Company of One: Why Staying Small Is the Next Big Thing for Business (2018-2019) PDF

[]{#brandPage.xhtml} ::: {#brandPage.xhtml#sec-brandpage001.section type="frontmatter"} ::: []{#title.xhtml} []{#nav.xhtml} Contents {#nav.xhtml#contents.EB04MainHead} -------- 1. [[*Cover*](xhtml/cover.xhtml)]{#nav.xhtml#cover} 2. [[*Title Page*](xhtml/title.xhtml#tit001)]{#nav.xhtml#wis0001...

[]{#brandPage.xhtml} ::: {#brandPage.xhtml#sec-brandpage001.section type="frontmatter"} ::: []{#title.xhtml} []{#nav.xhtml} Contents {#nav.xhtml#contents.EB04MainHead} -------- 1. [[*Cover*](xhtml/cover.xhtml)]{#nav.xhtml#cover} 2. [[*Title Page*](xhtml/title.xhtml#tit001)]{#nav.xhtml#wis0001700} 3. [[*About the Author*](xhtml/abouttheauthor.xhtml)]{#nav.xhtml#wis0001701} 4. [[*Dedication*](xhtml/dedication.xhtml)]{#nav.xhtml#wis0001701a} 5. [[*Prologue*](xhtml/prologue.xhtml)]{#nav.xhtml#wis0001701b} 6. [[[PART I: BEGIN]{.strong}](xhtml/part001.xhtml)]{#nav.xhtml#com0001103} 1. [[1. Defining a Company of One](xhtml/chapter001.xhtml)]{#nav.xhtml#com0001105} 2. [[2. Staying Small as an End Goal](xhtml/chapter002.xhtml)]{#nav.xhtml#com0001107} 3. [[3. What's Required to Lead](xhtml/chapter003.xhtml)]{#nav.xhtml#com0001109} 4. [[4. Growing a Company That Doesn't Grow](xhtml/chapter004.xhtml)]{#nav.xhtml#com0001111} 7. [[[PART II: DEFINE]{.strong}](xhtml/part002.xhtml)]{#nav.xhtml#com0001113} 1. [[5. Determining the Right Mind-Set](xhtml/chapter005.xhtml)]{#nav.xhtml#com0001116} 2. [[6. Personality Matters](xhtml/chapter006.xhtml)]{#nav.xhtml#com0001118} 3. [[7. The One Customer](xhtml/chapter007.xhtml)]{#nav.xhtml#com0001120} 4. [[8. Scalable Systems](xhtml/chapter008.xhtml)]{#nav.xhtml#com0001122} 5. [[9. Teach Everything You Know](xhtml/chapter009.xhtml)]{#nav.xhtml#com0001124} 8. [[[PART III: MAINTAIN]{.strong}](xhtml/part003.xhtml)]{#nav.xhtml#com0001126} 1. [[10. Properly Utilizing Trust and Scale](xhtml/chapter010.xhtml)]{#nav.xhtml#com0001128} 2. [[11. Launching and Iterating in Tiny Steps](xhtml/chapter011.xhtml)]{#nav.xhtml#com0001130} 3. [[12. The Hidden Value of Relationships](xhtml/chapter012.xhtml)]{#nav.xhtml#com0001132} 4. [[13. Starting a Company of One---My Story](xhtml/chapter013.xhtml)]{#nav.xhtml#com0001134} 9. [[*Afterword: Never Grow Up*](xhtml/afterword.xhtml)]{#nav.xhtml#com0000966} 10. [[*Notes*](xhtml/prologue_notes.xhtml)]{#nav.xhtml#com0000966a} 11. [[*Acknowledgments*](xhtml/acknowledgements.xhtml)]{#nav.xhtml#com0000966b} 12. [[*Follow Penguin*](xhtml/endpage.xhtml)]{#nav.xhtml#endpage} 13. [[*Copyright Page*](xhtml/copyright.xhtml)]{#nav.xhtml#copyright} 1. [[iii](xhtml/title.xhtml#pgiii)]{#nav.xhtml#pgiii} 2. [[iv](xhtml/copyright.xhtml#pgiv)]{#nav.xhtml#pgiv} 3. [[v](xhtml/dedication.xhtml#pgv)]{#nav.xhtml#pgv} 4. [[vii](xhtml/epigraph.xhtml#pgvii)]{#nav.xhtml#pgvii} 5. [[xi](xhtml/prologue.xhtml#pgxi)]{#nav.xhtml#pgxi} 6. [[xii](xhtml/prologue.xhtml#pgxii)]{#nav.xhtml#pgxii} 7. [[xiii](xhtml/prologue.xhtml#pgxiii)]{#nav.xhtml#pgxiii} 8. [[xiv](xhtml/prologue.xhtml#pgxiv)]{#nav.xhtml#pgxiv} 9. [[xv](xhtml/prologue.xhtml#pgxv)]{#nav.xhtml#pgxv} 10. [[xvi](xhtml/prologue.xhtml#pgxvi)]{#nav.xhtml#pgxvi} 11. [(xhtml/part001.xhtml#pg1)]{#nav.xhtml#pg1} 12. 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[(xhtml/chapter011_notes.xhtml#pg237)]{#nav.xhtml#pg237} 240. [(xhtml/chapter012_notes.xhtml#pg238)]{#nav.xhtml#pg238} 1. [[Cover](xhtml/cover.xhtml)]{#nav.xhtml#tho0002614} 2. ::: {#nav.xhtml#tho0002615} ::: 3. [[Begin Reading](xhtml/brandPage.xhtml#sec-brandpage001)]{#nav.xhtml#tho0002616} []{#abouttheauthor.xhtml} ::: {#abouttheauthor.xhtml#sec-abouttheauthor.section type="frontmatter"} ##### []{#abouttheauthor.xhtml#pii type="pagebreak"}ABOUT THE AUTHOR {#abouttheauthor.xhtml#tit000014.EB07SmallCapsMediumHead} Beginning as a corporate web designer and internet consultant, Paul Jarvis first spent years working with top professional athletes like Warren Sapp, Steve Nash and Shaquille O'Neal with their online presence, and with large companies like Yahoo, Microsoft, Mercedes-Benz and Warner Music. He then migrated to working with online entrepreneurs such as Marie Forleo, Danielle LaPorte and Kris Carr to help build their online brands. These days, Paul Jarvis spends his time writing, creating software, podcasting and teaching online courses with his own company of one, which is called Mighty Small Ventures. His writing and ideas have been featured around the internet in places like *Wired*, *Fast Company*, *USA Today*, *Vice News*, and by MailChimp and Adobe. When not working, Paul enjoys gardening, driving fast cars, sarcasm and hiking. He lives on an island off the coast of British Columbia with his wife Lisa. Paul writes a weekly newsletter called *The Sunday Dispatches,* where he shares his latest writing and ideas. It's free and you can sign up at www.pjrvs.com/signup/. You can also find him on Twitter \@pjrvs. To learn more about how to start your own company of one, join the Co1 community, listen to the Companies of One podcast, and get other free resources related to the book, visit the website: www.ofone.co. ::: []{#praise.xhtml} ::: {#praise.xhtml#sec-praise.section type="frontmatter"} ##### COMPANY OF ONE {#praise.xhtml#tit000004.EB07SmallCapsMediumHead} 'Growth has been hacked to simply mean "more". More revenue, more customers, more employees, more products, more, more, more. That's a tragically myopic view of growth. Paul Jarvis will help you open your eyes to a broader, wiser definition of growth. One of learning, one of betterment, one of contentment. There's never been a more opportune time to launch or run companies that embrace having and being "enough". The most important ingredient is a new world view. *Company of One* can give you just that' David Heinemeier Hansson, creator of Ruby on Rails and founder of Basecamp 'Your business can thrive with less! *Company of One* is a riveting, lucidly written guide to run a successful minimalist business' Joshua Fields Millburn, host of *The Minimalists* podcast 'The default equation of more = better in business isn't working any more. If you want to build something that matters, make a difference for your family and the world, and actually enjoy what you do, *Company of One* offers the inspiration and step-by-step actions that will change the way you do business, and the way you do life' Courtney Carver, bestselling author of *Soulful Simplicity* 'Paul Jarvis beautifully illustrates that "Small is the new big". It's true. It's not about how many employees you have (or how many customers you serve). It is about "who" you are working with. This is a revolutionary idea for our times: build your business based on *your* values. There's nothing small about that. This book is a treasure' Mitch Joel, founder, Six Pixels Group, and author of *Six Pixels of Separation* and *Ctrl Alt Delete* 'Ever since starting MailChimp eighteen years ago, I've always been told that my way was wrong. My way has never been to "be big". My way was always to "be useful". My company has become a global brand with millions of customers, over \$525 million in annual revenue and almost 1,000 employees united by a single mission to empower companies of one. Go figure. There's not one, right way. Only your way. Paul's book can help you find your way' Ben Chestnut, CEO and founder of MailChimp '*Company of One* will give you invaluable insights to focus on the purposeful, interesting and impactful work you *actually* love doing, right alongside permission to stop blindly chasing growth by defining success on your own terms. This book is great for freelancers, side-hustlers and small-business owners who are looking to bring autonomy, self-reliance and creativity to their work without becoming total workaholics' Kathleen Shannon and Emily Thompson, authors/hosts of *Being Boss* 'Paul Jarvis is the savviest sole proprietor I know. This book is a permission slip to reject tired corporate business advice in favour of a smaller, slower, more personal approach. Amen' Jocelyn K. Glei, host of *Hurry Slowly* 'A bright, useful entry in the small-is-beautiful genre' *Kirkus Reviews* 'You are not alone with *Company of One.* If, like so many others, you're setting out to take on the world by yourself, then welcome to the best company there is, your own' Sam Conniff Allende, author of *Be More Pirate* '*Company of One* is the next frontier for less is more' Richard Koch, bestselling author of *The 80/20 Principle* and *Simplify* ::: []{#dedication.xhtml} ::: {#dedication.xhtml#sec-dedication001.section type="dedication"} []{#dedication.xhtml#pgv type="pagebreak"}*For Luna* ::: []{#epigraph.xhtml} ::: {#epigraph.xhtml#sec-epigraph001.section type="epigraph"} ::: {#epigraph.xhtml#the00001.block} []{#epigraph.xhtml#pgvii type="pagebreak"}There's no such thing as perpetual growth. Yet that's what traditional business people crave. But what is growth meant to achieve? If Oxford University is so successful, then why isn't there a branch in Washington, D.C.? If a symphony is successful with 120 musicians, why not even more so with 600? "To grow bigger" is not much of an effective business strategy at all. [ --- RICARDO SEMLER, CEO OF SEMCO PARTNERS]{.small_caps} ::: ::: []{#prologue.xhtml} ::: {#prologue.xhtml#sec-prologue_001.section type="prologue"} {#liq00002} []{#prologue.xhtml#pgxi type="pagebreak"}Prologue {#prologue.xhtml#com0000970.brandingHead} ------------------------------------------------- On February 28, 2010 --- the final day of the Winter Olympics in Vancouver --- I found myself driving a tiny cube-van with my wife, Lisa, heading to a ferry terminal. We had just closed on the sale of our condo, a small glass box in the sky located right in the heart of downtown Vancouver. We had also sold or donated almost all of our possessions, and we were moving to a town in the middle of nowhere, literally at the end of the road on Vancouver Island. Our new town --- Tofino --- was proudly billed as "life on the edge." As in truly the edge of nowhere. This island is the setting for the reality TV show *Alone,* where the actors grapple with living and surviving in complete isolation; it's filmed a few hours north of town. Fewer than 2,000 people live in Tofino --- mostly surfers, old draft dodgers, and other assorted hippies who are still very happy living in the twentieth century. At the time --- before, after, and even during the move --- I was working entirely online as a designer and online business consultant to everyone from Mercedes-Benz to Microsoft to Marie Forleo. My work and life depended on being hyperconnected. But now I was trading all of that for a town with zero other people involved in tech and, even worse, a really awful internet connection. In short, for someone like myself who was coming from the []{#prologue.xhtml#pgxii type="pagebreak"}tech world, this move was going to be a *bit* of a massive