Adam McFarland

No question the most interesting statement from the interview I posted earlier today with Jun Loayza was when he said:

“As a young entrepreneur, you will have NO work/life balance. I am very serious about this. If you want to succeed, you need to be working 24/7 every day of the week.”

That’s why I wrote such a long response prior to asking my next question:

“It’s easy to be happy for a year or two working all day, every day.  In my opinion, it’s hard to be happy doing that for a lifetime - one day you’ll wake up at age 50 and realize that you’ve missed out on love and relationships and wonderful experiences because you were obsessed with your company.”

That’s why Anthony took the time to write such a long comment:

“Adam - You’ve spent a lot of time on this blog advocating the fact that this is not true, and that entrepreneurs need to try as hard as possible to sidestep that misconception. I am with you on that. A true entrepreneur, and one who is on a path to success, may reach a peak of high workload, but for the most part, should constantly be on a steady decline of hours per day/week being worked. If you’re doing things right, you’re finding more and more ways to automate, delegate, etc.“

Work/life balance is a very touchy subject for anyone who runs a business.  You clearly love your company, but happiness is rarely (if ever) achieved by loving one thing and neglecting your mental/physical health or your relationships with others.

As Adam Gilbert says, the way that you find out what is truly important to someone is by how they spend their time:

“In a world where people are moving a million miles per minute how can you actually tell what someone really cares about? Look at their calendar! It’s that simple. Your calendar never lies. All we have is our time. The way we spend our time is our priorities, is our strategy. Your calendar knows what you really care about. Do you?”

I’ll take that a step further.  When it comes solely to the business owner and their work/life balance, take a look at how they spend their weekends. Do they use them to recoup and recover, or do they work just as much (or more) than they do during the week?

Why weekends?  Because that’s the time the rest of the world takes off to rest.  You can argue whether 2 days off for every 5 too little or too much, but it’s the way the world works and those are the only 2 days you get to really spend a legitimate amount of time with people in the rest of the world who have jobs.

So go ahead, ask me how I spend my weekends?  Glad you asked.  

To be honest, in 2006 and 2007 I worked most of my weekends.  Probably 75% as much time as a weekday, but I’d have less distractions so I’d get the same amount done.  Then again, my social life sucked.  I justified it (and in retrospect I learned things a lot faster by having my entrepreneurial journey be 7 days/week as opposed to 5) but sacrificing my hobbies, friends, family, and dating life were things that wore on me increasingly.  Those who knew me well often would wonder how I did it (half in amazement, half worried about my sanity).   I always knew that at some point I’d have to balance things out a bit more.  Sacrifice isn’t always admirable - sometimes it’s just plain stupid.

Earlier this year we moved into our warehouse.  Sales continued to grow.  We became more efficient.  We gave ourselves raises.  There was no longer a fear that one wrong move could cripple us.  At that point - as hard as it was, even for someone cognizant of overworking themselves - I took a step back and made a conscious decision to work less.  Every night I started doing something fun that was non work related.  I started saying “yes” every time I got invited to a family party that I would have previously turned down.  I tried to hang out with my friends more.  Most importantly, I started treating my weekends as a time to rejuvenate myself for the coming weeks.  Not to push myself closer to burn out.

Last weekend I went to a wedding.  This coming weekend consists of camping for a night, my fantasy football draft, a full day of watching college football, a family dinner (yours truly is turning 26), and a massive party at my apartment on Sunday night.  Very little work will be done.  That’s OK. Because come Tuesday morning I’ll wake up and be ready to kick ass again.  Taking time for myself doesn’t mean I don’t love what I do as much as I did before.  If anything, the balance leaves me less stressful and more productive when I’m working.  I’m more eager to work when I have a day or two away from it.  Sure, I’ll still block out a weekend here and there to work on a side project because I enjoy those, but the majority of weekends now are for the other people and things in my life that aren’t related to Pure Adapt.  I still have plenty of hours left in the week for my entrepreneurial fix.

Anyone who owns a business like ours has been there.

You’ve just met a new group of people and they casually ask what you do for a living.  You give one of a variety of answers, based upon how web-savvy the crowd is and how interested you are in talking about your business at the moment.  They think what you do is really cool and they ask a bunch of nosey-but-well-intended questions.

In a way, it gets a bit old.  Of course, in another way it’s pretty freaking cool.  Having someone genuinely interested in what you do is a pretty big compliment.

Then the night goes on like normal.  Until someone brings up one of the following:  their lack of vacation time, their not-so-wonderful boss, the glass ceiling at their job, the BS politics, or the perpetual fear of losing their job.  And then they say it.  They look you in the eye, smile, and (somewhat sarcastically) say:  “Of course, YOU don’t have to worry about that!”   Again, in a way it’s a compliment.  But in another way it’s as if they’re saying “look at the business owner who is soooo cool that he doesn’t have to deal with all of the crap that the rest of us do.  Must be nice to be him. ”

The easy answer is to just smile and say “yup, you’re right.  It’s nice not having that stuff going through my head.  Being a business owner is awesome.”

In a way, that’s true - it’s what I used to say back when I had more of a chip on my shoulder and was trying to prove that entrepreneurship (or better yet, my choice of entrepreneurship) was “superior”.  Now I smile and say how I truly feel.  Something along the lines of “yes, that’s definitely true, but like anything else in life there are trade-offs.”

