offer their CDs, too. After a while more and more musicians asked for distribution and CDBaby grew. He said that after a while he talked to his first employee and said that they maybe need a second employee and he don’t want to grow the company.
It’s quite funny how he found a perfect opportunity but didn’t realize then that it was one. One main objective or like Guy Kawasaki would say the mantra of Sivers was to help musicians. Everything should help musicians to distribute their CDs.
If you are the owner of a company you can do with it anything you want. You don’t have to follow some strict rules or even some “common sense”. Sivers avoided lots of formalities and did just the stuff he wanted. For example, often people think that CEOs are handling the business deals - Sivers never wanted to do that - he looked for persons who were motivated and good at doing deals and let them do the work. But he enjoyed coding and thinking about improving his business and this was what he did.
He also talks a lot about delegation and overdelegation. At one point he delegated nearly everything to his employees, even the profit-sharing plan. After a while somebody said to him that his employees take all the profit, which wasn’t really into his intention. The result argument lead him to leave the USA and work alone from the UK.
Anything You Want is a really interesting story because he talks so much about things that gone wrong but it never appeared that he was unhappy in retro-perspective. I think the main points are that you should somehow help other people in providing products or services to them and that you can do anything you want with your business. All in all a real nice book, quite short but insightful. Do what makes you happy!
What is it about?
It took me fifteen years to build this service company, now I want to retire and spend more time with my kids. But how? Even if you aren’t going to sell your company immediately, John Warrillow will show you how to make your company sellable and your job as a CEO more comfortable. I will focus a bit more on service companies because for most products companies these things are obvious.
What can I learn?
Recurring revenue and a repeatable sales process: A main key to increase the value of your company is to create recurring revenue. It could be subscriptions, consumer goods or long-term contracts. This helps you to create a more consistent cash flow and less short-term liabilities. Furthermore, your sales process should be repeatable. Try to create a product which could be sold without (much) customization and hire at least two sales people. Why two? Because they love competition! In the book, the owner of a creative agency, created a simple five step process to sell and create logos.
Hire managers: If you created your product, you are probably going to scale your business a bit. Besides the two sales people, you may want to focus more on your product and hire more people how are awesome at creating your product. After some time you may increase your sales force and the amount of creators. Instead of managing them by yourself, hire/promote people to managers. Your goal is to sell this company or at least make you dispensable.
Sell big: If you finally decided to sell your company, you should look for brokers which help your sell your company. Later when talking to the future owners you should emphasize on the possibilities your company offers. You created a great management team, a repeatable sales process and product and it could be scaled to the unlimited. Sell big and sell a superb vision of what could be.
Built To Sell is an awesome book! I love the story about the agency owner who wants to sell his company. It reminded me of the E-Myth but here’s the story is a bit deeper and more interesting. The second part of the book explains each principle again in detail. Awesome book and clear recommendation!
What is it about?
What have Amazon, Hilti and Hindustan Unilever in common? Each company revolutionized its business model. Mark W. Johnson studied these and more companies and found a process for business model innovation.
What can I learn?
What’s the job-to-be-done? Don’t ask your customer what he wants your product/service to be. Find out what tasks he have to do. This allows you to use your expertise to build a better solution. This will be your starting point.
How can you satisfy it? Now it’s time to build a company around your product. What are your key resources, your key processes and how can you make money out of it?
Let’s take the first business model of Amazon for example. The job-to-be-done was offering a wide range of books. You can only make profit, if enough books will be sold. Also the warehouse costs have to be reduced. Furthermore, people want to read their books as soon as possible.
To ensure that you are going to sell enough books, you have to build a platform. So the key resources and processes are the technology for warehousing, IT infrastructure for the website (channel) and a partner for shipping.
Change is hard: Often there’s a discrepancy between your company and your new business model. If possible, take the easy way and build a new company. It will save your lots of time, discussions and compromises.
I really like Seizing the White Space. It is more practical than Business Model Generation which focuses more on building a meta solution. There are lots of interesting case studies with uncommon companies. Furthermore, I like Johnson’s approach of Customer Development, i.e. searching a solution for the job-to-be-done and then building the rest of the company around it. Great recommendation for everyone who wants to start a company and solve a job-to-be-done.
What is it about?
How do you change a company? And how do you avoid being overrun by new forces? Andrew S. Grove explains how Intel changed from a semiconductor company to a microcomputing company.
Strategic inflection point: Grove defines a strategic inflection point as a point or period in which a force (see Porter five forces analysis) gets 10X stronger. For example, in the 80s, the Japanese memory industry grew very fast and got very cheap. This was a gruesome experience for Intel because they were known as the memory company in the USA.
Always observe your environment: To avoid being overrun by such changes, you should always observe your environment, i.e. your customers, competition, new technology, your suppliers, etc. Only if you can see emerging 10Xs you can act fast enough.
Is it a 10X or isn’t it? There are a lot of changes but which are important? Ask your employees, customers or vendors. Often the CEO is the last one to see a change. If you think that one of these 10X forces isn’t really one, don’t discard it. Observe if it changes and then valuate it again.
Change from top and bottom: You can’t force a change from the top, but also can’t form a cooperate strategy from the bottom. It is important that you use both forces to carry out the essential modifications.
This is a excellent book on changing a company. Andrew Grove recounts his own experiences and don’t try to please everybody. Half of the managers quit the company because they don’t wanted to change. The other 50% had to reeducate themselves. Changing a company isn’t easy and there will be casualties but it’s better than completely vanishing. Clear recommendation!
What is it about?
Gary Hamel writes about the future of leading a company and explains that innovation will rather come from your normal employees than from the top management. He focuses on some outstanding companies like Cemex, Schwab or UPS.
Encourage activism: A lot of front line employees see problems that the (top) management can’t see. You have to enable every employee to share their ideas.
Build internal markets for talents, capital and ideas: A great way to allocate resources are markets. Hamel recommends to build internal markets for these components to allow people to execute their ideas.
Measure your innovation progress: If a idea seems fertile let people test it. If it succeeds let them build ventures and if this venture is successful try to spin-off or reintegrate this venture in your company. You probably have to generate lots of ideas for one successful venture, so start filling the funnel!
Leading the Revolution is a great book for its time. There are some really neat ideas like internal markets which are now successfully adapted (e.g. at Google). Furthermore, Gary Hamel understood the idea of crowdsourcing long before it became familiar.
What is it about?
Bogusky and Winsor shows different examples for merging your product and its marketing. They present how innovation changed companies and how to improve collaboration between companies silos.
Do not disconnect marketing and product development. The product itself should be your marketing instrument, e.g. Apple’s Ipod.
This book offers some great examples of innovating your product and explains how you can overcome these barriers in bigger companies. Although there are some nice inspirations for companies of every size. For example, try the opposite of the status-quo: If they build big, build small (e.g. cars). Or sacrificing instead of adding features.
In conclusion, I really like Baked In because it presents you a lot of actionable possibilities to improve your product.