How I Built This by Guy Raz

A book based on the popular podcast of the same name, Raz does a wonderful job here telling the stories of the trials, tribulations, successes, failures, errors, and lessons learned from the founders of some of the world’s most well-known and noteworthy companies and brands: Southwest Airlines, Clif Bar, Spanx, Warby Parker, Panera Bread, Netflix, and FUBU, to name just a few. Raz has been interviewing “founders” for a number of years, and he’s really managed to put together a fantastic summary or cliffs notes version, if you will, of what works and what doesn’t, what to expect and how to deal with the unexpected, and what you have to go through if you are going to truly survive and thrive as a business in 2022. The main theme might seem obvious but Raz is able to point this out time and time again without feeling the least bit redundant: starting a business is hard. REALLY hard. And not just starting a business, but then figuring out how to make it sustainable, and then when it’s sustainable how to deal with the pressures that come with that sustainability. In one sense How I Built This lays out a ton of basic advice for aspiring entrepreneurs, but there are also valuable lessons for anyone in a position of leadership, or those that manage other employees in a business setting: kindness, as a human virtue specifically but more generally in what is deemed to be a cutthroat business setting, is vastly underrated, and kindness from the CEO or founder can go a long way toward creating a company that is a long-lasting, trusted, and an admired part of a community or society. Not every business is about the actual bottom line, and not every founder is interested in being a millionaire, but there are many different ways to run a successful business, and Raz has a gem here in showing how to start one, grow one, or simply be inspired by those that want to do the same.

• actual number of entrepreneurs in America has been in decline since the 80's
• every mistake that could be made in business has been made
• solutions to your problems have already been found
• to learn from other people’s mistakes instead of going through them yourself is perhaps the only shortcut that exists in all of entrepreneurship
• the entrepreneur is a person who strikes out on their own to reach these frontiers of progress, aware of both the risks and the rewards of going it alone
• anyone can be one
• they aren’t chosen, they are made; self made
• can you actually find a good idea, or does it have to find you? yes!
• two greatest forms of organic growth: repeat customers and word of mouth
• name for a person who creates something purely out of passion = hobbyist
• person who creates something out of passion that solves a problem only they have: tinkerer
• person who creates something out of passion that also solves a problem they share with lots of other people: entrepreneur
• bathtubs should be 365 times as frightening as sharks, but it’s the reverse; we don’t have Bathtub Week on the Discovery Channel
• we’re more relaxed around things we’re more acquainted with
• failing is scary, wasting your life is dangerous
• initial uncertainty and scariness of the unknown
• even greater dangers of regret and squandering opportunity — waking up at 65 only to realize that someone has wasted their life
• most of the successful entrepreneurs that Raz has met left the comfort of their previous lives as safely and smartly as possible
• stayed in their real jobs until their startups demanded more time than they could spare, or they went for it with a fallback plan in their hip pocket, which made the risks inherent in entrepreneurship manageable enough for them to be able to sleep at night
• FUBU began its ascendancy as the defining brand in hip hop fashion during the same years that many of the artists who defined the golden age of hip hop rose to prominence wearing the company’s clothes
• all have done their homework, about their product, their business, their customers, their industry as a whole, and it has imbued them with a deep confidence in the viability of their ideas
• lots and lots of research, every founder does it, they have to
• absence of this thing evolves from a minor inconvenience in their life to a real world problem that, in their estimation, needs to be solved
• Jobs: “People don’t know what they want until you show it to them. That’s why I never rely on market research.”
• banked all that knowledge and then applied their own judgment, instincts, aesthetics, skills, and experience to it
• partnerships have been the rule, not the exception
• virtually no company is the creation of a single individual, but rather the product of a partnership, or even a group of co-founders
• you need a partner whose skill set complements yours
• someone who not only shares your vision but elevates it and holds you accountable to it
• who does what you cannot, who thinks and sees things in a way that you don’t
• whose strengths compensate for your weaknesses, and vice versa
• Holmes: “Many ideas grow better when transplanted into another mind than in the one where they sprang up.”
• fatefulness to them: the right idea in the right place, at the right time, with the right people
• find someone to partner with because starting a business is lonely
• bootstrapping: without other people’s money to stand up for your business, you have to find other ways to pay for things: credit cards, personal savings, cycling profits back into the business
• also about keeping control of your business as long as you can
• Visa after Visa to MC and Amex, maxing out just to fund themselves
• Sam Altman, president of Y Combinator: “The best companies do amazing things on small amounts of money.”
• telling your story is a more cost effective way to take your advertising beyond usefulness and efficacy and efficiency as topics of conversation
• every business is a story — the story is what connects you and me and everyone out there to the thing you’re building
• you need to give us a really compelling reason why we should choose yours
• why do you do what you do? why should we care?
• all businesses are stories, all stories are a process
• basic story is one that creates loyal customers, finds the best investors, builds an employee culture that keeps them committed to the venture, keeps you committed and grinding away when things get really hard and you want to give up (and you will)
• OPM: other people’s money
• investors were sitting on 3.4T of cash at the end of 2019
• OPM from friends and family is generally cheaper, but coming from people who believe in you more than they necessarily believe in your idea
• money is tied to a bet on you, not on a specific formulation of your idea
• some people have distinct, tangible advantages that made it easier for them to pull together enough OPM to get their businesses on solid footing and pointed in the right direction
• acknowledging privilege and recognizing advantage are essential to understanding the nature of success — both yours and others
• personality is an advantage, will is an advantage, likability, unflappability, resilience, having a good memory
• process for raising early money really is available to anyone
• everyone exists at the center of their own set of concentric circles
• once you’ve convinced people in your personal network to part with their money in support of your idea, that’s when the pressure to succeed really begins
• iteration — incremental evolution of a product or service
• tinkering with your idea until it works and you, as the creator, are satisfied with what you have
• exposing the working idea to the public and tweaking the product based on their feedback until it catches on
• importance of allowing their product to be judged by the marketplace, and the opportunity that users feedback presents to make a product better as a result
• sending a version of their idea out into the world that they could stand behind and that could itself stand up to the criticism they were inventing
• healthy fear of failure
• not letting their fear of failure slow them down
• inextinguishable belief in their idea
• barriers to entry — all the ways existing businesses shut out competitors and make it difficult for new businesses to compete in a given industry
• go around the corner and go through the vast gate that no one’s taking
• 5 hour energy: GNC was always looking for new products; if it’s in Walmart, no one buys it at GNC; where they started
• find your way into the market where you are likely to have the most success
• power of location in the context of the subjective needs and preferences of individual buyers
• e commerce in the early 2000’s hadn’t worked … yet
• tech was too early
• Dropbox CEO Drew Houston: “Where you live matters. Whatever you’re doing, there’s usually only one place where the top people go. You should go there.”
• Ben and Jerry’s opened their business in VT because there wasn’t much ice cream there
• only in Ottawa could Shopify get to become Shopify, without SV doubters meddling with Lutke’s software
• some had to move in order to break into their industries, some had to move in order to break out of them, some were perfectly situated right where they were
• every year, roughly 850K new businesses are established in the U.S.; of them, 80 percent will make it to their first anniversary
• nearly 800K existing businesses close their doors every year
• by year five or six survival is a 50/50 proposition
• top five apps account for 85 percent of all in app time spent by users on their mobile devices
• success of a new business depends on its ability to build buzz and engineer word of mouth
• engineering word of mouth is about converting all that wonderful name recognition you’ve just achieved from the buzz into sales
• difference between buzz and word of mouth is the difference between taking a big step toward brand awareness and then making a quantum leap toward customer acquisition and long term fandom
• by making Five Guys harder to find, set up conditions to more accurately determine whether or not the word was spreading and if so, how fast
• only one reliable way to engineer word of mouth: you have to make a really good product
• so good that someone has to recommend it
• Disney: “Whatever you do, do it well. Do it so well that when people see you do it, they will want to come back and see you do it again, and they will want to bring others and show them how well you do what you do.”
• the best way out is always through
• “trough of sorrow”: describes the period young companies find themselves in as a result of a lack of product market fit
• just one or two things on the margins could change everything, both for the user experience and for the long term prospects of the business itself
• only way you can gain both a clearer view of reality and some perspective on the bigger picture is by distancing yourself from the fray
• vast majority of American small businesses have fewer than twenty employees (if they have any employees at all) and generate annual revenues somewhere between 300K and 2M
• VC’s get it wrong more then than they get it right
• “What usually look like good ideas are bad ideas, and what look like bad ideas are good ideas, because the problem with good ideas is that everyone tries to do them, and as a result, there’s no value to be created there.”
• “You need to do the thing that you believe you are the best person in the world to do, where you have a unique proposition, given your story, to solve a problem.”