adjustment. The main reason I was hell-bent on leaving civilization was that I had simply had enough of "business as usual" city life and the constant push from others to grow my successful business into something bigger. My wife, Lisa, too, was sick of her daily career demands. We were both done with the constant stimulus and stress of our urban existence --- the lights, sounds, and distractions, the constant and incessant "buzzing." To save our sanity, we made our escape as quickly as we possibly could. And living on Vancouver Island seemed like the perfect tonic. Yet we soon learned that living in the woods on an island does something funny --- it forces you to go deep within your own thoughts. There's not a whole lot else you can do, especially if you don't have a television or even Netflix. And at first, exploring your own thoughts is one of the scariest things in the world. (A study at the University of Virginia by Timothy Wilson found that [people would rather get electric shocks](prologue_notes.xhtml#pro_en1){#prologue.xhtml#pro-en1} than simply be alone with their thoughts.) But then again, if you sit with your thoughts for a while, they can reveal some mind-set-changing ideas. But scaling down wasn't just a plan for getting rid of our physical belongings; it was also a plan for achieving mental clarity. In creating a personal life that was bare of all but the essentials, parallels to my work started to become evident --- what was truly necessary and what wasn't. By decluttering my thoughts (creating an "inbox zero" for my brain, if you will), I was able to look at my day-to-day business much more clearly because the distractions were now gone. I hadn't been able to clearly express my reasons for the way I had been working until that moment. This clarity highlighted something I had unconsciously been doing for nearly twenty years, even before going out on my own, and that was building a business full of resilience, driven by a desire for autonomy and, on most days, enjoyment. In other words, []{#prologue.xhtml#pgxiii type="pagebreak"}by scaling down every aspect of my life, I realized this was how I had successfully built my business all along. I had benefited immensely by resisting the typical avenues of growth and business expansion. (Hey, I was able to move to the woods on an island.) And now, for the very first time, I understood why. I had been building a company of one. ##### INTRODUCING A COMPANY OF ONE {#prologue.xhtml#com0000980.EB07SmallCapsMediumHead} At first, I felt alone in my assumption that more isn't always better. But then, during the writing of this book, I found that there is an amassing army of others who feel very much the same, and whose business decisions are backed up with growing research and studies. It turns out that some of the most successful brand-name companies and individuals are companies of one at heart. Living in Tofino gave me the opportunity to take up a daily ritual of going for a morning surf. One day I was out in the lineup (the place just in front of the breaking waves where surfers wait to catch rides) with my accountant friend. We were sitting out there, waiting for the next decent wave, and he turned to me and said, "I'm stoked! I've just about made enough to take the rest of the year off to go rock climbing." It was August. Puzzled by what he said, I missed the next few waves that rolled by. Once he paddled back to the lineup, where I still was, he explained that he had calculated what he needed to make in profit in order to cover his cost of living and put a decent amount of money into investments. He had figured out the amount of wealth he needed to be comfortable and didn't feel the need to accumulate more. Past that, he didn't need any more money --- so he'd stop working when he hit his "enough" amount and travel for the rest of the year. He didn't want to grow his accounting business into a bigger company with employees and offices in every city. If he did, his "enough" number would also grow, from having to manage more []{#prologue.xhtml#pgxiv type="pagebreak"}employees and a bigger business. He wouldn't be able to spend as much time rock climbing (or surfing). His focus in his business was being better, not growing bigger. I quickly began to realize that I had adopted a similar mind-set: I knew what I needed to make to cover my business and my life, so I could decide to slow down when I reached "enough" as well. It's assumed that hard work and smart thinking always result in business growth. But the opposite is often true: not all growth is beneficial, and some growth can actually reduce your resilience and your autonomy. Just as I learned new skills in self-sufficiency that were far outside my realm of knowledge, companies of one can do the same. Indeed, they'll need to in order to stand out and thrive. In truth, embracing growth appears to be the easier route more often than not, since it's easier to throw "more" at any problem that might pop up. Want more customers? *Hire more employees.* Need more revenue? *Spend more.* Fielding more support requests? *Build a bigger support team.* But scaling up might not be the best or smartest solution to the basic problem. As a means to generating higher profits, what if you acquired more customers simply by creating more efficiency, so you didn't have to hire more people? What if you generated more revenue by finding a way to spend less (again, for higher profits)? What if you responded to the growth in support requests by finding a better way to teach your customers how to use what you sell, so they didn't have to ask questions as often? What if you didn't have to work more hours to finish a project but just more efficiently, so you could then enjoy more of your life away from work? Growth, in the typical business sense, isn't always a smart strategy if it's followed blindly. Much of the research reported in this book will strongly suggest that blind growth is the main []{#prologue.xhtml#pgxv type="pagebreak"}cause of business problems. It can leave you with an unmaintainable number of employees, unsustainable costs, and more work than hours in a day. It can force you to lay off employees, sell your company at a less than optimal price, or, even worse, close up shop completely. What if you worked instead toward growing smaller, smarter, more efficient, and more resilient? Staying small doesn't have to be a stepping-stone to something else, or the result of a business failure --- rather, it can be an end goal or a smart long-term strategy. The point of being a company of one is to become better in ways that don't incur the typical setbacks of growth. You can scale up revenue, enjoyment, raving fans, focus, autonomy, and experiences while resisting the urge to blindly scale up employee payroll, expenses, and stress levels. This approach builds both a profit buffer for your company to weather markets and a personal buffer to help you thrive even in times of hardship. The "company of one" approach doesn't apply only to a single-person business --- it's a model for using the power of you to be more self-reliant and more responsible for your own career path. Although a company of one can certainly be a small or single-person business, it's unlike most small businesses, whose end game is usually expansion or growth to hit peak profitability. A company of one questions growth and stays small on purpose. A company of one isn't simply a practicing freelancer either. While freelancing is a perfect first step to becoming a company of one, freelancers are different because they exchange time for money. Whether they're getting paid by the hour or by deliverables, if they're not working, they're not getting paid. All of a freelancer's relationships are one-to-one, meaning that each time paid work occurs, a freelancer has to do something and use his or her time. In contrast, a company of one is more in line with the traditional []{#prologue.xhtml#pgxvi type="pagebreak"}definition of an entrepreneur. If you're utilizing systems, automations, and processes to build a long-term business, you're not trading time for money, but instead operating and profiting outside of the time you spend working and beyond your one-to-one relationships. For example, whether you're creating physical products, selling software, or teaching online courses, customers and users can purchase and consume these products and services without your company of one putting in time for each transaction. While developing products can be time-consuming and iterative, the number of customers can be almost infinite for a company of one, and profit then happens outside of time spent. Where a company of one is concerned, as we'll see in coming chapters, scaling customers and even profit doesn't always require scaling employees or resources exponentially. A company of one is a collective mind-set and model that can be used by anyone, from a small business owner to a corporate leader, to take ownership and responsibility for what they do to become a valuable asset in any marketplace --- in terms of both mental practices and business applications. It's a blueprint for growing a lean and agile business that can survive every type of economic climate, and ultimately it leads to a richer and more meaningful life --- no cable-cutting or moving to the woods on an island required. Just as Michael Pollan's food ideology is summarized in three simple rules --- "eat food, not too much, mostly plants" --- the "company of one" model can be laid out in a similar fashion: "start small, define growth, and keep learning." ::: []{#part001.xhtml} ::: {#part001.xhtml#sec-part001.section type="part"} []{#part001.xhtml#pg1 type="pagebreak"}Part I {#part001.xhtml#com0000996.brandingPartNum} --------------------------------------------- ------------------------------------------------------------------------ ### BEGIN {#part001.xhtml#com0000997.EB04SmallCapsMainHead} ::: []{#chapter001.xhtml} []{#chapter001.xhtml#pg3 type="pagebreak"}1 {#chapter001.xhtml#com0000998.EB04MainHeadClosedNum} ------------------------------------------- Defining a Company of One {#chapter001.xhtml#com0000999.EB04MainHeadClosedTitle} ------------------------- In the fall of 2010, Tom Fishburne quit his seemingly great career as the vice president of marketing at a large consumer foods company. He wanted to draw cartoons. This turned out to be Tom's best career move --- both emotionally and, surprisingly, financially. He wasn't just following his passion on a whim, nor did he become some sort of anti-capitalist hippie. He carefully planned out and executed his decision to ensure, as much as anyone could, that he would thrive. As a child, Tom was obsessed with drawing cartoons --- so much so that he would take his doctor father's prescription pad and draw flip-books on the back. Then, at Harvard, while working toward his MBA, his friends