Misfit Entrepreneurs

 by Dan Pallotta

Imagine Walt Disney at the age of nineteen. His uncle asks him what he plans to do with his life, and he pulls out a drawing of a mouse and says, "I think this has a lot of potential."

Or Springsteen. In a concert he once told the story of how he and his dad used to go at it — how his father hated his guitar. Late one night, Springsteen came home to find his father waiting up for him in the kitchen. His father asked him what he thought he was doing with himself. "And the worst part about it," Springsteen says, "was I never knew how to explain it to him." How does he tell his father, "I'm going to be Bruce Springsteen?"

Someone interviewed me a few months back for an entrepreneurship project, and he mentioned that in his conversations the thing that stood out most was the willingness of great entrepreneurs to be vulnerable. It's not the first association you'd make with an entrepreneur. Words like "driven," "ambitious," and "persistent" usually come to mind. But the moment he said it I knew he'd hit the nail on the head.
Vulnerability. It is the most poignant quality in every entrepreneur I know.

There's a misfit in each of us, and it's the most delicate, precious thing that we have. Sadly, most people make it their life's mission to hide it, to cover it over in the same clothes, the same work, the same "regurgitations," as Thomas Merton wrote, as everyone else. This virus of homogenization has infected the landscape. Our backdrop in real life now mimics the scenery repetition you'd see in a Fred Flintstone cartoon as he drove down the street. But now it's Home Depot-Walmart-McDonalds-Starbucks; Home Depot-Walmart-McDonalds-Starbucks; Home Depot-Walmart-McDonalds-Starbucks.

Ironic that all those enterprises were begun by entrepreneurs trying to do something different. And poignant that in the absence of Walt Disney himself, the Walt Disney Company just keeps building more Disneylands.

I used to visit the merry-go-round in Griffith Park in Los Angeles where Disney once took his daughters, asking himself, "Is this all there is? There has to be a better place to take my children." And the rest is history. The great entrepreneur — the entrepreneur who really changes things — is the one who, in 2010, goes to Disneyland and asks the same question: "Is this all there is?" And the new world she or he will create as a result of that audacious inquiry is one that cannot possibly be conceived by people busy trying to fit into the world as it is.

To question the hegemony of merry-go-rounds — to actually care that there should be something more magnificent than a merry-go-round — is to be a misfit. I mean, who worries about these things? It reminds me of that scene in Annie Hall where the mother of a young Woody Allen takes him to a shrink and he says to the therapist, "How can I relax when the universe is expanding?" And his mother says, "You live in Brooklyn! Brooklyn isn't expanding!" Talk about a misfit, right?

To embrace the misfit in oneself is to be vulnerable. It is to forsake the easy acceptance that comes with fitting in and to instead be fortified by a kind of love, really. A love of life, a love of wonder, and, ultimately, a sustaining love for oneself. Far from egoism, that love for oneself is a measure of one's love for others, for humanity. And it is only from love that great ideas can be born.

This kind of love cannot be taught in business school. It has to be felt. It has to be given sanctuary away from the noise and relentless assault of information. And then it has to be nurtured. It must be embraced, in the light of day, for all to see, for people to ridicule, to criticize, to laugh at. And the entrepreneur has to be willing to feel the pain of that ridicule and suffer the risk of the dream being stolen, or crushed by the meanness of this world. But the misfit doesn't worry about that. The misfit has a higher calling: to bring the unmanifest into being, no matter who is saying what.

Vulnerability is the absence of cynicism. And the absence of cynicism is love.
As that interviewer uttered the word "vulnerability," I thought of some of my entrepreneur friends: Peter Diamandis who founded X Prize, Wayne Elsey who founded Souls4Soles, Billy Shore who created Share Our Strength, Brian Menzies who founded 1-800-CharityCars, Dennis Whittle who created Global Giving, Torie Osborn, who brought the L.A. Gay & Lesbian Center into the twenty-first century.

And I realized that what separates them from others is their abject lack of cynicism.
Their willingness to be vulnerable. Their love.

What's Included?