I don’t have to worry about many of the things that stress someone in a typical corporate position, but I also have stresses that they don’t.  Trying to speak from a completely generalized point of view: owing a business is neither “better” nor “worse” than having a job.  It’s just a different path.  A path that I happen to feel suits me better, but that doesn’t mean that the lifestyle should necessarily be romanticized as much as I feel like it is.  At times owning a business sucks far worse than going to work at 9 and checking out at 5.

Yup, my pay has no ceiling.  I can give myself a raise whenever I want.  I don’t need to worry about my bosses nephew getting preferential treatment and taking “my promotion”.  Of course, my salary also has no floor.  Earlier this year we didn’t pay ourselves for several months to survive our move and expansion.  And every time I do give myself a raise I am taking away from money that could be used to increase marketing or hire/train employees.  Pay yourself more at the cost of growing your company (and your stock), or pay yourself less and struggle to pay your bills? Show me an employee who has to make a decision like that.

Sure, I can take a day “off” whenever I want.  I don’t need to get permission from anyone.  I don’t need to deduct it from my yearly vacation time.  At this point, the company won’t fall apart without me.  Of course, at any time on one of those days off something could happen and I could immediately be pulled away from whatever I’m doing from an indefinite amount of time (see our server issue from a few months ago).  The reality is that until we have a large staff I cannot completely get away from work from any discernible amount of time.  I feel like I’ve done a good job this year of spending more time with friends and family away from work, but I still haven’t taken anything even close to resembling a vacation in several years (Florida for a week in January of 2005 is the most recent I can think of).  And even with a staff, I’ll probably be so passionate about what we’re working on that I’ll want to be contacted if something major goes wrong…even if I’m not the one fixing it.  So is the life of an entrepreneur who loves what they do.  I wouldn’t want it any other way.  I will be able to spend more time away from work in the coming years.  But when that time comes it will come because of great sacrifice over the previous years.  It’s not something that I lucked in to, it’s something I earned through my choices and my hard work.  I understand if others think it’s “cool”, but I don’t necessarily think they’d find the process leading up to it very “cool”.

There’s always more to the story than what you see on the surface.

I’ve been thinking a lot lately about my productive output post where I declared that I would never work more than 35 hours in a week again (see Productive Output:  What the 9-5 Misses and Why I’m Done with a 40 Hour Workweek). It was only two months ago, but a lot has changed since then.

At the time I had just come off of 2+ years of pushing my entire life aside.  In college I worked hard, but I played hard too.  I might not have partied as much as some of my friends (some of which are still in college by the way) but I kept what I thought was a solid balance for someone in an intense engineering program at a top school.  However, once I left my career I didn’t care about balance:  I cared about being an entrepreneur and everything that came with it.  I had the proverbial chip on my shoulder and I was dead focused on kicking ass.

When I moved into the apartment that I’m currently residing in back in May, I took it as the opportunity to “turn on” my social life again.  We had finally reached a point of stability and I realized I needed to phase back in some of the things I’d pushed aside.  The intention when I left my career was never to work 75 hour weeks, neglect family/friends, and teeter on the line of burning myself out.  But the everlasting (self-induced) pressure to make our company a success drove me so hard that - on occasion - I asked myself if I knew what I was doing or if I was just fooling myself and unknowingly becoming a workaholic.  A workaholic that would never recover no matter how much success he had, just because I had become accustomed to it and knew no other way.

I needed to prove to myself that I could have balance and still live the entrepreneurial dream.  So I wrote the post.  I needed the challenge.  It worked.  I began intensely focusing on my 6-7 hours a day and banging through 9 hours of work in 7 just because I was excited at the potential of some true free time after I got finished. All of a sudden my entire day wasn’t based around how much work I could get done.  Pretty quickly I got to the point where 7 nights a week I had plans with friends or family, many of which I saw sparingly the past few years.  Every night something else was going on.  I’ll admit - it was pretty cool coming from a point where I only got out of the house on a non-work related outing once every few weeks.

Of course, this type of social schedule is too much over time for someone like myself  (I proclaim myself to be 50% introverted and 50% extroverted - a convenient even split).  So the past few weeks I’ve still kept my 35 hour rule in effect, but I have made sure I have a few nights a week to myself to read, play video games, catch up on sleep, or run errands.  Of course, a funny thing has happened:  I’ve been getting the itch to use that free time to tackle some of the “secondary” projects like the revamp of SportsLizard or a totally new site (crazy idea) that I’ve been working on.  I call these projects “10%” projects after Google’s 70/20/10 policy where  employees get 10% of their time to work on anything they want, the idea being that very innovative products often come out of the wacky creative projects when people are allowed to think outside the box.  I define “10% time” as time I spend working on non e-commerce projects, seeing as we’re getting 99% of our revenue from our e-commerce sites.  I could spend every waking second on our shopping cart and other e-commerce stuff.  It’s never ending.  We’re growing fast as it is.  There’s definitely a need to cap this work or the potential for burnout definitely exists.

For two years I pushed really hard and my business-life balance was a bit out of whack.  Considering my non-work life is something I highly value, it was only natural that I went the other direction for a few months and loaded up my social life.  Now I feel like I’m settling into a balance that I’ll hopefully keep for the next few years…until we have a few employees and I don’t have any day-to-day responsibilities, which will likely be a whole new adventure for me.  For now I’m still going to keep my “35 hour rule”.  Nights and weekends will always be open for social stuff, but I’m going to still try to get 2-3 nights a week where I can just relax and do whatever I want.  And most likely, what I want to do will include quite a bit of 10% work.