prompted him to submit cartoons to the campus paper, the *Harbus,* which he did for the rest of the time he was at school. Still, once finished with school, he took a job in the corporate world, because it seemed like the logical next step after receiving a business degree. Tom was also part of the SITCOM demographic (Single Income Two Children Oppressive Mortgage), so he figured he needed a "stable" job. Cartooning remained a hobby, however, and he would share with coworkers his cartoons poking fun at corporate marketing --- the very industry he was now part of. []{#chapter001.xhtml#pg4 type="pagebreak"}As Tom worked his corporate job and his cartoons were shared by his friends, and then by their friends, and then outside their circle, they started to garner attention. He began taking on side jobs to draw during the evenings and weekends for companies that were eager to pay him. It wasn't until he had a safe runway of such clients lined up, and money saved up, that he pulled the trigger to leave his corporate career and start his own venture. In the seven years since quitting, Tom has made two to three times more income as a cartoonist than when he was an executive. This didn't happen because he grew an agency, or hired more employees, or expanded to having satellite offices around the globe. His company, Marketoon, is still just he and his wife, along with a few freelancers who work only on isolated projects. Tom and his wife work from home, in a sunny studio in their backyard in Marin County, California, where their two daughters regularly sit and draw cartoons in the afternoon with them. Traditionally in business, growth has always been seen as a by-product of success. But Tom doesn't care much for how things are supposed to work. He knows the rules of business --- he studied at one of the top schools in the world, then put that knowledge to work at a massive corporation. He just wasn't interested in following those conventional rules. Typically, when a company does well, it hires more people, builds more infrastructure, and works at increasing its bottom line. There's a core assumption that growth is always good, is always unlimited, and is required for success. Anything else is pushed aside as not being a top priority. If Tom had grown his company, even though he has a waiting list of clients wanting to hire him, he'd have less time to draw cartoons (as he'd be too []{#chapter001.xhtml#pg5 type="pagebreak"}busy managing cartoonists) and would have far less time with his family in their backyard studio. For Tom, that kind of growth wouldn't be smart or logical. It would go against what he values in his life and in his career. Consumer culture says the same thing --- that more is always better. Through advertising, we're sold a bill of goods that requires us to love the things we buy only until a newer or bigger version is put out for sale. Bigger houses, faster cars, more stuff to pack into our closets, garages, and then, inevitably, our storage lockers. But under this hype, this fetishization of wanting more, are empty promises of happiness and fulfillment that never seem to come to fruition. Sometimes "enough" or even less is all we need, since "more" too often equates to more stress, more problems, and more responsibilities in both life and business. We can easily run a business with less, although to many people that seems counterintuitive. Tom doesn't have to worry about human resources, rent for office space, salaries, or even the responsibility of managing employees. He hires outside people only when a paying project requires them, and they too have other clients and other work; they can fend for themselves when they're not working on a job for Marketoon. Tom has been able to create a stable, long-term business that's small enough to handle any economic climate, resilient enough to not have to lean too heavily on a single project or client, and autonomous enough to let him build a life around his work (not the other way around). He's been able to grow his revenue without having to also grow the trappings that typically come with it. He's a brilliant businessperson who gets to spend every day with his family, drawing cartoons, with his daughters, for multinational companies that pay him much more than most illustrators earn. In short, Tom is the perfect example of a company of one. ##### []{#chapter001.xhtml#pg6 type="pagebreak"}A COMPANY OF ONE, DEFINED {#chapter001.xhtml#com0001013.EB07SmallCapsMediumHead} A company of one is simply a business that *questions* growth. A company of one resists and questions some forms of traditional growth, not on principle, but because growth isn't always the most beneficial or financially viable move. It can be a small business owner or a small group of founders. Employees, executive leaders, board members, and corporate leaders who want to work with more autonomy and self-sufficiency can adopt the principles of a company of one as well. In fact, if big businesses want to keep their brightest minds in their employ, they should look to adopt some of the principles of companies of one. I've personally seen the most success in my life when I've figured out solutions to problems without having to do what traditional businesses do to solve problems --- hire more people, throw more money at the problem, or build complex infrastructures to support the extra employees. Basically, I'm not interested in addressing problems by throwing "more" at them. Solving with "more" means more complexity, more costs, more responsibilities, and typically more expenses. More is generally the easiest answer, but not the smartest. I've found both delight and financial benefits in working out solutions to problems without growing. Instead, I and many others enjoy handling problems with the resources currently available. Although it can require a little more ingenuity, solving problems this way can set a business up for long-term stability, since less is needed to keep it afloat. In October 2016, I wrote a blog post saying I wasn't interested in exponentially growing any company I own or build. I felt like the single red fish in a school of green ones. But then an interesting thing happened: replies started to pour in. People doing all sorts of exciting things in business, from selling fair-trade []{#chapter001.xhtml#pg7 type="pagebreak"}caramels to working at the biggest tech companies to manufacturing clothing, emailed me that they felt the same way --- they had resisted traditional growth and had benefited from it. As I started to develop my own ideas around this concept of staying small and questioning growth, I continued to discover more and more research, stories, and examples of others doing the same. I found that there's a silent movement to approach business in this way that isn't just for cash-strapped tech startups or people who make just enough to scrape by. This movement includes individuals and businesses making six and seven figures and becoming happier than most businesspeople are with the work they do. The school of red fish is, ironically enough, growing. ##### THE RISE OF COMPANIES OF ONE {#chapter001.xhtml#com0001018.EB07SmallCapsMediumHead} Technically, everyone should be a company of one. Even at a large corporation, you're essentially the only person who looks out for your own best interests and continued employment. No one else cares about you keeping your job as much as you do. It's your responsibility to define and achieve your own success, even in a larger framework of employment. It can be harder to be a company of one within a corporation, but it's not impossible. Companies of one within organizations can thrive and even be responsible for massive progress. Over the years these individuals have been credited with everything from inventing Post-it notes to developing Sony's PlayStation. [The word "intrapreneur"](chapter001_notes.xhtml#ch_en1){#chapter001.xhtml#ch-en1} points to one example of a company of one within a larger organization. It describes corporate leaders who come up with their own goals and then execute them. They don't need much direction, micromanaging, or oversight, as they've been given full work autonomy. They know what needs doing and they just do it. They're aware of the needs of the company and how their talents fit, and they just get to work. []{#chapter001.xhtml#pg8 type="pagebreak"}Where the term "intrapreneur" varies from a company of one is that intrapreneurs are typically responsible for product creation and marketing --- that is, creating something new, with the resources of the company behind them. Companies of one within organizations don't need to be managers or create products --- they simply need to find suitable ways to become better and more productive, without more resources or team members. They can certainly be managers or product creators, but that's not the only definition. Companies of one within larger corporations have a history of helping large corporations make breakthroughs and dominate markets. Dave Myers, who worked for W. L. Gore and Associates, the company that makes GoreTex fabric, was given "dabble" time to develop new ideas within the company and ultimately came up with the idea to use a kind of coating they were already manufacturing on guitar strings. The result was the best-selling acoustic guitar string brand, Elixir (the strings I use on my guitars --- they're head and shoulders above the competition). Sometimes companies of one happen by accident. Dr. Spencer Silver, a scientist at 3M, was working to create an adhesive for aerospace. In playing with the formula, he created a lighter adhesive that didn't leave any residue. It wouldn't work for planes, but it was perfect for paper products, and thus Post-it notes were born. Some large corporations, like Google, give their employees "personal time" to experiment with ideas outside their typical job roles. Facebook uses "hackathons," which typically last several days and bring together computer programmers to collaborate on something big in a relatively short amount of time. It was a hackathon that led to the creation of Facebook's "Like" button, which arguably connects its ecosystem to the rest of the internet. [In a recent study](chapter001_notes.xhtml#ch_en2){#chapter001.xhtml#ch-en2}, Vijay Govindarajan, a professor at Dartmouth, found that for every 5,000 employees, at least 250 will []{#chapter001.xhtml#pg9 type="pagebreak"}be true innovators and 25 will be innovators and great intrapreneurs (or companies of one) as well. Many large corporations have companies of one hiding within them. If the skills and passion for innovation and autonomy of these employees are fostered, it can greatly benefit the entire business as a whole. But if they are stifled in their creativeness and freethinking, they tend to move on quickly to other employment or entrepreneurialism. They're