Below is yesterday's blog entry from Seth Godin.  Think about your last visit to the doctor's office as you read it.  Were you treated like a valued patient or rushed through your appointment so the patient behind you could be seen?  The rise of the healthcare consumer will force most health providers to stop viewing patient encounters as a transactions and start seeing them as opportunities to create happy referrals.  Power to the people.       


What's Included?

This is the pricing question of our time.

First, from the buyer's point of view: when I buy this car/boiler/phone, how much are the services that come with it going to cost me every month, forever?
We stand at the Verizon store agonizing about the extra $34 in posted price for one phone over the other, then sign a contract for $2400 in fees.

We are attracted to a car with a rebate, not caring about the $2000 extra in lifetime gas costs.

More and more, the thing we buy isn't a thing, it's a subscription. The thing might as well be free.  And from the seller's point of view?

When you sell me that low-cost email service, did you also just get yourself on the hook for a lifetime of free support? What's that going to cost you?

When you take her reservation at your hotel, are you prepared to do all the work and attention you need to get a decent review on TripAdvisor? Ready for your CEO to take a call in the middle of the night, ready to comp meals, scramble teams of reps or engage in months of correspondence with that customer? Because that's all included in your marketing costs now, isn't it?

I recently hired someone to do some research and brainstorming. The first stage of what might become quite a bit of work. I was sort of amazed at the end of the short project... he asked me if I was happy with what I got, and I said, 'no.' He said, 'sorry' and walked away.

On one hand, this is dumb marketing, because he'd already done the hard work of establishing a customer, and wasn't particularly interested in turning that customer into a happy referral.

On the other hand, the old school decision to view a transaction as a transaction, time to move on to the next, is getting more and more rare. Perhaps it's an intentional act on his part, a way of doing business in the moment, without investing in or worrying about what comes as a result.

From Earthworms to Amazon: How Tony Hseih and Zappos Create a Culture of Happiness

By Gregory VandenBosch


In his new book Delivering Happiness, Tony Hseih outlines his journey to achieve professional happiness on an individual level as well as his model for "delivering" happiness to his employees, customers and vendor partners.  It's a funny, wry, honest autobiography of a striving Asian American who's got the drive and ambition of his family deeply ingrained, and at the same time the irreverence of a slacker who's looking to create a "vibe" that makes the people around him feel like they're part of something special. From a failed earthworm farming venture to a successful teenage button making business, the book is chocked full of stories that provide an entertaining glimpse into the mind of an entrepreneur in the making. 

After telling the story of LinkExchange, an internet advertising cooperative he co-founded in 1996 with two of his Harvard classmates, the book shifts gears.  It's the reality of a $265 million dollar LinkExhange sale to Microsoft that leaves Tony, now wealthy and free, looking for his next adventure and his earnest search for personal happiness.  His time with friends partying, buying up real estate, investing in start-ups all provided highs, but the adrenaline rushes were short lived.  Tony wasn't building something.  He wasn't living with a higher purpose.  Overtime he ended up finding himself more and more involved with Zappos, a tiny little startup that kept losing money and was in desperate need of more and more of Tony's personal funds.  While Tony writes about the countless challenges the company faced in its early years, the message is really focused on how to create a company with a culture that sustains happiness for both it's employees and the customers it serves.  Hsieh clearly defines the company's culture with 10 core values that underlie all interactions:

1. Deliver Wow Through Service
2. Embrace and Drive Change
3. Create Fun and a Little Weirdness
4. Be Adventurous, Creative and Open-Minded
5. Pursue Growth and Learning
6. Build Open and Honest Relationships with Communication
7. Build a Positive Team and Family Spirit
8. Do More with Less
9. Be Passionate and Determined
10. Be Humble

The culture at Zappos is preserved at all costs.  And, the thing that Zappos figured out, and continues to deliver on, is the idea that people who don't fit the company culture are better off being paid to leave.  "Everyone that's hired, it doesn't matter what position--you can be an accountant, lawyer, software developer--goes through the exact same training as our call center reps. It's a four-week training program and then they're actually on the phone for two weeks taking calls from customers. At the end of that first week of training we make an offer to the entire class that we'll pay you for the time you've already spent training plus a bonus of $2,000 to quit and leave the company right now."