So there’s a new caveat to the rule:   I am limiting myself to 35 hours a week of work - with the same “rules” as before - except that I can spend as much “10% time” as I want.

I know, I know.  The list of things that I can do above and beyond 35 hours is getting pretty long.  Then again, the line between what is “work” and what is “fun” for me has never been 100% clear anyway.   That’s what makes me one of the lucky ones.  I get to do something every day that is fun, exciting, satisfying, and can pay the bills.  Can’t get much better than that.

—–

*Besides, the most important thing to take away from the productive output post is that efficiency and productivity are more important than hours of work put in.  Results are great.  Results with minimal time/effort are what businesses should really be looking for.

—–

Minor Blog  News:  I added a “Most Popular Posts” section to the sidebar.  My initial idea was to do a “Best of” section for new readers to familiarize themselves with the site.  Then I realized that I have 440 posts and combing through those would take forever.  So I just auto-pulled a list based upon most commented posts and called it a day.  Maybe for post 500 I’ll do a comprehensive list of my favorite posts…we’ll see.

One of my huge pet peeves is when someone is in a difficult situation and they whine and complain about it, but proceed to do nothing to change the situation.  Usually this comes in two flavors -  relationships and jobs - although it really can apply to anything.  It drives me nuts.  If you don’t like a situation in life get off your ass and do something about it.

When it comes to starting your own business, everyone has a tendency to talk a big game.  You might succeed, you might fail, but to me it’s unacceptable to talk about changing the world without even trying.  In most cases, “failure” leads to success at some other point down the road…even if it means you just laid the groundwork for someone else to come along and succeed.

The other day I saw this index card over on Indexed, one of my favorite blogs:

No arguments from me on the sex side of things

But I started to really think about the “changing the world” portion of the card.  And you know what?  Yea, I’d say that’s what most people do.  But that’s not what I do.  Or - more appropriately - that’s not what we do.

My definition of  “changing the world” - an action that improves the life of one or more people.

I don’t agree that the only events that can “change the world” are curing cancer or eliminating poverty.  I think that mentality makes it too easy to give up and walk through life feeling like you can’t make a difference.  That just simply isn’t true.  You might not be able to cure cancer, but you can brighten the day of a little kid with cancer down at your local hospital.  You might not be able to end poverty, but you can pick up some extra groceries for your local food pantry.  I look at this blog, SportsLizard, iPrioritize, Detailed Image, Music-Alerts, etc and I know that each one has “changed the world” in it’s own minor-but-relevant way because I’ve seen hundreds of emails from people expressing their gratitude for the work we’ve done.

What if I didn’t decide to start this blog back in 2005?  What if I gave up on SportsLizard after the first few tough months?  What if George and Greg didn’t take initiative on the opportunity that they saw to start an auto detailing site focused around great customer service and educating car owners?  What if I gave up on my search for an album release date service and didn’t start Music-Alerts?

The obvious answer to me is that we wouldn’t have changed the world.

All of those emails from satisfied users/customers would seize to exist.  To me that’s more important than any dollar amount in my pocket.  That’s why I continue to try to change the collectibles industry with SportsLizard even if it accounts for (and probably will always account for) a tiny percentage of our revenues.  If I can make enough money to live and I know my work is making the world a better place, I will be wholly satisfied with myself.

You might contest my definition of changing the world.  That’s fine, it’s certainly debatable.  I’ll tell you one thing that isn’t debatable:  no one has ever changed the world by just talking about changing the world.  Talk without action will get you nowhere.

Tonight my little sister Jenna graduated from 8th grade. I accompanied her and my parents to the ceremony held at the high school that I graduated from back in 2000. Being twelve years apart with no siblings in between, I always feel like there’s a huge gap between my generation and her generation. In reality, there really isn’t. Much of what she goes through is the same as what I went through twelve years ago. Take tonight for an example:

The principle gives a speech about reaching for your dreams, pursuing your passions, and striving to do something amazing. The teachers hand out all sorts of awards to the kids who have perfect attendance or have an average over 90. Each kid gets called up and given a diploma, a class picture, and a folder with certificates for their various achievements. My sister had nothing short of 20 different awards and certificates. Don’t get me wrong, she’s a great student. But is anyone that good? I’m guessing most kids went home with the same bag of goodies. We live in a world where everyone gets a trophy for just trying. Kids become conditioned to being rewarded for just showing up.

The question I kept asking myself was: does all of this give our kids the best chance to succeed? As the (very long) graduation ceremony began my mind started to drift back to the time twelve years ago when I was sitting in the exact same spot. I thought about who was in my graduating class and what they’re doing now. Some have gone on to start businesses (two of my partners - Mike and Greg - were in my 8th grade graduating class). Some are working in politics. Some have joined the peace corps. Most have settled for mundane jobs and given up on their dreams. Still, others have hit rock bottom and become addicts or criminals. Yet twelve years ago we all sat there just like my sister. We were all filled with hopes and dreams and promises of greatness to come. Why did some veer off course?

At that point I realized something - our parents don’t prepare us for greatness. They prepare us for mediocrity, to be average. Do you want your kid to cure cancer? Start their own business? Join the army or the peace corps? Work for a non-profit? Get a Ph.D? Teach inner city kids?  Help the disabled? The question parents should ask themselves deep down: do you really want your kid to change the world?

Every single parent would answer “yes” to that question. But their actions speak louder than their words, and the two don’t agree. They’ll go on and on about how their child will become president or solve our energy crisis, but what they don’t realize is that achieving anything great requires hard work, sacrifice, passion, focus, determination, and most importantly the ability to deal with failure. Because most likely, if you’re striving for greatness, you’re going to fail. Achieving great things is hard. Most of the great things in this world have been discovered or achieved by people who relentlessly fought for what they believed in even when they failed repeatedly, even when they ran out of money, and even when others told them to quit and get a “real job”.

Parents: how will you react when your kid has $20k in student loans and leaves a secure job to start a company like I did? Or when they take a leave of absence from college to go overseas to help in Darfur? Or when they decide to join the army and go fight in Iraq because that’s what they believe in? You’ll get nervous. You’ll push back. You’ll ask them to reconsider. Because it scares you to see them fail. But what you don’t realize is that your fear also prohibits them from doing something great. Your fear pushes them into working 50 hours a week doing something they don’t love because it’s “safe” or “secure”. Our world has warped our minds into believing that your 401K is more important than your happiness or what you do for others.

We do a great job of telling our kids to be great, we just do a horrible job teaching them the traits they need to become great.  My advice to every graduate this spring - be it 8th grade, high school, or college - you truly can do anything that you want with your life. Dream the impossible, then do it. Cherish that mentality - don’t let other people ever take it away from you.

As any college student will tell you, scheduling classes is an art form. My first semester I didn’t have much choice and had to take whatever was available. My second semester I loaded up on Monday and Thursday and had the rest of the week off. It sucked - Mondays and Thursdays wore me out and the rest of the week I had to spend 10 hours doing homework. My third semester I put large gaps between my classes so I’d have time to get work done during the day, but all I did was bone around on ESPN.com and AIM.

My fourth semester I finally got it right: 1 - 3 hour breaks between classes, equally spread out throughout the week. I got the same amount of work done in a 2 hour break that I’d get done in a 5 hour break the previous semester. I didn’t mess around and waste time because I was under a time crunch. A 2 hour break really means like 70 minutes of work when you factor travel time and setup time into the equation. You don’t have any time to mess around with 70 minutes: you’re always under a bit of pressure and that’s why you get so much done. You’re focused. This one lesson has stuck with me ever since.

Read the following excerpts and stop and think for a few minutes before continuing the post.

If you’re an employee, spending time on nonsense is, to some extent, not your fault. There is often no incentive to use time well unless you are paid on commission. The world has agreed to shuffle papers between 9 and 5, and since you’re trapped in the office for that period of servitude, you are compelled to create activities to fill the time. Time is wasted because there is so much time available. It’s understandable.

Most entrepreneurs were once employees and come from the 9-5 culture. Thus they adopt the same schedule, whether or not they function at 9 AM or need 8 hours to generate their target income. This schedule is a collective social agreement and a dinosaur legacy of the results-by-volume approach. How is it possible that all the people in the world need exactly 8 hours to accomplish their work? It isn’t. 9-5 is arbitrary.

Since we have 8 hours, we fill 8 hours. If we had 15, we would fill 15. If we have an emergency and suddenly need to leave work in 2 hours, we miraculously complete those assignments in 2 hours.

Tim Ferriss - The Four Hour Workweek, pages 73-74

ROWE stands for Results-Only Work Environment. In a ROWE, each person is free to do whatever they want, whenever they want, as long as the work gets done. Currently, there are two authentic ROWEs—Fortune 100 retailer Best Buy Co, Inc. and J. A. Counter & Associates, a small brokerage firm in New Richmond, WI. At both organizations, the old rules that govern a traditional work environment—core hours, “face time,” pointless meetings, etc.—have been replaced by one rule: focus only on results.

In the 4-Hour Workweek, you helped people understand that because of technology, people don’t have to defer living until retirement. They can design their own lifestyle. Now imagine what would happen if the entire culture of a workplace went through the same transformation. That’s what a ROWE is. A ROWE is a work culture that gives people the power to take control of their lives. As long as they get their job done, they’re free.

One of the misconceptions about ROWE is that it’s a work-from-home program. It’s not. If you want to work in a cube, that’s great. If you want to work from a coffee shop, then that’s great, too. The question in a ROWE is not “where is everybody?” but “is the work getting done?”

Cali Ressler and Jody Thompson in an interview with Tim Ferriss

The United States leads the world in two categories: work and waste. American employees put in more hours and take fewer vacations than just about anyone else in the industrialized world, and our individual ecological “footprints” are much larger.

Coincidence? I think not. The way we work drives our habits of consumption and waste. The more we work, the more we drive, the more energy we burn, the more styrofoam to-go containers we use. At the end of the day, we’re so tired, we devour more takeout and TV, often falling asleep in front of the latter. If we want to accelerate the recent trend of reducing waste, it may be time to consider the radical step of, well, relaxing more, consuming less, and living fuller lives. May the Wall Street Journal editorial board strike me down.

Naturally, most businesses blanch at the notion of giving up any competitive edge in a globalized economy. But it’s not as if moving to a four-day (or 32-hour) workweek would simply lop 20% off the economy. Cutting hours may actually raise per-hour productivity. France, home of the 35-hour week, creates more GDP per work hour than the United States ($37 versus $34, as of 2003). Norway spanks us too ($39), and Norwegians work 26% fewer hours a year than Americans. It’s a myth of modern hypercapitalism that an overworked, sleep-deprived, stressed-out workforce is a necessity. Studies have consistently shown that longer workweeks increase productivity only in the very short term. In a recent survey by Salary.com, workers copped to wasting about 20% of the average day Web surfing and gossiping. Sound familiar?

Companies can take the first step by reinventing the workweek. Then it’s up to us to devote our increased leisure hours to activities with low environmental impact — and not to driving around gas-guzzling cars or booting up power-hungry electronics. Then we could enjoy both continued wealth and improved planetary health.

David Roberts - Reinventing the Workweek, Green Business Practices - Fast Company: May 2008

OK, soak those in for a second…got it? Here’s what I think when I read excerpts like that:

The Logical Thought

So if I’m not an employee, and we’re in long term growth mode (past the start-up phase), and 9-5 is completely arbitrary, and it’s shown that less time working will make me more productive per hour spent, and if I’ll be healthier/happier by spending more time on things outside of work, and it’s better for the environment, why the f*ck am I working so many hours?

In the startup phase there’s a “cavalier” attitude that you have to have. Life = work and work = life, and that’s OK. But I’ve been doing that for two years and I don’t want to become that guy who works 24×7 for their entire life and misses out on everything else. I enjoy new experiences and new people. I enjoy experiencing life. A large part of that is being an entrepreneur, but there’s also a lot that has nothing to do with running a business.

I spent a lot of my engineering days in college, on internships, and in the work force working on Six Sigma and Lean Manufacturing projects and always thought to myself “why can’t these principles be applied to areas in business outside of manufacturing?” What 4HWW did for me was validate that increasing effectiveness and efficiency not only can be applied to all areas of a business, but in all areas of life too. Like everyone else I have become conditioned to 9 -5 and needed a little push to realize that I didn’t have to stay a part of it.

What I Want us to Become

I badly want us to become a model of efficiency and effectiveness. I want it because it makes us a more valuable company. I want it because removing the mundane and repetitive improves the quality of our lives.

In my head, all of this starts with our business processes. Unless you’ve got a ton of money (we don’t) you need to do the equivalent of hiring people by automating anything that is repetitive and can be done without human input. It started with our shopping cart software that automates inventory and shipping (side note: we had the owners of a large e-commerce store that’s been running for twelve years come visit us recently. The founder turned to George and said “I could fire two employees if I had that technology”. That made me feel all warm and fuzzy inside). It continued by moving all of our data to the web and automating backups and with George automating his accounting. In the future we’ll automate more of our marketing - while things like Google Base submission are automatic, niche newsletters based on customer behavior aren’t quite there yet…but they will be.

Once the business processes are set we can move on to us. We all want to work less hours. Some tasks - like packing and shipping - cannot reasonably be automated with technology so the way you “automate” them is to hire employees. I feel that by the end of ‘09 we’ll have the 2-3 people in place that we need to allow us to work 20 hour workweeks. That’s my personal goal for each of us - the other guys might be thinking less or more, but that’s what I’m pushing for.

How did I come up with 20 hours? In 4HWW Tim Ferriss asks the question “If you had a heart attack and had to work 2 hours per day, what would you do?” He asks the question to challenge you to think about what you really need to do to successfully complete your job. However, he bases this on the premise that you don’t like your job and want to work as little as possible. That’s not me/us. I love this stuff. One of the things I really want to do a lot this summer is white water rafting - I’ve been twice and it was fun as hell so I want to officially make it one of my hobbies. I’m pumped. But I equally want to expand upon an email marketing system that we recently launched (right now we send follow-up emails to everyone who makes a purchase asking them to review their products on the DI blog or TD forum, but there’s a ton of growth potential there). I also equally want to hike every state park in the Albany area. Of course I also equally want to bulk up my AJAX skills and improve the user experience on our cart.

Clearly I love our company as much as I love non-work related things. It’s a good place to be in life. 20 hours limits you just enough so that you get excited to work. If I can only work 20 hours the intensity in which I work will be multiplied many times over. I’ll also really look forward to those few hours a day instead of letting my mind drift to things that I might rather be doing.

What I’m Doing About it

I realize that this all starts with me. I’m the one usually “proposing” these wacky things to my partners so I have to prove the concept before I can expect them to get on board. 20 hours isn’t realistic right now because we don’t have an employee and won’t for a while. However, I’m always looking to make progress and prove my point so I’ve decided to limit myself to 35 hours of work each week. After a few months, I’m going to make it 30. Then I’ll stay at 30 until we have our 2-3 employees in place and trained.