rarely motivated solely by money or salaries and lean more toward reinventing their job and role in a way that works best for them. If you're a company of one, your mind-set is to build your business around *your* life, not the other way around. For me, being a company of one means not having to bother with infinite growth, since that was never the purpose of my working. Instead, I just focus on maximizing work in a way that works for me, which can sometimes mean doing less. Work can be done at a pace that suits my sanity rather than one that supports costly overhead, expenses, or salaries. As much as I enjoy growing my wealth, I also realize that there's a point of diminishing returns if I don't also take care of myself and my well-being. Society has ingrained in us a very particular idea of what success in business looks like. You work as many hours as possible, and when your business starts to do well, you scale everything up in every direction. To this day, this strategy is considered what it takes to be a success in business --- solving problems by adding "more" to the solution. Anyone who stays small, in this line of thinking, hasn't done well enough to add "more" to the mix. But what if we challenge this way of thinking in business? What if staying small is what a company does when it's figured out how to solve problems without adding "more" to them? Growth, especially blind growth, isn't the best solution to any problem a business might face. And going further, growing your []{#chapter001.xhtml#pg10 type="pagebreak"}business might actually be the worst decision you could make for the longevity of your business. So a company of one is not anti-growth, or anti-revenue, and it's not just a one-person business either (although it certainly can be). It's also not just working with a tech-focused or startup mind-set, although leaning on technology, automation, and the connectedness of the internet definitely makes it easier to be a company of one. A company of one questions growth first, and then resists it if there's a better, smarter way forward. Next, let's look at the four typical traits of all companies of one: resilience, autonomy, speed, and simplicity. #### Resilience {#chapter001.xhtml#com0001033.EB11SmallItalicHead1} Danielle LaPorte, a best-selling author and self-made entrepreneur, reaches millions of people each month with her message of conscious goal-setting and entrepreneurship and is one of Oprah's (yes, *that* Oprah) "Super Soul 100" leaders. But in the beginning, she was fired by the very CEO she had hired months earlier. In believing that exponential growth was required for her business (more on this in [Chapter 2](#chapter002.xhtml)), she took \$400,000 in funding from private investors with the provision that she had to hire a "*wunderkind* CEO" to run the business. So she incorporated and hired a thought-to-be superstar. But six months later, the investors and CEO wanted to change the business model, which meant relegating Danielle's role to just a few blog posts a month and substantially decreasing her pay. Note: named after her, the business was a personality-driven brand based on her own unique personality and style. Once Danielle got over the supreme shock of what happened, which involved a lot of yoga, tears, and good friends, she began to bounce back. She brought on a new team of A-players, created a website within a few weeks, and figured out the fastest way to start making money on her own with a new business that she had []{#chapter001.xhtml#pg11 type="pagebreak"}full control over. She began offering consulting services that became so popular that she had to create a waiting list, and then she wrote a best-selling book. In all the success of her new website, she realized that the strings attached to other people's money are often those other people's opinions about your business and your life. In hardship, she was able to find her path to becoming a company of one. Being or becoming a company of one has a lot to do with resilience: the capacity and fortitude to recover quickly from difficulties --- like a changing job market, or being fired. Like a shift in a larger company's focus, or the need to adapt to new disruptive technology --- or even to avoid being replaced by robots. (No, this book isn't a taking a turn toward sci-fi... more on this in a second.) Dean Becker, the CEO of Adaptiv Learning Systems, has been researching and developing programs around the idea of resilience since 1997. His company found that the level of resilience a person exhibits determines their success in business, far more than their level of education, training, or experience. Contrary to popular belief, resilience isn't something that only a select few are born with. It can most definitely be learned. Resilient people possess three --- absolutely learnable --- characteristics. The first trait that resilient people have is *an acceptance of reality.* They don't need for things to be a certain way and don't engage in wishful thinking. Instead of imagining "if only this changed, I could thrive," they have a down-to-earth view that most of what happens in our lives is not entirely within our control and the best we can do is to steer the boat a little as we float down the river of life. For example, I'm not going to stop writing today because my neighbor is using his deafening chainsaw. Rather, I'm just going to close my window, turn on some electronic music, and get back to work. Danielle LaPorte didn't throw in the towel after being fired; instead, she took a minute, regrouped, then started again. []{#chapter001.xhtml#pg12 type="pagebreak"}Often, it's easier to accept reality with a bit of dark humor. My wife, a firefighter and first responder, regularly jokes around with her department because they're routinely exposed to the worst day of someone's life --- houses burning down, heart attacks, even chainsaw accidents. Their humor is a way of coping that her fire chief actively encourages, not to make light of bad situations, but to *add* a sense of light to bad situations. Their sense of humor is just as important as their ability to save lives and put out fires. However crass it might sound to an outsider, dark humor helps first responders and firefighters accept their reality and therefore keeps them resilient in doing their essential work. The second characteristic of resilient people is a sense of *purpose* --- being motivated by a sense of meaning rather than by just money. Although purpose and money are not mutually exclusive, you're more likely to be resilient when you know that even in awful or stressful situations, you're working toward a greater and larger good. This sense of purpose comes from values that are unchangeable and central to both individuals and companies as a whole. Companies of one know that they can enjoy their work without always enjoying every aspect of it. So, even if work is sometimes stressful, as long as it relates to a greater whole or a greater end result, that tough work is worth it in the end. For example, you may get stressed out on the day you launch a new product or land a new client, but if the product or the client aligns with the purpose of your business, that momentary anxiety is worth it, since not every day will be nearly as stressful. The last trait of resilient people in a company of one is *the ability to adapt* when things change --- because they invariably do. In Canada, [42 percent of jobs are at risk](chapter001_notes.xhtml#ch_en3){#chapter001.xhtml#ch-en3}, according to Ryerson University, from advances in automation, and 62 percent of jobs in America will be in danger within the next ten to twenty years, according to the White House's Council of Economic Advisers in 2016. As much as we can joke about "welcoming our robot overlords" []{#chapter001.xhtml#pg13 type="pagebreak"}(a memorable quote from the 1977 film adaptation of H. G. Wells's short story "Empire of the Ants"), the threat is real. McDonald's has a robot that can flip a burger in ten seconds and could replace an entire crew within a few years. Tesla and other companies are working on self-driving big rigs to replace truckers for long-range cargo delivery. Highly skilled jobs are also at risk: IBM's Watson, for instance, can suggest available treatments for specific ailments, drawing on the body of medical research and data on disease. However, what's difficult to automate is exactly what makes a company of one great: the ability to creatively solve problems in new and unique ways without throwing "more" at the problem. Whereas workers in "doing" roles can be replaced by robots or even by other workers, the role of creatively solving difficult problems is more dependent on an irreplaceable individual. Regardless of the rise of the so-called robot overlords, this is where the strength of a company of one lies. A company of one sees coming shifts like the above and can pivot. For example, an interior designer may spend less time measuring and ordering supplies and more time creating innovative design concepts based on a unique client's needs. Or a financial adviser may spend less time analyzing a client's financial situation and more time understanding the client's particular needs and teaching them how best to manage their money. These industry disruptions or market changes aren't a sky-is-falling scenario --- they're truly just opportunities to redefine work and adapt to changes. When I was doing web design full-time, each time an economic bubble burst or a recession hit I found myself in a great place to find more jobs because I could offer the quality of work a larger agency could provide, but at a price that had one less zero in it. And not only was I still making more profit than if I had been salaried at an agency, but I could still make the most of the price I was charging because my overhead []{#chapter001.xhtml#pg14 type="pagebreak"}was almost nothing past having a computer and writing off the second bedroom in a rented condo. And then, when the economy picked back up, agencies were so busy that they had to farm out work, which I was available for. So either way, I had a model for revenue that larger agencies couldn't have replicated without scaling down immensely. Improvising when change happens or when difficulties arise in the market allows you to make do with what's at hand, without having to add "more" into the mix --- as in, more employees, more expenses, or more infrastructure. These traits for resilience are absolutely learnable, not just inherent. In fact, they must be learned, and then fostered, if you are creating a company of one. #### Autonomy and Control {#chapter001.xhtml#com0001049.EB11SmallItalicHead1} Companies of one are becoming more popular because people want more control and autonomy in their lives, especially when it comes to their careers. This is why so many people are choosing