Paying new employees to leave may seem odd, but for Tony, it makes simple sense. "Really, the goal of that originally was to weed out the people that are just there for a paycheck."

In the end, the culture is about more than money. "It's not me saying to our employees, this is where our culture is. It's more about giving employees permission and encouraging them to just be themselves.

The book goes on to colorfully describe the company's growing pains and mounting tensions in the board room.  Despite explosive growth, a number of board members viewed the company's culture as a pet project — “Tony’s social experiments,” they called it.  The board’s attitude was that his “social experiments” might make for good PR but that they didn’t move the overall business forward. "The board wanted me, or whoever was CEO, to spend less time on worrying about employee happiness and more time selling shoes".  In the end, Tony was pressured to sell Zappos.  Fortunately for all, their acquirer, Amazon, seems to value and share what Zappos values.

The book is titled Delivering Happiness and the subtitle is A Path to Profits, Passion and Purpose. Tony Hsieh says in the book that research found that the best companies in terms of long-term financial performance are ones that are able to combine profits, passion and purpose. "There's three types of happiness and really happiness is about being able to combine pleasure, passion, and purpose in one's personal life. I think it's helpful and useful to actually think about all three in terms of how you can make customers happier, employees happier, and ultimately, investors happier."  So, if you’re an entrepreneur, thinking of becoming an entrepreneur, or just curious as to what it really takes to build a successful team, this book is a must read.  Happy reading.

Delivering Happiness - Book Giveaway

by Gregory VandenBosch

I’ve followed Zappos and their CEO, Tony Hsieh’s blog for quite a while. Recently I read about his latest project, his new book, Delivering Happiness. While researching its release, I read about an opportunity for bloggers to receive an advance copy of his book to review and promote. I applied, was surprisingly approved, and recently read the book.  I’ll be posting my review next week when the book is officially released.  So, stay tuned.

In the meantime, I’m offering the readers of this blog an opportunity to win a copy of Tony's book. And, in keeping with Zappos’ refreshing commitment to deliver ‘WOW’ through service, I was given two extra copies for this purpose. I’ll ship your copy free of charge, with no shipping costs to you. So, two people will receive a free copy of the book next week. Cool, huh?

Here’s what you need to do:

1. Keep doing what you do and read this blog.
2. Write your comments to any of the new or previous posts. Post your comments between now and 12:00 AM on June 11th.
3. The top two people with the most comments on the site between now and 12:00 AM on June 11 will receive their free copy of the book.

12 Ways to Get Off Your Ass and Out of Your Comfort Zone

by Brett Miller


Want to be more creative? Take a step back and look at your daily routine.

If you are like most people you get up about the same time everyday, eat similar things for breakfast each day, take a familiar route to work, have a list of tasks to get done before lunch, eat lunch, get some more work done, head home the way you always do, have some dinner and do your normal evening activities before turning in for the night. Then you get up and do it all again. We are all creatures of habit. There is comfort in this predictability. This is all well and good if you are content with your level of thinking and creativity moving along at the same predictable pace.

If you want to elevate your creative thinking, you need to get off your ass and break out of that comfort zone. To get a new perspective on things you can’t just sit in your “ivory tower” and expect it to come to you in a flash of genius. You need to deliberately get out there and experience new things and meet new people.
Here are 12 routine-breaking things that will give you a new perspective and open your mind to new thinking (kind of a 12-Step Program for unleashing creativity):

1. Take a new form of transportation to work next week.

2. Get out of your normal work environment at least 4 hours each week.

3. Strike up a conversation with a complete stranger.

4. Take a “Radical Sabbatical” with your team and experience something you all have never done together before and share perspectives with each other afterward. This could be an hour, a day or a week together.

5. Set up a monthly lunch with someone outside your department or company and get his or her perspective on a problem you are trying to solve.

