Jim Manzi: Focus on Delivering Value to Customers at a Foreseeable Profit.

Jim Manzi, founder of Lotus and Applied Predictive Technologies, advises entrepreneurs to “Focus on delivering value to customers at a foreseeable profit” in “How to Succeed in Business by Really, Really Trying.”

How to Succeed in Business by Really, Really Trying.

It’s a great article and also on the limits of advice to entrepreneurs, in particular autobiographies sold as “treasure maps” Here are his opening two paragraphs

First, even though every guy who has done a successful start-up somehow feels he’s therefore become the philosopher-king of business, all experience is bounded. Any observations I make apply to venture-backed enterprise software targeting scale-up. Many of the things you would do for a biotech start-up or a consumer-oriented social media business, as examples, are probably very different. Further, there are companies that exist to sell products at a profit, and companies that exist to sell equity to investors. I only know about the former. The latter tend to flourish in the later stages of a bubble, and rely on a totally different set of skills related to promotions, networking and PR.

Second, even within the universe of relevant companies, all “rules for success” are either obvious or incomplete. Each suggestion in this post will be incomplete, in that it will ignore inevitable exceptions and complications. In other words, there are no rules for success. If there were, lots more people would do successful start-ups.

Jim Manzi in “How to Succeed in Business by Really, Really Trying.”

Hard Earned Advice for Bootstrappers

He then proceeds to offer some hard earned advice very applicable to bootstrapping a startup, in particular

“Have a co-founder. Ideally, you should have high overlap in your view of the world, and only partial overlap in your skill sets.”
Jim Manzi in “How to Succeed in Business by Really, Really Trying.”

I think technology startups require so many distinct skills that it’s difficult for one person to have enough critical experience to be able to persevere. Shared values and distinct skills would be my shorter phrasing for his recipe.

“Seek blue water. Do something innovative enough that nobody else is even trying. This is the best way to get around scale advantages that others have over you. Since you don’t know what you’re doing yet, it’s better if nobody else does either.”
Jim Manzi in “How to Succeed in Business by Really, Really Trying.”

One of the best ways to do this is find two or three people with distinct knowledge or expertise where the combination is novel. I think it’s often less a matter of new inventions or discoveries and more about unique or novel combinations or applications of diverse and seeming unrelated knowledge and technology.

“Always assume an average amount of luck in the long-run, and terrible luck in the short-run.”
Jim Manzi in “How to Succeed in Business by Really, Really Trying.”

Don’t be too pessimistic or you will end up wearing a belt, suspenders, duct tape, and a wetsuit to hold your pants up. But nothing new ever works so assume it will take a few tries to get a novel combination to a basic level of usefulness. Over the long run it helps to hope for average and prepare for the worst

Focus on Delivering Value

“Focus on delivering value to customers at a foreseeable profit.”
Jim Manzi in “How to Succeed in Business by Really, Really Trying.”

I think this is probably the core piece of advice. Understand who is going to pay you, why, and how much.

“Treat revenue and (especially) profit are the best possible feedback on your ideas.”
Jim Manzi in “How to Succeed in Business by Really, Really Trying.”

Of all the forms of encouragement that an entrepreneur can take advantage of, a customer’s check is irreplaceable. It’s also proof you are delivering value.

“Cash flow break-even is the most important milestone your company will ever achieve.”
Jim Manzi in “How to Succeed in Business by Really, Really Trying.”

I think this  is the watershed event in the life of a startup, not the first order or getting an investment but getting to break-even. Once this happens you have an infinite runway for experiments to scale up, before then it’s only a matter of time until you have to reconsider. Break-even normally requires focus on a niche unless you are very fortunate.

Related Posts

• Entrepreneurs Focus On Customers Not Startup Mechanics
• Few Against Many Requires Focus and Perseverance
• Startup Stages: Survive, Explore, Focus, Refine, Grow
• Corinne Roosevelt Robinson: Focus for Effect But Look Beyond Your Own Special Interests