this path: being a company of one lets you control your own life and your job. But to achieve autonomy as a company of one, you have to be a master at your core skill set. Competence and autonomy are tied together because the opposite --- having complete control but not a clue what you're doing --- is a recipe for disaster. So just as Tom commanded a knowledge of marketing from his Harvard MBA education and subsequent corporate marketing job, as well as a talent for drawing that he had fostered since childhood and worked at weekly, you have to have a skill set, or a combination of skills, that's in demand. With a well-developed skill set, you'll know what areas will benefit from growth and what potential places for growth don't make sense. Basically, you have to be good at your skill set before you can expect to achieve autonomy from using it. []{#chapter001.xhtml#pg15 type="pagebreak"}Typically, you can't acquire this mastery without putting in some time at the beginning of your career in a job that's less autonomous, offers less control, and requires less resilience, since you're managed by the whims of someone higher up. Companies of one know how to break standard rules for the greater good. Doing so is tricky, however, as it involves learning the rules first. In the beginning, a pre--company of one adopts the mind-set of a sponge --- basically, you learn everything you can about your profession, your industry, and your customers, and you work at collecting valuable skills of your trade. Corporations that excel at creating autonomy for their best employees often empower them to become something like companies of one: these employees work faster and more ingeniously, and they use fewer resources. For example, Google gives its engineers "20 percent time": they can work on whatever project they want for 20 percent of their time. More than half of the products and projects Google releases were created during this 20 percent time. Other companies set up ROWEs (Results-Only Work Environments), in which employees don't have set schedules, all meetings are optional, and it's entirely up to employees how they spend their time working. They can choose to work from home, they can work from 2:00 AM to 6:00 AM if it suits them, and they can sculpt their job however they want, as long as the results benefit the company as a whole. Cali Ressler and Jody Thompson have defined and then studied ROWE implementations for over a decade, and they find that in these kinds of autonomous environments, productivity goes up, [employee satisfaction goes up, and turnover goes down](chapter001_notes.xhtml#ch_en4){#chapter001.xhtml#ch-en4}. For entrepreneurs or those working for themselves, autonomy may seem easier to achieve but can come with several pitfalls. Often when you start working for yourself you trade micromanaging bosses for micromanaging clients. The solution to finding []{#chapter001.xhtml#pg16 type="pagebreak"}better clients and better projects has a lot to do with your skill and experience, just as I mentioned at the start of this section. When you're starting out and your skills aren't as developed, you won't be able to lead projects or be too picky about the type of work you do. But as your expertise increases and your network grows, you can land better clients --- the kind who listen more carefully to how you would do what they're paying you to do --- and you can be more selective about the types of customers and projects you want to take on. Kaitlin Maud, a digital strategist and currently a freelancer, put in her time developing her skills at an agency for five years. She spent that time learning the ropes of her industry as well as building a solid network of contacts, with whom she actively kept in touch. Just like Tom the cartoonist, she didn't venture out on her own until she had enough freelance projects to bring in a relatively stable side income. Kaitlin thinks that a sense of autonomy looks different on everyone. She herself has created a work life that rewards her for getting her work done quickly. In a typical company, regardless of how quickly you work, you're still required to be there for a set number of hours a day; in other words, there's no reward for productivity or efficiency. Kaitlin has also found that she's able to get work done with more focus from 9:00 AM to 1:00 PM, so she doesn't schedule meetings or calls during that window of time. According to a study from Upwork, freelancing now accounts for [more than one-third of jobs in America](chapter001_notes.xhtml#ch_en5){#chapter001.xhtml#ch-en5}. Like Kaitlin, people are increasingly *choosing* to go freelance --- that is, they're not using freelance work as a fallback because their job disappeared. Freelancing makes up almost half the jobs being done by younger people, who are choosing to freelance in hopes of gaining more control over their career path. As a society, we're gradually starting to view "work" not as a single place of employment, but as a series of engagements or projects. The millennial generation in []{#chapter001.xhtml#pg17 type="pagebreak"}particular views the traditional aspiration to a corporate job in an office as something like a satirical sitcom, à la *The Office,* than something they wish to strive for. With a stable of side project clients and a vast network of contacts in hand, Kaitlin left her agency job and started to freelance full-time. When she started, she first worked at leveling up her skill set before focusing on becoming more autonomous. Since going solo, she's had a steady waiting list, regularly has to turn down projects that are a fit for her values, and has worked with some large companies like Beats by Dre, Taco Bell, Adobe, and Toms. Her work, because she put in the time to become great at it, now revolves around her life. She can focus entirely on the type of work she loves, solving problems with creative solutions online --- basically, Kaitlin is the Olivia Pope (of *Scandal* fame) of the internet. She fixes things that no one else can --- and she's well on her way to becoming her own company of one. Sol Orwell, a fellow Canadian, has refused venture capital for his very profitable business, Examine.com, because he doesn't see an upside in relinquishing control to venture capitalists. He doesn't need cash --- his company makes seven figures per year. He isn't looking for a quick out or trying to sell --- he enjoys his work a great deal. As a majority owner, he doesn't have to answer to anyone except his paying customers. Sol would rather have ownership of his work and the freedom to not have to fill every minute of every day with his job. Success to him means making a great living, but not at the expense of being able to take long midday breaks to walk his dog or attend hourlong dance classes on a Wednesday afternoon. But bear this in mind: achieving control over a company of one requires more than just using the core skill you are hired for. It also requires proficiency at sales, marketing, project management, and client retention. Whereas most normal corporate []{#chapter001.xhtml#pg18 type="pagebreak"}workers can be hyperfocused on a single skill, companies of one, even within a larger business, need to be generalists who are good at several things --- often all at once. #### Speed {#chapter001.xhtml#com0001063.EB11SmallItalicHead1} Companies of one work best under constraints --- because that's where creativity and ingenuity thrive. Companies like Basecamp have a four-day workweek during the summer (no work on Fridays) because it helps them prioritize what's important to work on and what they can let go of. The key for their employees is to figure out how to work smarter to accomplish tasks with the time they've got, not just harder. Companies of one question their systems, processes, and structure to become more efficient and to achieve more with the same number of employees and fewer hours of work. On the company intranet, Basecamp has a "weekend check-in" where employees can post photos of what they did on their three days off from work. This helps this remote-based company build connections between its employees, who are spread all over the globe. Speed is not merely about frantically working faster. It's about figuring out the best way to accomplish a task with new and efficient methods. This is the concept at work in the ROWE method: employees no longer have to work a set amount of time, but are rewarded when they finish their tasks faster. By being smarter at getting more work done faster when you work for yourself, you can create a more flexible schedule that fits work into your life in better ways. Tasks that used to take Kaitlin days to accomplish in the open-office environment of the agency she worked at now take her only a few hours, because she's figured out what needs to be in place to maximize her productivity. This gives her the space in her workday, when she's not at peak productivity, to head to the gym or []{#chapter001.xhtml#pg19 type="pagebreak"}spend time with her newborn daughter. She's able to accomplish eight hours of agency work in four hours of freelance work, freeing up half her day. She still works hard and sometimes has to work much longer as project deadlines loom, but she enjoys the reality that most of the time on her schedule is her own. Another aspect of speed in a company of one is the ability to pivot quickly when a customer base or market changes. As a solo worker or small company, a company of one finds this much easier to do, because it has less infrastructure to cut through. So speed works to the advantage of companies of one not only because they're able to pivot when needed, and far faster, but also because they have less of the corporate mass that often gets in the way. Stewart Butterfield started out developing online games, like Game Neverending and Glitch. Both games failed to gain enough of an audience to become profitable, but both times Stewart was able to pivot his (then) small teams, pluck key features from the games, and spin them off into their own products --- the photo-sharing site Flickr and Slack, an internal chat system that is now worth over \$1 billion. Facing the limitations of both time and money running out, Stewart's teams managed to hyperfocus on a single solution and bring it to market. By keeping his company small and by paying attention to what was working and what wasn't, he was able to quickly move to spin-offs that ultimately netted great gains. When I asked Danielle LaPorte if she'd take funding again for a new business idea, she said no. She'd learned that not accepting outside funding allowed her to move faster. Instead, she said, she would quickly release a first version of a new product that would fund iterations on it, keeping her costs and expenses as low as possible in order to move toward profitability as quickly as possible. The fewer staff