What counts as “work” you ask? Good question. I’m counting everything that is related to running Pure Adapt with the exception of:

• Commuting time
• Blog posts on this blog
• Time spent reading business books or business magazines
• Time spent learning (for example, I have a few AJAX books that will take a lot of time to work through…those don’t count)

Everything else is fair game. I purposely waited until the end of Thursday to do this post because I wanted to test my limitation this week. This week is the perfect test week - if I can do it this week I can do it 95%+ of the time. Being that I got NOTHING done last week with our server mess, my to-do list was backed up a ton. On Sunday night I took all 20 action items and split them up equally among the days of the week. In my head I said to myself “you’re only going to have 6 or 7 hours to do all of this, so you better be focused”. It has worked. Every day I knocked each item off. I am getting at least as much work done in far less time. Some days I worked right up to the last second and others - like today - I was done early. Thus far here are the hours I’ve worked:

• Monday - 7 AM - 2:30 PM (7.5 hrs)
• Tuesday - 7:30 AM - 4 PM (8.5 hrs)
• Wednesday - 7:30 AM - 1:30 PM (6 hrs)
• Thursday - 7:30 AM - 1 PM (5.5 hrs)

That puts me at 27.5 hrs through Thursday. We each have four days at the warehouse and one “off”. My off day is Friday, so I generally do the most work Monday - Thursday. 7.5 hours for Friday - Sunday sounds just about right. I’ll probably work about 4 hours tomorrow, 3 hours on Saturday, and just check email on Sunday (Indy 500 baby….anyone else pumped!?!?!).

This past four days has been the best of my life in terms of work-life balance. There’s nothing outside of work that I wanted to do that I didn’t. That’s huge for me. I’ve also stopped doing work at home - I do most of my work at the warehouse and the rest at Starbucks/other local coffee shops, which helps me mentally unwind when I walk through the door of my apartment. Continuing this schedule will go a long way to ensuring I get the fulfillment I’m looking for out of both work AND life.

I’ll definitely continue to post updates as this unfolds…should be interesting.

It’s a weird feeling that I always get around this time. Every single time I’ve launched a new site or project I’ve felt the same thing, best described by a post I wrote back in 2006 just after the launch of iPrioritize:

From my limited experience as an entrepreneur, I’ve come to the realization that the day after the launch of a new business or product is a weird one. The initial excitement and relief of the launch has been replaced with a realization that you have exactly zero customers. Now, maybe for some people this doesn’t happen the next day, but I’d say something’s wrong if you are still celebrating your launch a week later.

I woke up in a weird mood today. I had that “holy crap, how am I going to get people to start using my site and eventually buy my service” feeling, despite the fact that I have a well-thought out marketing plan to execute. I suppose that I get this feeling because marketing is such an inexact science.

For the past week I was in sort of a post-launch-work-life-funk. All day long I’ve felt anxious and unsatisfied (not typical at all for me) and I’ve questioned if I/we have done everything we could have done to make the site great.

The difference this time is experience: I’ve felt this feeling before and it’s always gone away as soon as things start to pick up and I realize that our months of development were justified. Tastefully Driven has been shipping out 2-3 orders a day, which is fantastic for a nine day old site. I’ve got to remember that we’re in this for the long haul and we don’t need $50k months right off the bat to be having success. I knew this all along - it was part of our plan, but I still got the same anxiety. So I started asking myself WHY.

I think I was wrong back in 2006 - it’s not at all because marketing is an inexact science. It’s because you downshift yourself from going balls out to launch a site to a more steady, long-term marketing strategy. It’s a massive life change that’s akin to switching from being a sprinter to a marathon runner.

For months I was pushing with everything I could to launch the site. Since I knew it was a short term thing, I could work 15 hour days and push aside other aspects of my life. The “rush” was always there because I saw us rapidly achieving goals that brought us closer to the ultimate goal: launch.

Now, I’m doing a mix of things that will bring some sales right away (PPC, product syndication, etc) and things that will bring in sales months/years from now (blog posts, forum posts, videos). Programming goes from exciting features to mundane maintenance, with the occasional exciting feature a few times a year. The ultimate goal is thriving over a period of years, something that’s much harder to get motivated for.

I KNOW from experience that what we’re doing is right and will work. I also know because nine days in things are going about as good as they possibly could (from a sales standpoint and from other important metrics). I feel like a puppet-master who knows exactly what strings to pull at exactly the right times - a skill that only comes with experience.

That said, it’s still a major life change and those take a while to adjust to no matter how confident and prepared you are. The rest of my life that I set aside for a few months now resurfaces and I’ve got to deal with the things that will allow me to live a more balanced life so I don’t burn out - I’ve got to ensure I finish the marathon and that means working a bit less and doing a bit more for myself.

After about a week I feel like I’m getting into a new “groove” and am beginning to find my place. But man, I’m happy we aren’t planning on starting any new sites for a while - even though I knew this funk was probably coming it still sucked.

I’ve never actually heard another business owner talk about this, but I’d imagine it’s a somewhat common feeling for anyone that sells out for something for a short, intense period of time.

I bet you think I just haven’t been posting much this week because we’ve been busy getting acclimated to the warehouse. Right? Right? Nope - I caught a wicked cold and have spent most of the week home sick getting very little accomplished. This was supposed to be the week where I started my ‘new’ routine, but that’ll have to wait until next week.

Speaking of next week, we could end up spending the majority of the week working with the oil company trying to figure out why our heater mysteriously stopped working today. That should be fun.

With the move and everything that it has involved, combined with George and I being sick the past few weeks, and George losing his laptop to repair for 2 weeks, I would have expected sales to have struggled. Nope. Detailed Image exceeded expectations by about $15k of additional revenue for February. We’ve spent so much time on total BS this month that sales weren’t doing so great I think I’d be in full-out panic mode.

