TMM #005: 10 IMPORTANT lessons for entrepreneurs

Read Time: 3.5 min

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I’m still figuring out what direction I want to take with this newsletter and community.

Today’s topic is more business principle centered, but I’ve addressed wealth building, mindset, lifestyle design, family, etc in these first few issues of the memo.

So… as someone who never wants to waste his time talking to people who don’t want to listen, I’ve created a poll at the bottom of this memo that I would love to have you click on your top answer to help me steer.

Read through this… then answer. Please 👊 

Growing Something Worth Owning

Having built, grown, sold, failed, bought, scaled, demolished, and run businesses for the better half of my career…

… 4 of which into the 7-figures.

I have learned (and continue to learn) a few things.

(and all of these are imperative for a life of margin)

This isn’t an exhaustive list and I plan on expounding on each of these at later dates, but here are 10 lessons I think every entrepreneur should learn:

1. Slow is smooth, and smooth is fast. This is my golden rule that I have had to learn too many times at this point. Ego and a lack of patience is truly your biggest enemy in building something special.
   

2. Hire slow, fire fast. Absolutely nothing will kill your growth like bad hires and guess what growing too fast makes you do?… hire poorly.
   

3. Aim for 2-4x. Not 10x. 10x is cute when you’re tiny. It’s not hard. But level set your expectations. If you’re at $1m and you 2x for 5 years in a row, you’ll finish year 5 at $32 million. (hint: this is also highly unlikely, but a solid target) But if you aim for 10x, you’re going to 1) be disappointed, and 2) make really dumb decisions that you can’t reverse without going -10x
   

4. AND…. if you want to 2x smoothly, follow the law of 26% - an epiphany occurred to me a few years back that really shook the way I needed to think about growth. There are 3 macro levers that we can pull on to grow: pipeline (lead volume), win rate (conversion to paid), and client value (what’s a client worth to you). Multiply all 3 and you get your revenue number, roughly. Most people when they are moonshotting look at trying to max out one of these categories, and it’s usually their pipeline (I need more leads!). If you want to 2x, just increase each of these categories by 26% and you’ll get there with ease.

   1. Example 1: 100 leads per month x 10% win rate x $30,000 client value = $300,000 × 12 months = $3.6m…. [now apply law of 26%]…

   2. Example 2 w/ 26% lift: 126 leads x 12.6% win rate x $37,800 client value = ~$600,000 × 12 months = $7.2m
      (yay you doubled and those weren’t that heavy of a lift)
      

5. Dictatorship. You must run an early stage company like a dictator. You are the entrepreneur, you are taking the risk, you have the vision, and this is your asset. Dictator doesn’t mean “dick” and dictator doesn’t mean that you don’t receive input from your team, but it is your duty to set vision, pace, and distance. You call the shots and have final say. People will argue me on this, but nobody else has a holistic view like you when you’re sub-$10m
   

6. Set quarterly targets, not annual. The key to growing slow (and thus smooth) is your ability to make adjustments on smaller time horizons. Push forward, pull back, move left, move right should happen far more frequently than people plan for. This is also a morale booster. You have 4 chances to win throughout the year. You have 4 chances to course correct.
   

7. Captain Eats First. People want to say that they love this principle until you have to actually do it. If the captain is stressed, the ship does crazy things. If the captain dies, the ship sinks. You are the captain and you need to take care of yourself first. You need to take home the most money, take the most vacation, take the most “mental health” days (or whatever the softy crowd calls them these days - I tend to just call them “off days” to recalibrate and level set). Institute a rule where you take your money out first. And watch how your decisions fall in line. The team will be better off.
   

8. Find your operator. If you’re an entrepreneur, it is imperative that you find a running-mate that can take operations off your plate ASAP. But remember lesson #2… hire slow, fire fast. Operators should never contribute to the vision of the company, they should simply carry out the vision and ask good questions along the way. A bad operator can destroy your vision - I would know. They need to have intimate understanding of how everything ties together and impacts one another.
   

9. Pick your partner very wisely. “The only ships that don’t float are partner-ships.” Nothing can kill your company quicker than a partnership gone sour - I would know. If you don’t need to give up equity… don’t. This will cause you immense pain later on when one partner wants to chill and the other wants to grow, when one partner carries the majority of the weight and the other seems useless, and when one partner has a crisis and wants to sell for $8m now while the other thinks you can build for another 2 years before selling for $30m. Instead, consider vesting schedules that gives key players “phantom equity.” It’s pseudo-equity that can act however you want it to (including just like equity - profit share, etc) before an exit or liquidity event, then it converts to equity at the point of exit. It can also be taken away at any point.
   

10. Never sacrifice profit for revenue. If your pursuit of margin in life is important to you, which I hope that it is, then you will heed my warning in this lesson. Far too many entrepreneurs crush every other category of their lives because they forget this lesson. What matters is what’s left over when all of the dust settles. Get too far behind on this and you’ll find yourself with mass layoffs, debt, client’s underserved, partnership splits, and a bunch of “why am I doing this” questions. Bottom-line over top-line at all times.

Well, there are probably another 90 I could put together (and maybe will one day), but I hope these help one of you reading this.

Which of these was your “aha!” lesson you’re going to apply? Respond. I’ll read and respond back.

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Ok, now… as I mentioned at the very top. Here is a poll that I would like for you to seriously consider.

Help me steer this content:

Grateful you’re here.

Excited you’re here.

To your pursuit of margin,
Joey Gilkey