Everyone loves stories, but most people prefer the ones with happy endings.  Happy endings are fun, but it doesn’t always work out that way.  And anyway, we learn more about how we accomplish our goals through our failures.  So I’ll share stories I’ve come across – usually businesses that initially failed, but then eventually figured it out.  It happens a lot.

How to Build Relationships and Deliver Happiness: The Story of Zappos

Zappos

Photo by bunnicula

In 1999, Tony Hsieh made an investment in a online shoe shop that was then called shoesite.com.  It was renamed shortly thereafter, and today we know it as zappos.com.  The first year wasn’t very pretty, but in year two Zappos started to show some traction.  It ended the year 2000 with $1.6 million in gross sales.  Gross sales continued to climb, and by 2008, they had exceeded $1 billion.  This is an absurd level of sales growth, yet the fuel for this growth was amazingly straightforward.  Read More »

The Story of Microsoft and the Three Men Who Made It

microsoft

Photo by Amit Chattopadhyay

The story of Microsoft, considering its creation spawned 3 of the 60 richest men in the world today, is an important one to understand.  Bill Gates, Paul Allen, and Steve Ballmer have amassed incredible amounts of wealth from Microsoft.  This is the story of how.  Read More »

The Story of Les Schwab and His Pride in Performance

Schwab Close

Photo by ocad123

Business often comes down to a core set of principles.  And the story of Les Schwab is no exception.  Keeping things in their simplest form (Reductionism) is what allows us to arrive at a core set of principles, but this is often difficult to do. Reductionism is a key aspect of understanding anything.  If we apply this concept to business, it always comes down to people.  It really comes down to decisions, but decisions are made by people.  And what I love about the Les Schwab story is that he so clearly understood the importance of this.  He loved people.  And if you’re in business, it really helps to love people – no matter how weird, how exotic, how aloof, or how awkward.  Read More »

A System of Marketing: The Story of John H. Patterson and National Cash Register

Cash Register

Photo by Svadilfari

Mental Models Used: , ,

In 1884, a small, wiry, middle-aged man named John Henry Patterson acquired the majority stock of a blandly named company called National Manufacturing Company.  That same year, Patterson renamed the company National Cash Register Company (let’s call it NCR, for short).  Although it was his first entrance into the cash register business, he realized the potential of the cash register immediately.  And Patterson, being forty years old at the time, had a fairly clear idea of what he wanted in a company.  He set right to work on creating a uniform management system, which included a uniform system of marketing.  Read More »

There’s No Best Age to Start a Business: The Story of Sam Walton and Wal-Mart

Walton

Photo by tsweden

After graduating from the University of Missouri in 1940, Sam Walton took a job with J.C. Penney.  He was 22 years old.  He spent five years with J.C. Penney learning the retail industry.  In 1945, Walton became an entrepreneur and bought a Ben Franklin variety store in Arkansas for $25,000.  He was 27 years old.  Walton spent five years growing his Ben Franklin store.  But in 1950, after Walton’s landlord refused to renew the five year lease he had on the Ben Franklin store location, Walton had no choice but to sell the franchise.  He sold it for a fair price, and then had to start all over again.  Walton was now 32, and it was at this age when he opened his first Walton’s Five and Dime (again in Arkansas).  But it wasn’t until he was 44 years old that he opened the first Wal-Mart.  It was a very gradual progression.  So, does age really matter when starting a business?  I doubt it.  There is no best age to start a business, no perfect time – none of that.  And Sam Walton is the perfect example of this.  Read More »

How to Build an Empire: The Story of Harvey Firestone and His Tires

Firestone Tire

Photo by Desert Bug

In 1926, Harvey Firestone sat down to write Men and Rubber: The Story of Business.  It outlines his philosophy on how to succeed in business, and to this day it’s still the best and most comprehensive story on how to build a business from nothing.

Firestone’s philosophy is quite simple.  It says that honesty is the fundamental principle of any business.  It says that a business must exist for a reason, and the single reason for the existence of any business must be that it supplies a human need or want.  “To make money” is not a good enough reason to be in business.  If fact, if all you want is money, Firestone advises you to get out of business as quickly as you can, and go work for someone else.  You are destined to fail otherwise.

Firestone was clear that a business must exist to supply a human need or want, and this philosophy can be further explained through Maslow’s Hierarchy of Needs.  The primary need for all humans is physiological, followed by safety, love/belonging, esteem, and self-actualization.  Humans seek to satisfy needs in this order.  Firestone was supplying tires, or facilitating transportation.  Transportation, depending on its intended use, could fall under physiological needs (driving to the grocery store for food), safety needs (driving to the office for work), or love/belonging needs (driving to family).  Either way, Firestone was clearly satisfying human needs with his tires.

This logic applies today as well.  For example, Mark Zuckerberg’s reason for starting Facebook (“to meet girls”), while it hurts my heart, does provide for the love/belonging needs that all humans naturally have.

That’s the end of my Zuckerberg digression – now back to Firestone…   Read More »

But What If It Isn’t Cool?: The Story of Eric Ries and IMVU

IMVU

Photo by pixelsebi

Eric Ries, with a few others, started a company called IMVU in 2004.  As in IM (Instant Message) VU (view) – the novelty of the concept was the introduction of avatars to instant messaging.  He tells his story through the following five core principles of the Lean Startup Movement:

  1. Entrepreneurs are everywhere: in other words, the constraints to being an entrepreneur are minimal, if they exist at all.
  2. Entrepreneurship is management: or, a start-up requires a different set of management principles than a mature company does.
  3. Validated learning: One of Ries’ core concepts, basically stating that start-ups exist to learn how to build a sustainable business
  4. Build-Measure-Learn: a critical feedback loop that Ries developed – he advocates that all successful start-up processes should be geared to accelerate this feedback loop
  5. Innovation accounting: traditional accounting doesn’t properly measure what matters to him (and on this, I wholly agree with him), so he set up a different process to measure progress, set up milestones, and prioritize work.

Eric and his colleagues eventually grew IMVU to annual revenues of more than $50 million in 2011 (and some level of profitability, which he doesn’t disclose).  It’s important to note, however, that Ries is in no way shy about admitting the repeated mistakes that he and his team made at the outset.  You can read all about his adventure in The Lean Startup.  One of the more amusing issues was the unwillingness of test users to tell their friends about it.  After all, it was new to them, and they weren’t quite sure whether or not it was cool.  And as well all know, it’s totes obvi that you gotta protect your rep.

Of course, there is another way to look at what Eric did to create his organization.  Eric’s success can also be deciphered through mental models…   Read More »