6. Ask your family (especially your kids if you have them) to help you solve a problem.

7. Read a magazine, book or blog that you would not normally read.

8. Watch television programs that you would not normally watch.

9. Listen to radio stations or music you would not normally listen to.

10. Take a walk in a park, go to a museum, a zoo or a movie during office hours. (Gasp!)

11. Go shopping (to an actual store, not on the Internet) for something you don’t need or even want. Talk to the salesperson and ask a lot of questions.

12. Eat only things you have never tried before for a week.

So, what are you waiting for? Get up, get out there and become more creative! What else would you add to the list?

Place Bets on Passionate People

by Tony Hsieh

Tony Hsieh is the CEO of Zappos.com, Inc. During the past 10 years, the company has grown from almost no sales to more than $1 billion in annual gross merchandise sales, driven primarily by repeat customers and word of mouth. Below is an excerpt from Tony's forthcoming book that describes the beginning of Zappos.

Nick [Zappos' original founder] summarized his entire pitch in three sentences: "Footwear is a $40 billion industry in the United States, of which catalog sales make up $2 billion. It is likely that e-commerce will continue to grow. And it is likely that people will continue to wear shoes in the foreseeable future."

A few weeks later, Nick contacted us and said that he wanted to set up a lunch meeting. He'd found someone named Fred who worked in the men's shoe department at Nordstrom and was interested in joining the company, but only if the company got funding beyond the small friends-and-family round that Nick had already raised. Nick also asked me what I thought of "Zapos" as the name of for the company, derived from zapatos, which was the Spanish word for "shoes." I told him that he should add another p to it so that people wouldn't mispronounce it and accidentally say ZAY-pos.

And thus, the name Zappos was born.

A few days later, Alfred [Zappos' current CFO and COO] and I met with Nick and Fred at Mel's, a 1950s-themed diner a block away from where we lived. As we talked about the potential of Zappos, I did my best to not let the fact that Fred was a spitting image of Nicolas Cage distract me from the business conversation. Fred was thirty-three years old, tall, and really did look like he could be Nicolas Cage's stunt double.

I ordered the turkey melt, with a side of chicken noodle soup to dip the sandwich in. Fred ordered a turkey burger. Exactly 10 years later, Fred and I would return to Mel's and order the same thing to celebrate our ten-year meeting-versary together.

Nick talked about the progress that the website had made over the past few weeks. They were already getting $2,000 worth of orders a week, and the numbers were growing. They weren't making any money, because anytime an order was placed, Nick would run to the local shoe store, buy the item, and then ship it out to the customer. Nick wanted to put up the website just to prove that people would actually be willing to buy shoes online.

There were literally thousands of different brands in the footwear industry. The real business idea was to eventually form partnerships with hundreds of brands, and have each of the brands provide Zappos with an inventory feed of what was in each of their warehouses. Zappos would take orders from customers on the Internet, then transmit the order to the manufacturer of each brand, which would then ship directly to the Zappos customer.

This was known as a "drop ship" relationship, and although it already existed in many other industries, drop shipping had never been done before in the footwear industry. Nick and Fred were betting that they would be able to convince the brands at the next shoe show to start drop shipping, and then Zappos would not have to own any inventory or worry about running a warehouse.

Fred told us that he'd climbed the corporate ladder at Nordstrom for eight years, just bought a house, and just had his first kid. He knew that joining Zappos would be a big risk, but he was ready to take a leap of faith if Venture Frogs would provide the seed funding for the company.

Alfred and I looked at each other. Nick and Fred were exactly the type of people we were looking to invest in. We didn't know if the shoe idea would work or not, but they were clearly passionate and willing to place big bets, so we were willing to bet on them too.

A week after our seed investment, Fred quit his job at Nordstrom. He was officially a Zappos employee now. He and Nick headed to the shoe show in Las Vegas the very next day.

The Key to Spotting Disruption Before It Happens

by Scott Anthony


The April 15 issue of The Economist published a simple chart that gave me chills. Look at it for a minute. What looks scary to you?

The chart displayed the number of pieces of mail sent by year over the last decade. When you look at the chart, the first thing you probably noticed was the precipitous decline in mail volume over the past few years. Indeed, mail volume has sagged 17 percent since 2006. