You’ll never hear this from billionaire entrepreneurs, but learning from small online sellers can change how you run your business
When I founded my company twelve years ago, I made a stand to take it to a multi-million-dollar exit. Startups have to think big.
Inside our fancy startup incubator, we — the founders — gossipped about recent billion-dollar exits of renowned startups and bragged about investors who offered the most seed cash. We were scientists, engineers, former executives, and top-management consultants. The national magazines portrayed us as the young entrepreneurship “elite” with groundbreaking innovations to change the world.
But my business views changed after I went to a local Amazon seller meetup. Talking to resellers of gym mats and homemade candles taught me lessons I never heard from my incubator clique.
They were common folk: students, mechanics, bakers, and clerks. About 2 in 10 had a college degree. No magazine wrote about them. Yet, they were street smart, practical, efficient, and had a down-to-earth morale. Instead of bragging about changing the world or raising millions, some of these sellers showed an ingenious ability to build a profitable business with absolute minimum resources.
I learned these five remarkable lessons about starting a business from seemingly “unremarkable” entrepreneurs.
This was probably the most important startup advice I’ve heard.
One Amazon seller, who sold gym mats and other cut-and-dry fitness commodities, said: “My customer is my best investor.”
Start with the little money you’ve got, and make sure to get profits as soon as possible. This was simple yet profound advice, often forgotten by many entrepreneurs.
Billion-dollar startups will often tell you profits don’t matter. According to Eliot Brown, the attitude of Valley startups is to spend money, grow their revenue on steroids, and worry about profits later. Yet, this mindset has flushed once-glorified startups into the abyss, including the infamous WeWork. The company generated gigantic sales through the billions spent on advertising and unprofitably low prices without their business model ever being profitable. As the company went public with an IPO, the global markets didn’t buy WeWork’s story. $37 billion of market value vaporized “overnight.”
Most small business founders don’t have the millions to burn through. Without investors’ deep pockets, they have no choice but to make money with the little money they own. They discipline themselves to reap profits as early as possible and invest back into their business. This mindset yields exceptionally robust business models.
I agree: no company makes profits from day one. But a small business owner will never tell you to keep feeding millions into a futile business model for years without seeing a dollar of profit. They expect profits in the first months of running their business, or they’d kill their product otherwise.
The mindset of a successful small business owner is not to burn cash but to create it.
When I mentioned the Amazon meet-up, my “high-profile” entrepreneur friend waved his hand in contempt: “What does a pusher of gym mats know about real product development or marketing?”
Many entrepreneurs will often look down upon small business owners, calling them do-it-yourself small-folk doomed to living at the bottom of the business food chain without the financial support of the venture capital industry.
It turned out the gym mat seller could teach me a lot about running a business.
The cut-throat competition on Amazon is a tough marketing school that even the top entrepreneur can envy. The seller knew the intricate bottlenecks of search algorithms and dozens of tricks to optimize his campaigns with minimal resources. I learned about using micro-influencers in my promotion campaigns, where to get the best shipping rates, and how to ensure the highest product quality from Asian suppliers.
Small online business owners are practical.
They can’t afford expensive consultants or coaches. Instead, they learn every aspect of their craft, spending nights studying videos and online courses while running their ad experiments during the day. And when something didn’t work, they fling it and try something else.
The business reality forces them to act quickly to survive and grow. They’ll often have created successful businesses by focusing on what works and avoiding risky, high-stakes gambles. Their experiences and lessons can help entrepreneurs understand how to build a business that is both profitable and sustainable.
So here is the skinny: Learn from small online businesses that sell products similar to yours. And while you are at it, teach yourself every aspect of your business before running for investors and hiring consultants.
Some entrepreneurs use complex words to describe simple things. Others use simple words to describe complex things. Guess who wins in the end?
We often get stuck in complex and intricate strategies. This results in overthinking and hard-to-manage businesses. In his bestseller Insanely Simple, Ken Segal writes that simplicity is the virtue of intelligent people. Successful leaders don’t overcomplicate. They seek ways to simplify and reduce complexity wherever and whenever they can.
Sitting at Starbucks, listening to the Amazon seller folk talking about their product strategies, I wondered why they followed simple plans.
For example, they’d never spend months prototyping their products but try selling a simplified version (or even competitor’s products) first to understand their customers. They didn’t care much about the product but focused on what people bought. The small-business owners didn’t have the money, time, and staff to pursue complex, intricate business strategies or develop state-of-the-art products right from the start. In a way, their lack of resources forced them to do things simpler, better, and more profitably.
Success often comes from focusing on the basics: providing excellent customer service, offering a high-quality product, and finding simple, smart solutions to everyday problems.
Here are the 7 simplicity principles of successful businesses you can follow daily.
We had a team joke. When someone asked us how we survived before having investors and sales, we said: “We always found free finger food.”
We loved attending startup events during our first years: award ceremonies, festivals, and sponsored meetups. Who can say no to free beer and canapés? On stage, founders boasted about their stratospheric growth and mind-boggling valuations. These entrepreneur rallies were fun, inspirational, and rich in calories.
But most of these events were a circus that taught us nothing about becoming better entrepreneurs. If anything, they boosted our egos, making us embrace the glamour of “being an entrepreneur” and look down upon other startups who weren’t invited. Most importantly, they distracted us from the actual work: developing products, growing sales, and serving our customers.
Don’t get me wrong. Sometimes, you want to clear your head over a couple of drinks. But celebrate achieving your goals and your team’s accomplishments — instead of listening to the boasting hogwash of other founders. Ask yourself: are these free meatballs and Mojitos worth the distraction and wasted time?
I’ve never met a single gym mat Amazon seller on these glamorous startup festivals. Some of them reminded me of Hank Rearden from Atlas Shrugged, who preferred spending his valuable time pouring metal at his steel mills and growing his business instead of mingling at parties.
If there was one thing I learned about startup parties was to prepare myself. I’d ask myself: is there something specific to learn there? Are there at least three tangible benefits to my business if I go? Over the past ten years, those meetups that answered a clear “yes” were the most helpful. The rest was a sunk cost on a lost cause (besides the free meatballs).
Try launching a gym mat business with a tiny budget in a crowded Amazon fitness equipment market.
It’s a dog-eat-dog business, and the chances to succeed among thousands of cheap Asian vendors are dwindling. Small business owners without investors’ deep pockets face this reality very quickly.
They learn quickly that products never take off as expected. Every product needs massive kicking to get it moving off the shelves. So most of these sellers have failed a few times already — giving them an edge in experience and humility over other entrepreneurs.
My company had a different start. Our team was flying in the clouds without facing any real failure for years to come.
We spent our time in a lab with a soldering gun and an oscilloscope. We discussed product features and marketing strategies but haven’t spent enough time with our customers. Time passed, and our first product launch met the crickets and a tumbling weed rolling lazily through our warehouse. We were too late for the show, costing us years to recover.
Stay grounded. Break through your fear: get out there and test your products as soon and as often as possible. Better have a small failure early than a big failure later.
Stephen Covey wrote that you should always start with an end in mind. Imagine where your journey must take you — think big.
But we all start at the same point: whether we are building the next big AI platform or opening a bakery in the neighborhood. We all start with the same problems and issues that require humility and common sense to build a business from the ground up.
Yes, being a part of a group of big-thinking entrepreneurs was inspiring. Talking about million-dollar exits and grandiose plans of conquering the world with our innovations. But you cannot put inspiration into your pocket. Nor can you use it to pay your bills.
Aspiring entrepreneurs often look to successful business leaders for inspiration and guidance, but not all role models are created equal. While a unicorn may seem like the ultimate goal for many entrepreneurs, the truth is that there are compelling reasons to look to small-scale “unremarkable” founders for advice instead. These entrepreneurs can develop a more achievable, practical approach to building a successful business and reach their goals with great confidence and success.
Entrepreneurship is a challenging but incredibly rewarding path. Remember that you have all the cards in your hands to make it a success:
- Keep things simple, even if others tell you that’s it complicated.
- Focus on your profits early because they are the blood that’ll keep your business alive.
- Sell your products early because small failures early are better than colossal failures later.
- Learn things yourself before paying for help.
- Celebrate your achievements, and don’t stand in the shadow of other startups.
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