and less external funding involved, the faster a company can move, whether forward or in a new, more promising direction. #### []{#chapter001.xhtml#pg20 type="pagebreak"}Simplicity {#chapter001.xhtml#com0001071.EB11SmallItalicHead1} The best example of the power of simplicity comes from two rival social bookmarking services, Pinboard and Delicious. Delicious grew quickly, adding lots of features, and its founder, Joshua Schachter, made investments early on and grew Delicious into a company with approximately 5.3 million users. The company was sold to Yahoo for somewhere between \$15 million and \$30 million. Unable to make it profitable, Yahoo sold it to Avos Systems, which removed the popular support forums that Delicious users had come to love. A few years later, Avos sold Delicious to Science, Inc., where Delicious users were continually leaving and using other services. While Delicious was rapidly changing hands, Pinboard was started by web developer Maciej Ceglowski. He offered his simple service to users at \$3 per year, a fee that increased over time to \$11 per year. Since the beginning, Pinboard has been a one-person company with a limited feature-set and with no investors. Ceglowski operated it as a side business for the first few months, until it was generating enough income for him to move to working on Pinboard full-time. Then, on June 1, 2017, Pinboard acquired Delicious for just \$35,000 and quickly shut it down to new users, offering existing users the option to migrate their accounts to Pinboard instead. After rapid growth and increased complexity in its offerings and internal structure, Delicious, in which millions of dollars had been invested, was ultimately consumed by a company of one for a tiny price. Pinboard had kept things simple, played the long game, and ended up winning. Typically, as companies gain success or traction, they grow by taking on additional complexities. These complexities can often detract from a business's original or primary focus, resulting in more costs and the investment of more time and money. []{#chapter001.xhtml#pg21 type="pagebreak"}For a company of one at any size, simple rules, simple processes, and simple solutions typically win. Complexity is often well intentioned, especially at large corporations, where, as complicated processes are added to other complicated processes and systems, accomplishing any task requires more and more work on the job and not toward finishing the task. It can be a slippery slope: one step is added to a process without increasing its complexity too much, but then, after a few years of adding steps here and there, a task that once took a handful of steps now requires sign-off by six department heads, a legal review, and a dozen or more meetings with stakeholders. By contrast, growth for a company of one can mean simplifying rules and processes, which frees up time to take on either more work or more clients, because tasks can be finished faster. With this goal in mind, companies of one routinely question everything they do. *Is this process efficient enough? What steps can be removed and the end result will be the same or better? Is this rule helping or hindering our business?* For a company of one to succeed, a strategy for simplifying isn't just a desirable goal but an absolute requirement. Having too many products or services, too many layers of management, and/or too many rules and processes for completing tasks leads to atrophy. Simplicity has to be a mandate. When Mike Zafirovski became the CEO of Nortel, he implemented an unambiguous theme of "business made simple" across the entire company. From reducing costs to speeding up product development, to making it easier for customers to get the latest technology, he wove the idea of "simple" into every aspect of their large company. Often, complexity can creep in right from the beginning --- when you're just thinking about starting a new business. You begin to assume that your business requires "essentials" like office space, websites, business cards, computers, fax machines (just []{#chapter001.xhtml#pg22 type="pagebreak"}kidding), and custom software solutions. In reality, it's usually possible to start a business --- especially the freelance or startup kind --- just by finding and then helping a single paying customer. Then doing it again, and again. And only adding new items or processes to the mix when they're absolutely required. If you have an idea for starting a business that requires a lot of money, time, or resources, you're most likely thinking too big. Your idea can be scaled down to the basics --- do it now, do it on the cheap, and do it quickly --- and then iterated upon. Start without automation or infrastructure or overhead. Start by helping one customer. Then another. This puts your focus on helping people immediately with what you've got available to you right now. Work on things like sales funnels and automation when it no longer makes sense to personalize your interactions with your customers in surprising and delightful ways. We've become enamored with new technologies, new software, and new devices, and too often large companies and even solo companies try to incorporate them into their existing structures in an effort to "keep up." The problem here is mistaking "simple" for "easy." Often we try to be simpler and end up more complicated. We add more tools, more software, more devices to the mix to make things easier, without testing or questioning how easy they'll be to use on a daily basis. Even the latest and greatest HR software, for instance, probably doesn't need hundreds of screens and drop-down menus. A business selling thousands of products can probably cut most of them if the bulk of their sales comes from just 5 percent of their offerings. There may be no need for thirteen company-wide initiatives if three will do. Start out as simple as possible, and always fervently question adding new layers of complexity. Set yourself up as a company of one that's run to maximize your ability to solve existing problems and to adapt as new problems arise. And then, who knows, perhaps []{#chapter001.xhtml#pg23 type="pagebreak"}you'll end up acquiring a massive competitor that couldn't keep up with your radical simplicity. ##### BEGIN TO THINK ABOUT: {#chapter001.xhtml#com0001086.EB07SmallCapsMediumHead} []{.bulletorn} Whether growth is truly beneficial to your business []{.bulletorn} How you could solve business problems without just adding "more" []{.bulletorn} Whether you really need funding or venture capital for your idea, or are simply thinking too big to start []{#chapter002.xhtml} []{#chapter002.xhtml#pg24 type="pagebreak"}2 {#chapter002.xhtml#com0000001.EB04MainHeadClosedNum} -------------------------------------------- Staying Small as an End Goal {#chapter002.xhtml#com0000002.EB04MainHeadClosedTitle} ---------------------------- Sean D'Souza doesn't want to grow his company. He decided that \$500,000 a year of profit was all he wanted to earn and that his business shouldn't exceed it. So that's what Psychotactics --- his consultancy that teaches other businesses the psychology of why their customers buy (or don't buy) --- earns through its website and in-person training workshops. Sean feels that his job as a business owner is not to endlessly increase profits, or even to defeat the competition, but instead to create better and better products and services that his customers benefit from in their lives and work. Implementation, he's found, is the key to retaining his customers and persuading them to keep buying --- that is, if they're using what he makes, they see successes in their own business and then keep buying more from him. Sean is only interested in reaching his target limit. This goal feels very counterintuitive to what we're taught about business and success. Society says that business goals should focus on ever-increasing profit and that, as profit increases, so should everything else --- more employees, more expenses, more growth. But like many others, Sean feels that the opposite is true --- that success can be personally defined, and that while profit and sustainability []{#chapter002.xhtml#pg25 type="pagebreak"}are absolutely important to a business, they aren't the only driving forces, metrics, or factors in business success. Sean's goal of achieving a target profit and not exceeding it comes from shaping his business around an optimal life he wants to lead --- complete with taking a three-month vacation each year with his wife and spending hours walking, cooking, and teaching and tutoring his two young nieces each day. Typically awake by 4:00 AM --- no alarm clock required --- Sean goes to work early from a small office located in his backyard. By starting this early, Sean can record audio for his podcast before the world around him becomes too noisy. It's an idyllic life filled with hourlong walks and ample coffee breaks. His work routine revolves mostly around answering questions for his customers in his private message board on his website. Sean is easily able to meet his \$500,000 per year profit goal, not through marketing and promotion, but by paying close attention to his existing customer base. His audience has grown slowly and sustainably because those listeners share his work with their own audiences and contacts --- his current customers gladly become his (unpaid) sales force. Too often businesses forget about their current audience --- the people who are already listening, buying, and engaging. These should be the most important people to your business --- far more so than anyone you wish you were reaching. Whether your audience is ten people, a hundred people, or even a thousand people, if you're not doing right by them, right now, nothing you do regarding growth or marketing will make a lick of difference. Make sure you're listening to, communicating with, and helping the people who are already paying attention to you. Sean sees lots of people in the online education world focusing their time entirely on marketing, but his focus is on making his products better for his existing audience. He works to get more and better results for his existing customers, who in turn continue []{#chapter002.xhtml#pg26 type="pagebreak"}to buy from him, both established products and new products as he releases them. He likens his business to a kind of "Hotel California" --- "You can check in anytime, but you can never leave" --- except that his version is less psychedelically creepy and doesn't feature pink champagne on ice; it features chocolate. Part of Sean's customer retention strategy involves sending his customers a box of chocolates, with a handwritten note and sometimes a small cartoon he draws himself. The package costs him approximately \$20, which includes shipping from New Zealand (where he lives currently), but it's the one thing his customers talk