Is there a point to all of this rambling? Yup. All of this has put us behind the 8 ball a bit with Tastefully Driven. A month ago we were way ahead of schedule, and now we’re cutting it really, really close. The site will launch 4/1 regardless (I’ll make sure of that), but I want it to launch 4/1 with 100% of our pre-marketing plan executed (haven’t started yet…eh) and 100% of the rest of our marketing - like our PPC - prepared.

I’ve also learned that vendors move slow as shit. Every vendor I’ve contacted for Tastefully Driven has been extremely receptive to Pure Adapt and has bought in to the Tastefully Driven concept…which is great. Once they’re sold however, I basically say “we need to place an order ASAP, how fast can I pay you?”. The majority have taken weeks to place the first order, and then weeks to ship the first order. Wtf.

In most cases we’re working direct with product manufacturers, which is an archaic world where fax machines still get more use than computers. One company even told Greg that they charge extra to “ship to companies south of the Mason-Dixon Line”. The Mason-Dixon Line??? Is this 1820 or 2008? Thanfully we are NORTH of the Mason-Dixon line. Whew.

To take product photos, take initial inventory, stock shelves, etc, we really need to have everything in our hands by the middle of March….which I’m confident won’t happen for all of our products at this point. There’s a chance that 75% of it will be here by the end of next week, but the other 25% are going to be pushing it. We could literally be receiving products the last few days of March and photoing them on 3/30 or 3/31. Lesson learned: contact new vendors 3-6 months before you plan to begin selling their products.

Does TD have to launch on 4/1? Of course not. Nothing has to be done. But I won’t let us screw this launch up, even if it means working every waking second the next month to get it right. A few unforeseen road blocks only motivate the shit out of me. In a way, the more daunting the task, the more focused and driven I am to get it done. The easy thing to do would be to postpone the launch to 5/1 - but that’s just not how I work.

It’s the dirty little secret of running a business. I hear about it all the time, but rarely hear it publicized. It’s glossed over by Karen Northup of Corefino in this Churchill Club Video, and it’s mentioned by store owner Dan Fox in this article: founders of seemingly successful businesses who don’t take a penny of salary for themselves.

The reasoning is quite simple: it’s expensive to run a business, and faced with the choice of paying themselves or furthering the business, most entrepreneurs will choose the latter 10 times out of 10. This past weekend we made a similar decision to not pay ourselves any salary from now until June.

Crap. I thought you guys were doing great. How are you going to live? Should you be moving in to a warehouse? Why did you get rid of clients if you need money? Aren’t you freaking out?

I’ll get to those in a second, but since I was the one who pushed for the idea, let me explain my reasoning.

Our Problem

We are thriving in our current situation. We could continue to ship from Greg’s basement, pay everyone’s salary, chip away at our revolving credit card debt, and save some money. But we’d be slowing our growth…to the point where we’d be turning down great opportunities solely because we couldn’t handle the capacity.

While cash flow is good, it’s not good enough to cover:

• The costs of moving into a warehouse. Hidden expenses are everywhere: a $700 deposit to the electrical company, oil heating (meaning we need to fill our tank in advance), the Town of Guilderland requiring a Knox Box, etc. On top of that, there are the not-so-hidden expenses like almost $10k down (first months rent, last months rent, February pro-rated, + a security deposit) and the cost of furnishing the place.
• Expanding Detailed Image. We have vendors that want to work with us, with products that we know will sell at great margins, but we don’t have the space to carry them right now. At a minimum, we’ll probably need $10k - $15k to do this right.
• Initial expenses for Tastefully Driven. On top of development and marketing, we are going to need to spend $10k + on initial inventory to do that right.

All of that adds up on top of normal operating expenses. It was causing us quite a bit of stress.

Our Options

Here are our options to pay for it all:

1. Take on more debt, something we don’t want to do. Revolving credit card debt for inventory is one thing…building up credit card debt and maxing out every line we have is another.
2. Ask for a personal loan. Banks don’t like loaning money to companies that have been incorporated for less than 3 years. We know a handful of people willing to loan us money, so this would be a definite possibility.
3. Give up equity in the company for an influx of cash. This is what most growing companies in our situation would do (I think). However, we’re not really into giving up our stock and our control.
4. Pay for it ourselves.

What would you do? #1 would put us in a bad spot for the next few years. We’d constantly be floating credit between cards and taking on new lines/cards to pay it off. #3 is something we just don’t want to do at this stage in the game. We’ve put in so much sweat equity that we want to have 100% of the company when it reaches the next level. #2 is a good idea, but it’s my belief that you should never ever ask anyone else for money until you’ve exhausted every penny that you have. How hypocritical is it to ask for $50k or $100k and then pay over half of it back to yourself in salary? Just doesn’t seem right to me.

Which leaves us at #4. Each of us has done a good job saving money, so it would seem to make the most sense to have the owners pay for the growth. We certainly have enough cash between the four of us to make it happen.

FAQ About Our Solution

Why not just take the money out of your bank, give it to the company, and keep having the company pay salary?

Every time we do payroll, we have to pay the payroll company and pay taxes (matched by the company in some instances…so it’s double). But by living off savings and taking $0 salary, we avoid those expenses and make the impact on the company’s bottom line all that much better. Plus, we will all show less income on our taxes at the end of the year, which is another tax break. Doing it this way will add an extra 30%+ to the money we’re all putting in.