• raising venture capital is about making a promise, that you have a product or a service that people will pay money for
• good investors know the promise you are making to them is just that, a promise
• they know you can’t make any guarantees
• one surefire way to know you’ve built something great that is primed to grow and scale is when your competitors start either copying you or suing you, sometimes both
• Tylenol had to recall 31M bottles, added triple seal tampering proof packaging, which was the first of its kind in the market
• before 1982, no one ever recalled anything
• within 8 months, Tylenol had recovered 85 percent of its previous share of the pain reliever market, and by the end of 1983, they had recaptured nearly all of it
• build trust with consumers, whom “the credo is all about”
• ultimate gesture in transparency, but also an act of faith, one anchored in mutual trust
• how quick, decisive, and transparent you are in responding to the moment itself
• what is more relevant for the purposes of understanding how to lead your company through a crisis is getting a complete picture of what happens when there is a void in leadership
• quick, decisive, transparent action that puts people first and public perception second
• “punctuated equilibrium” hypotheses: species level change occurs rapidly, in short bursts, with long stable periods in between
• pivot from pita sandwiches to Stacy’s Pita Chips
• for every successful pivot, not just the recognition that you can’t keep doing what you’re doing if you want to grow or survive, but also identifying something else to do and/or some other place to do it
• rarely, it seems, do companies pivot from a failure to success
• they don’t go from a bad idea to a good idea
• rather, they go from a good idea to a great one
• recognize that the business you are leading is bigger and more important than the idea (your idea!) on which that business was originally built
• path to true entrepreneurship success is not strictly about profit; it’s also about finding and fulfilling a deeper purpose
• knowing that, and recognizing when you’ve reached it, is when the rewards truly begin to accrue
• founders who approach their businesses with a mission first focus tend to be better equipped to handle the lure of unrestrained and manic growth that has damaged or even sunk so many companies with early potential
• gives them a reason to keep on fighting
• mission is what gives you and your business direction
• categorize and prioritize the field of choices in any situation, from those that advance the interests of the business to those that subvert it or hold it back
• any successful founder will tell you that the impulse to do everything yourself, to believe that only you know best and then to build processes that reflect that belief, is endemic to entrepreneurship and has the potential to be incredibly destructive
• everything about the business starts to be about the founder rather than the business
• monarch CEO’s — business is defined around them and their life is defined around the business
• if the roots are unstable the leadership is constantly changing, and the culture will be too
• Netflix culture deck, wants to find people who believe in the ideas expressed on those 130 plainly designed presentation slides, who share the same values as people, as an organization, as a culture
• know your values, write them down
• you don’t scale (you personally); only your idea and your story and your values do
• for every Uber, there are a 100 Uber competitors Uber for ___ that never make it
• finding a small niche related but adjacent to a massive boom and building a business there
• Southwest — if they thought small and acted small, the sky would be the limit
• testament to the profitability of a small niche that can, like a vein of gold, appear only an inch wide but run a mile deep
• as a founder you have to e ready for the honeymoon phase of your partnership to end, for the romance of the entrepreneurship to fade away and leave the mundane obligations of running a business in its place
• military: Proper preparation prevents poor performance
• Product plane crashes produce partnership problems — in business, perhaps
• once you get into a business partnership with a friend, the friendship gets totally sublimated into the business partnership
• thinking like a parent and a partner is a skill every aspiring founder should cultivate in preparation for the challenges they will face with potential co founders
• Founder’s Dilemma — choice between two competing interests, money and control, and they will often choose poorly
• they will act either against their own self interest, or, in some instances, against the best interests of their companies, and sometimes both
• especially active once a founder has grown their business beyond what they ever imagined possible and the opportunity to sell presents itself
• happiness, contentment, making a decision that feels right
• Clif Bar, Gary, power of a business done the right way is way more powerful than two rich people
• “It’s a power that comes from freedom and contentment. The freedom to do whatever you want because you are content with the fact that you’ve already done what you know is right.”
• you are the mission maker, the values setter, the morale booster
• kind leaders have kind companies, kindness is a powerful tool, kindness is free, costs nothing
• return on investment for kindness is bigger than that for any financial investment and entrepreneur can make
• they treat people well, do the little things and the big things, they pay their success forward
• kind founders don’t just make every customer feel valued; they make every employee feel valued as well
• they do things that make their employees feel like part of the family
• from a strategic perspective, what is so underappreciated about treating your employees well and creating a kind work environment is that people pay attention
• great for recruiting, customers notice, which is great for brand loyalty and word of mouth
• Patagonia had a flexible work schedule and extensive maternity and paternity leave since the 70's
• remove the traditional trade offs between time and money that most working parents have to make as they attempt to strike a balance between work and family
• reduce the pull many working parents feel to choose one or the other
• you give them back time, and you increase their ability to be present in all aspects of their lives as their whole selves
• things you do advance your mission and match your values
• you do them from the beginning, precisely because mission, values, and culture generally are so hard to change
• most businesses fail within a year or two
• cards are generally stacked against anyone thinking about starting a business
• if one or two bounces go your way, all of a sudden you can come out of the game as a big winner
• luck, when it comes right down to it, is really just an opportunity waiting to be taken advantage of, and they took advantage of it
• “The whole world runs on luck. The question is, what you do with it.”