about. They'll buy a \$2,000 training program from him and talk about the chocolate. He'll give a speech at an event, and people will talk about the chocolate. His customers love these small touches, and the attention his business gives them, because his company of one focuses solely on serving his existing customers, not on infinite growth. When a friend of Sean's had a remarkably profitable year, they cracked open the champagne (possibly pink champagne, on ice) in a meeting and vowed to double that profit in the following year. But Sean is absolutely certain that his end goal is to keep his business small. He questions the blind growth mind-set because he doesn't require it. If he were to double his profits, like his friend was trying to do, how much more work would be involved? How would that extra work affect his family or his life overall? Sean doesn't want that complexity, the added stress and responsibility. He'd much rather make a great living without his work taking over all aspects and hours of his life. So succeeding, for Sean, means staying small. Sean's Psychotactics business is a great example of a company of one finding its optimum size and staying put. He purposely keeps his business small as a long-term strategy that makes sense for maximizing his profits and his lifestyle. With Psychotactics at its current size, he's able to get to know and better help his customers, []{#chapter002.xhtml#pg27 type="pagebreak"}who in turn are eager to spend thousands on his training products every year --- as long as he also sends them \$20 worth of chocolate. Like Sean, Ricardo Semler, CEO of Semco Partners, has found the right organic size for the businesses he owns and invests in. And it's working for him, as he's grown Semco into a business worth more than \$160 million. He believes that companies need to focus on becoming *better* instead of simply growing *bigger.* His approach is to question the idea that growth is always good and always unlimited. Ricardo works at determining the size at which each company he manages can enjoy worldwide competitive advantages and then stop growth from there in order to turn the focus away from getting bigger and toward getting better instead. The current business paradigm teaches us that to make a lot of money or to achieve lasting success, we need to scale our businesses --- as if larger businesses are less prone to fail or to become unprofitable (obviously not true). In fact, according to this view, before our imagined businesses are even off the ground we need to create them with the sole purpose of growth --- and possibly eventual sale for a huge profit. This paradigm, however, isn't rooted in truth, nor does it hold up to critical investigation. A study done by the Startup Genome Project, which analyzed more than 3,200 high-growth tech startups, found that [74 percent of those businesses failed](chapter002_notes.xhtml#ch_en1){#chapter002.xhtml#ch-en1}, not because of competition or bad business plans, but because they scaled up too quickly. Growth, as a primary focus, is not only a bad business strategy, but an entirely harmful one. In failing --- as defined in the study --- these high-growth startups had massive layoffs, closed shop completely, or sold off their business for pennies on the dollar. Putting growth over profit as a strategy, however trendy as business advice, was their downfall. When [the Kauffman Foundation and Inc](chapter002_notes.xhtml#ch_en2){#chapter002.xhtml#ch-en2}. magazine did a follow-up study on a list of the 5,000 fastest-growing companies []{#chapter002.xhtml#pg28 type="pagebreak"}five to eight years later, they found that more than two-thirds of them were out of business, had undergone massive layoffs, or had been sold below their market value, confirming the findings of the Startup Genome Project. These companies weren't able to become self-sustaining because they spent and grew based on where they thought their revenue would hit --- or they grew based on venture capital injections of funds, not on where revenues were actually at. Venture capital can be a quick way to infuse money into a company to help it succeed, but it's not a requirement and it definitely comes with certain pitfalls. The Kauffman Foundation study also illustrated that almost 86 percent of companies that succeeded in the long term did *not* take VC money. Why? Because a company's interests may not always align with the interests of its backers. Worse, investor interests may not always align with what's best for a business's end customers. Capital infusion can also leave a business with less control, resilience, speed, and simplicity --- the main traits required for companies of one. Paul Graham, the cofounder of Y Combinator (one of the largest and most notable VC firms for startups) explains that VCs don't invest millions in companies because that's what those companies might need; rather, they invest the amount that their own VC business requires to see growth in their own portfolios, coming from the few companies that actually give them a positive return. Graham notes that sudden and large investments tend to turn companies into "armies of employees who sit around having meetings." Startups, as serial entrepreneur Salim Ismail states, are extremely fragile by nature. They're designed to be temporary organizations that *may* grow into large companies, under conditions of extreme uncertainty. They expend money and resources in the anticipation that revenue will catch up to spending. Most startups fail because that doesn't happen often. []{#chapter002.xhtml#pg29 type="pagebreak"}Although a lot of these examples involve companies that would be considered startups, companies of one aren't always startups in the traditional sense. Many startups focus on growth, buyouts, employees, lavish offices with foosball tables and open-concept floor plans, and massive profits at any cost, and they tend to rely on investors for initial cash. Companies of one instead focus on stability, simplicity, independence, and long-term resilience and rely on starting small and becoming as profitable as possible, without the need for outside investment. Companies of one, with their focus on what can be done in the here and now, not what can be done with investment, can also be started without an injection of capital. Not all startups can be lumped together --- some are challenging the mantras of blind startup growth. For instance, Buffer, a social media scheduling tool with more than three million users, has seventy-two employees and isn't looking to grow that number quickly, unless it absolutely has to. Buffer wasn't always in the mind-set of challenging growth --- a few years ago the company got caught up in a hiring frenzy because it was looking to do a large round of raising capital. The idea was to be ambitious in hiring in order to do more to capture more of the market share and hit new revenue targets that investors were going to want to see. But Buffer hired more people than it had revenue to pay. Two shifts then happened: Buffer realized that even after securing funding, it still had to lay off 11 percent of the team. That employees could be hired and paid based on revenue targets (instead of on actual and current profits) wasn't a reasonable assumption to have made. Second, they realized that their leadership team was divided about what success meant to their company. The CEO wanted a more profit-driven, holistic, slow-growth plan and believed in hiring more employees only when the money was there, not in the hopes that it would materialize. Buffer's COO and CTO, by contrast, were more motivated by []{#chapter002.xhtml#pg30 type="pagebreak"}high stakes and high growth --- in other words, the typical startup game. In the end, they [left the company](chapter002_notes.xhtml#ch_en3){#chapter002.xhtml#ch-en3} and no other employees left or were let go; those who remained shared their CEO's vision of slower, profit-based growth. When businesses require endless growth to turn a profit, it can be difficult to keep up with increasingly higher targets. Whereas, if a business turns a good profit at its current size, then growth can be a choice, made when it makes sense to succeed, and not a requirement for success. For companies of one, the question is always *what can I do to make my business better?,* instead of *what can I do to grow my business larger?* ##### THE DOWNSIDE OF EXCESSIVE GROWTH AS AN END GOAL {#chapter002.xhtml#com0000027.EB07SmallCapsMediumHead} Often, in the pursuit of growth, companies or founders have to battle what Danielle LaPorte refers to as "the Beast." A company focused on growth often puts into place complicated systems to handle exponential volume and scale, which require more resources (human and financial) to manage, which then require more complex systems to manage the increased resources, and so on and so on. Danielle's "Beast" was the system and structure (financial and technological) she created to match her grand vision for her business. She invested in a million-dollar website to take her business to the next level. The problem was that a million-dollar website requires a team of experts to manage and run it at all times. Updating blog posts or products can incur tremendous costs. The Beast had an ever-growing appetite and required constant feeding. To keep the Beast satiated, Danielle's focus was pulled away from her center --- that is, from her purpose in creating and running a business in the first place. As her focus became muddied []{#chapter002.xhtml#pg31 type="pagebreak"}she found herself busier with feeding the Beast than in taking care of her core business. When Danielle realized that she didn't want to exponentially grow to continue feeding the Beast, she decided it had to be destroyed. In "killing her own Kraken," as she put it, she began to radically simplify. Her strategy shifted from "broadcasting light... to as many people as possible" to "broadcasting light... to the people with eyes to see it." Not focusing on growth and scale, she believes, was the best way to remove the Beast from her company of one and return her focus to the people who were already paying attention to her work. She likens her decision to stop trying to reach infinitely more people through paid channels to feeding only those people who show up for dinner --- the ones who naturally or organically find her work through word of mouth or who are hanging out where her business hangs out. The fact is that she still has hundreds of thousands of ravenous fans showing up for "dinner." Lusting after the Beast, of course, feels completely understandable and human --- even in business, we all need to feel loved and wanted, some of us more than others. However, unless we truly question this need and how relevant it is to our business, we can perish because of it. Buddhists call the Beast the "hungry