How are you going to live?
As I said, we all have enough in savings to live for 3 months. We wouldn’t have done it if we didn’t. Down the road when we need another wave of funding to expand we might have to consider other options, but this solution is ideal for this instance. Sure I’ll have to be a bit more careful with how much I spend, but nothing extreme.

I thought you guys were doing great?
This is the hardest to explain to people. We are doing great. Revenue for February 2008 is over 3x what it was in February 2007, our first full month with DI as part of Pure Adapt. Sales have grown exponentially and will likely continue to do so. But there’s only so much you can do with your revolving cash flow without giving it a “boost”. We needed that “boost” to get us to the next level, and we’ll probably need another one in a few years.

Why didn’t you just keep client work for a little longer?
The cash from client work was nice, but it was offset by the impact it was having in slowing down that exponential sales growth. The time required to raise $30k - $50k in client money would wipe out so much of our time that we wouldn’t be optimizing the use of our best assets: our e-commerce platform and our warehouse space. To be blunt: I’d rather take $0 salary and work on what I believe is best for the company and what I enjoy the most. My partners all agreed.

Aren’t you freaking out?
It’s kind of the opposite. We were freaking out when we were worrying about where the money was going to come from. Now we can all focus on the task at hand. Consequently, I think we’ll all be happier and be more productive.

There’s also something to be said for sacrificing for something you believe in. Had someone swooped in and gave us $2 million I don’t think we would have had the same unity, focus, and drive as a team that we do by making a common sacrifice. We’re all giving up a lot to make sure we do it right.

——-
In the end, I feel like by doing this for 3 months we’re advancing our company by at least 9 months. It’s the quickest means to the end that we are working towards.

I *almost* didn’t write this post. I thought it might be a case of too-much-information. I thought about it for a few days, and I still wanted to write it - mostly because I felt I’d be cheating the readership of this blog by not painting an accurate picture of our company and how it impacts my life.

Let’s just say hypothetically that Pure Adapt fell apart tomorrow and we lost everything and I was left with nothing. What would I do? First things first - if you know me, you know the absolute last thing I’d ever do is get a job. So how would I build a company?

Mark Cuban wrote a great post yesterday entitled The Best Equity is Sweat Equity:

There are only two reasonable sources of capital for startup entrepreneurs, your own pocket and your customers pockets. I personally would never even take money from a family member. Could you imagine the eternal grief and guilt from your mom, dad, uncle or aunt because you blew your nephews college money or the money for grandmas last vacation… I cant.

You shouldn’t have to take money from anyone. Businesses don’t have to start big. The best ones start small enough to suit the circumstances of their founders. I started MicroSolutions by getting an advance from my first customer of $500. The business didn’t grow quickly in the first couple years. We didn’t grow past 4 people in the first couple years, and we all worked dirt cheap.

So what’s wrong with that? It’s OK to start slow. It’s ok to grow slow. As much as you want to think that all things would change if you only had more cash available, they probably won’t.

The reality is that for most businesses, they don’t need more cash, they need more brains.

In this hypothetical example, we’re working under the assumption that I have little money to fund a business to start with, so I would choose number two: raising capital from my customers pockets. By far the best way to do this in my experiences is with web client work - SEO and design services. With client work you get money upfront, and you’re using sweat equity to build your company. So yea, you’re working a lot of hours but you’re getting capital immediately and you’re developing important business relationships for the future. I’d have enough to live and hopefully some left over.

You could stop there, but of course I wouldn’t. The problem with client services is that they don’t scale well…at all. Case in point: the recent Big SEO Firms Make Chicken Scratch post on SEO Book.

the 2006 numbers for the 20th [largest SEO] firm had like 5 million in revenues with something like 260 employees. Some companies may not want to be on such a list for competitive reasons, but the companies on the list are likely rounding up on the numbers and counting whatever they can as revenue. That comes out to revenues of less than $20,000 per employee, which stinks when you consider that if you deliver any real value to the clients and are growing your business some of that spend needs to go into doing market research, buying PPC ads, marketing your own consulting business, office related overhead, employee benefits, travel, taxes, creating custom software, buying links, etc.

It’s just too hard: you’re relying on finding people as multi-talented as yourself that are willing to work for you and can interact well with a team. In any service arena - law, accounting, personal training, etc - scaling is very difficult and a total pain in the ass in my opinion.

At this point I’d start taking money from my pocket to fund another new venture. More specifically, after my experience with Detailed Image, I’d start an e-commerce store. There’s just so much money and so much demand in e-commerce, and marketing is easy short term with eBay and PPC and long term with SEO, newsletters, blogs, etc. Even better, it’s extremely scalable. We know the owners of a niche e-commerce company in Albany that uses a crappy generic cart and does $4+ million in sales with a 750 sq-ft craphole warehouse and about 7 employees…most of which are packers/shippers that are cheap and relatively unskilled labor. I really think it’s hard not to get an e-commerce company to that point in ~5 years.

At that point (which is obviously ahead of where Pure Adapt is now), you again can keep things status quo or re-invest in some of the really cool and ballsy stuff. Maybe you take a shot with self-funding a cool web 2.0 software…or maybe you venture elsewhere into real estate…or into other technology (I know personally I’d love to prototype some engineering designs I had from college and try to get those products to market). Essentially this is what Mark Cuban did. Microsolutions was a service company that he sold for $$$ and then he took a ballsy chance with Broadcast.com which took off huge and turned him into the billionaire we know today.