Michael Gerber, the E-Myth evangelist.
Michael Gerber’s name should sound familiar.
I recommend his bestseller, The E-Myth Revisited, as the must-read classic on automation. It brief, it discusses how to create scalable businesses that are based on rules and not outstanding employees; and how to become an owner instead of constant micromanager.
Michael also had a enormous influence on me as a first-time writer. His words to me were simple during our first lunch:
“If you’re going to write a book, write a f*ing book.”
Don’t hedge and don’t think small. I didn’t hold back material for a sequel, I aimed for the top of the top, and I credit Michael’s advice as, in part, responsible for the subsequent success of the 4HWW. It was that recalibration of ambition that made it all possible.
His latest book, Awakening the Entrepreneur Within, examines how to recalibrate the scale of objectives and other facets of the core entrepreneurial experience, which we recently sat down to discuss…
1. Michael, having counseled more than 50,000 post-corporate entrepreneurs caught in what you call the “entrepreneurial seizure,” can you explain this phenomenon and how to avoid it?
The “entrepreneurial seizure” lies at the heart of most failures in judgment when someone decides to leave his or her job to go out on their own.
The excitement of independence associated with getting rid of the boss is almost always fueled by a flawed understanding of what being on your own means. Most small businesses are started by technicians rather than by true entrepreneurs.
The technician believes in the fatal assumption that because he or she knows how to do the work — whether graphic design, engineering, cooking a great dinner, repairing an automobile, snow boarding, or otherwise — they can turn that capability into a business that frees them from the boss. The graphic designer creates a graphic design business. The technologist creates a technology-based business. The cook creates a restaurant. The mechanic creates an auto repair business. The snow boarder creates a snow boarding business.
But instead of freeing themselves from the boss, they have become their own boss, and they’re now — with absolutely no understanding about how it happened — working for a lunatic and doing what they know how to do but in greater volume than before.
True entrepreneurs make the transition from working for someone else to working on their own much differently. Entrepreneurs invent businesses that work without them. Technicians create businesses that work because of them. The entrepreneur is liberated from what I call the “tyranny of routine,” and the technician becomes a slave to it. In the entrepreneur’s case, the business works. In the technician’s case, the technician works. And that’s why most of the 500,000 new businesses that are started every month in the U.S.A. will fail. According to a recent study done by the Kauffman Foundation, 81% of all businesses in the US employ no people besides the owner. They’re sole proprietorships. True entrepreneurs are never sole proprietors.
2. Much of the model you laid out in The E-Myth Revisited has to do with the importance of systems in building a scalable business. What is the shape of the process and the practical steps for business development in your model?
As I’ve said before, and as AT&T has been quoted: the system is the solution.
The system I’m talking about is the core operating system of your business. It comprises three essential functions that must work in a completely integrated way. These are lead generation, lead conversion and client fulfillment. Whether the business is McDonalds or Starbucks, FedEx or Dell Computer, these three systems are critical to the success of that company. Building these systems then is the process we teach at E-Myth. They are really arranged in a very simple three-step approach. Step one: intentional dreaming (the dream, the vision, the purpose and the mission). Step two: intentional organization (conceiving, building and perfecting the automated client fulfillment systems that comprise the operating reality of the company). Step three: intentional growth (conceiving, building and perfecting the lead generation and lead conversion operating systems of the company). Every business under the sun is conceived, built and perfected in identically the same way, using identically the same processes.
3. Has the Internet really fundamentally changed the game for small business?
The internet era has, of course, changed the game for small business, but not as dramatically as most would profess.
After all is said and done, the internet is simply a medium through which the business of business is transacted, a conduit through which one can communicate and deliver the results one has set out to deliver. As many or more companies fail on the internet as anywhere else, and many more businesses (especially sole proprietors) stumble along without every making an impact on anyone, and most without selling anything to anyone.
In short, if an internet business fails to follow the three-step development process I just outlined, it will fail just like any other business will. So, I must say frankly that I am not a great believer in the internet as the be all and end all of business opportunity that others see it to be. Maybe I’m simply too old, but I think not. In short, I think that, given my experience of internet entrepreneurs as being very much the same as any other types of entrepreneurs, if they are absent the entrepreneurial fundamentals that are absolutely essential for any new company to grow, the result will be the same: lack of direction, lack of intention, lack of execution, diminished results.
4. In your new book you write–very counter-intuitively to most–that the reason most small businesses fail is not that they dream too big, but that they dream too small to create a truly thriving enterprise. Can you elaborate?
By “dreaming big” I mean conceptualizing a result greater than anything you have ever experienced. When I started my first company, now E-Myth Worldwide, I had absolutely no business experience. All I had was an idea bigger than life itself. My idea, my dream, was to transform small business worldwide.
That dream was the energizer for everything that was to follow. That dream for me was the realization of a picture I had formed in my mind of the typical small business I walked into every day, where the owner lived for sweat equity, worked 18-hour days, and had no idea that his or her life could be any different than the overwhelming life he experienced, and that all of his or her peers experienced in the day-to-day hell of doing it, doing it, and doing it some more. I just knew, don’t ask me how, it didn’t have to be that way.