ghost" --- a pitiable creature with an insatiable appetite. There is never enough for the hungry ghost, so it's always looking for more. In business, the hungry ghost is the quest for more growth, more profit, more followers, more likes. Even large and established companies aren't immune to the perils of chasing the Beast of high and infinite growth. Starbucks, Krispy Kreme, and Pets.com all pursued aggressive scaling and have paid a steep price in various ways. Starbucks was opening hundreds of stores around the world but decided that it could scale faster by adding sandwiches, CDs, and fancier drinks to its offerings. This rapid expansion ended up diluting the Starbucks brand, and in an equally rapid contraction, []{#chapter002.xhtml#pg32 type="pagebreak"}the company was forced to close 900 stores. Subsequently, Starbucks returned its focus to doing its one thing --- coffee --- better. It renewed its efforts to recapture a boutique coffee shop experience by upgrading coffee machinery, retraining staff in the art of making a perfect espresso shot, and removing a lot of the superfluous products like music and lunch food. Starbucks learned the hard way that better isn't always bigger. Krispy Kreme's freshly cooked novelty treats were so popular (and delicious) that it seemed like the company couldn't fail. Its freshly baked sign would regularly lead to lines that went on for blocks. But in focusing on expansion into grocery stores, gas stations, and even multiple locations in small areas, Krispy Kreme diluted the very scarcity it had once capitalized on. As franchises were pitted against each other, the company found itself chasing diminishing profits: it dropped 18 percent in sales over the two years from 2004 to 2006. Krispy Kreme's newly massive size also created some accounting and reporting nightmares that forced it into a \$75 million settlement with the U.S. Securities and Exchange Commission. Finally, Pets.com is, by most measures, the epitome of the dot-com boom-and-bust cycle --- an example of prioritizing uncontrolled and overfunded growth while doing things like selling products far below cost (which obviously isn't sustainable). Pets.com spent more than \$17 million on advertising involving sock puppets in the second quarter of 2000 alone; meanwhile, their revenue (not profit) at that time was only \$8.8 million. Pets.com was spending based on growth it *hoped* to see, not on where the company was *currently* at, and it ended up losing an estimated \$300 million in investment capital along the way. Of course, economies of scale can sometimes be required for success in certain markets and for some products, but often they aren't required and it is ego, not a strong business strategy, that is forcing growth where growth isn't necessary. []{#chapter002.xhtml#pg33 type="pagebreak"}When you feel like you have to start out competing with the largest player in the market, you end up chasing your competitor's growth instead of bettering your own offering. Sometimes finding and working with a single customer, then adding another, and then another, is a very useful and solid way to begin. And sometimes that can even be the end goal --- one where your focus is on the relationship and the paid work at hand. Sometimes the best plan is focused on your current customers' success, not on chasing leads and growth. Not everything needs to scale to succeed --- as Leah Andrews, founder of Queen of Snow Globes, discovered almost by accident. She runs an extremely unscalable business: creating intricate and unique snow globes, one at a time, for her customers. From the start, she was inundated with requests for these custom pieces of art, from big names like Quentin Tarantino and Channing Tatum and even from Netflix's corporate offices. Instead of scaling production, she focused on raising her prices higher and higher until the demand leveled off to where she could handle orders. She focused on creating an amazing product that was better than the competition --- mass-produced snow globes --- and was able to charge a huge premium for her work. Because she focused on making the best product, not the most scalable product, she grew her profits quickly without scaling production, which would have also scaled complexity and expenses. Pat Riley, the Hall of Fame basketball coach who led five teams to the NBA championship, coined the term "the disease of more." He noticed time and time again that winning players, just like some startups, focused on *more* instead of *better.* Once they won, they'd let their own ego get in the way of all the tasks that had helped them win in the first place --- like practice and focus --- and instead become lured into more endorsements, more accolades, and more media attention. As a result, they ultimately lost to internal forces, not to competitors. []{#chapter002.xhtml#pg34 type="pagebreak"}When you focus on doing business and serving customers in better and better ways, your company of one can end up profiting more from the same amount of work because you can raise the prices until your demand flattens out to where you can handle it. I did the same when my business was a client-focused design business: I doubled my rates over and over until the demand only slightly exceeded the time I had available to do the work. In doing so, I didn't need to hire more people to grow profits; I just needed to focus on doing better and better work --- putting in the same number of hours but vastly increasing the revenue generated from the work I did. Staying small is still my end goal, because like Sean's and Ricardo's visions for corporate success, I look toward betterment instead of infinite scalability. There's nothing wrong with finding the right size and then focusing on being better. Small can be a long-term plan, not just a stepping-stone. ##### IS THE TRADITIONAL WAY OF DOING BUSINESS BROKEN? {#chapter002.xhtml#com0000043.EB07SmallCapsMediumHead} Traditional ways of working --- in offices with strict rules and corporate hierarchies --- are giving way to gig-based, remote work with more autonomy. The business world is constantly being disrupted with new automations and technologies, and this is a good thing. Changes in how we work give us a chance to scale with the bare minimum in investments, people, and time. Traditionally, having a small business was thought of as a good starting point, or as what happens when a business finds only limited success. But there's a new breed of business that starts small and stays small, and not for lack of vision or strategy, but because these days one person (or a tiny team) can accomplish a lot. Technology is constantly improving, allowing us to do things like automate sales funnels, or drop-ship physical products with []{#chapter002.xhtml#pg35 type="pagebreak"}no need for warehouses and staff, or print-on-demand without investing in machinery and storage. WordPress, the software that powers 26 percent of all websites on the internet, closed its gorgeous San Francisco office, not because the company was out of money (it's extremely profitable) but because employees were barely working at the office, opting instead to work at home. The 15,000-square-foot WordPress office was being used by approximately five people a day; having 3,000 square feet to work in is definitely a bit too much space. Because technology makes it easy to work from anywhere, on any computer, less spending on overhead (like offices and the things that come with offices) is required. Pieter Levels is a digital nomad and Dutch programmer who is challenging the status quo of business tradition. Working from any location around the globe with an internet connection (currently in a village in Thailand), he builds software that competes with VC-funded Silicon Valley companies with teams of twenty or more people. Pieter runs his online service, Nomad List --- a community list of cities around the world ranked by how easy and fun it is to work from them --- and [earns \$400,000 a year](chapter002_notes.xhtml#ch_en4){#chapter002.xhtml#ch-en4} without employees or even an office. With the *New York Times, Wired,* CNN, and *Forbes* having all reported on Nomad List, Pieter needs no PR or marketing team, just a focus on a great and always improving service. Because the company is just Pieter and a handful of contractors he uses as he needs them, he can implement ideas as he has them, test them to see if there's a market fit, and quickly pivot if there's not. He's able to be top of his industry, above much larger companies, as a team of one --- and he currently doesn't even have a traditional mailing address. By automating what he can with existing software, he's even able to be offline for weeks at a time and still have steady revenues. Through careful planning and strategically executing personalized []{#chapter002.xhtml#pg36 type="pagebreak"}sales funnels, people like Brennan Dunn, who runs an email automation and training consultancy, are able to launch products without even lifting a finger. Brennan can leave home, not even bringing a computer, and still have record sales because he's built a system that drives ideal buyers to his website, converts them into subscribers, sends them personalized emails that change content based on their actions or behavior on the site and list, and finally turns them into buyers. It's a process that generates revenue whether or not he's present, and it's all done through software (email service providers like MailChimp or Drip) that costs a few hundred dollars a month to use. Brennan started down the traditional path of hiring employees, having an office, and scaling people, investments, and resources to get his business to succeed. But now that he's scaled back to having no office and only a handful of remote contractors, he spends less time on work --- and far less on overhead --- and generates more revenue by using off-the-digital-shelf technology. Tools that used to be expensive enterprise software --- or hadn't even been developed yet --- today are cheap, easy to master, and easy to use without spending a lot of time on them. For example, I can run a 30,000-person mailing list that generates the bulk of my income by spending approximately an hour a week on it. I can create a document that's both editable and shareable around the world for free with Google Documents or share any file, of any size, using a service like Dropbox. I can replace an entire IT department with one on-contract systems administrator in Berlin who works one to two hours a month for me, and I can learn everything I need to know about the visitors to the websites that run my business with free analytics software. Technology has made it easy to do what used to cost thousands or require a team of people. The new reality of business makes it easier than ever to be a company of one and not have massive growth as an end goal.