Then I saw McDonalds and the impression I walked away with was huge. I suddenly realized exactly how the tragic condition of small business could be turned on its ear. All I had to do was to McDonald-ize every small business by teaching the owner how to think like Ray Kroc, the founder of McDonalds, did. That led to the invention of E-Myth worldwide.
That’s what I mean when I say dream big. Dream about great results. Dream about a world that works, rather than one that doesn’t. Think of one thing you wish to transform and than go to work ON it, rather than IN it, which quickly became my E-Myth mantra. The result of that will be something bigger than you ever imagined. Dreaming small is not dreaming at all. Dreaming small, which is what most small business owners do, is really the act of shrinking yourself to live a life that you can imagine because it fits your perception of what you know and are able to do. There is no imagination in that. And a life without imagination is already dead. In my new book, I am focused on awakening the soul of my reader to enable him or her to discover the entrepreneur within. And, once discovered, to put his or her imagination to work to invent a new life beyond anything he or she has ever done before. Just like I have done. Just like you have done, Tim. Just like every entrepreneur does.
5. It’s interesting to me that in your view of a truly awakened entrepreneur, they would not ever buy in to a franchise. I think people often confuse designing a scalable business that could be franchised with become a franchisee. Two fundamentally different objectives, right?
Right. The truly awakening entrepreneur wouldn’t buy a franchise. Why would they? The franchise is someone else’s dream. Not the entrepreneur’s. The entrepreneur is the one who invents a franchise company, not the one who buys a franchise. If the entrepreneur were to buy the franchise, he would immediately set about the task of taking it apart and turning it into something else. And, in the process, he would destroy the franchise.
No, the one who buys a franchise is either the technician – he buys a system that works and then he works it – or a manager – he buys a system that works and than manages it. And that’s the way it ought to be.
6. My readers are interested in the intersection of business and lifestyle design. Does an “awakened entrepreneur” seek some form of balance, or is it something else? I’m a big proponent of work-life “separation” vs. balance, as you know.
An awakened entrepreneur isn’t interested in balance of the typical sense. An awakening entrepreneur is passionate about creating. Creating is, by its very nature, unbalanced. But, to the creator, it doesn’t at all feel that way. It feels like the optimal flow of life. Creating is a power all its own. It takes you where it wants to take you, and the creator simply follows where it takes him.
Just like joy. Joy is not balanced either. Joy is explosive, it is the intense experience of life’s purpose all happening at once. So, if you want balance, don’t become Walt Disney. Don’t become Michael Dell. Don’t become anyone who seeks the unknown. Balance is a figment of our known reality. Balance has never been something that people who are disinterested in control ever pursue. The only people who crave balance are people who are desperately out of balance. When you’re living the creative life, you achieve a natural balance all its own.
7. After 30 years of working with entrepreneurs, do you see a fundamental change in entrepreneurship today? If so, what is different now and why?
Actually, no. I don’t see a fundamental difference between the entrepreneurs of 30 years ago and the entrepreneurs I meet today. Other than this: today’s entrepreneur is more likely to be interested in meaning rather than money. Not that he’s not interested in money; he obviously is. But money that comes with the absence of meaning is too big a price to pay for the new entrepreneur I’m engaging today.
Understand, I’m not saying that everyone I meet today has the question of meaning in mind. But, when I begin the conversation about meaning, more people I meet today are interested in having the conversation than ever before. So, there’s something going on today in the world of the entrepreneur. And that’s why I call it “the age of the new entrepreneur.” Something interesting is beginning to wake up, not only in the people I’m talking to, but in me as well.
Odds and Ends: Tim Upcoming Speaking and Two Favors
I don’t do much speaking, just as I’ve never done any formal book tours or signings, but there are two coming up soon:
E-Tech in San Diego, CA – I’ve giving the closing keynote on March 6th
SXSW in Austin, TX – I’m speaking at the following from March 7-11:
-Fri. 3:30pm “How to Rawk SXSW: The Basics”
-Sat. 3:30pm “The Art of Speed: Conversations with Monster Makers”
-Sat. 5pm Book Signing (Day Stage Cafe, Level 4)
TWO FAVORS, PULEEZE:
1. I’m putting together a group of Lifestyle Design 101 posts. Which 3-5 posts on this blog would you recommend for first-time visitors who want to learn some basics?
2. What questions would you ask the panelists on the “Art of Speed” panel? Please put in your top 2 or 3 in the comments and I’ll try and make them happen. Please keep them relevant! (i.e. no “how does a sonic boom happen?”)
Speaking to Google management at an offsite in Marina del Rey
The Tim Ferriss Show is one of the most popular podcasts in the world with more than 800 million downloads. It has been selected for "Best of Apple Podcasts" three times, it is often the #1 interview podcast across all of Apple Podcasts, and it's been ranked #1 out of 400,000+ podcasts on many occasions. To listen to any of the past episodes for free, check out this page.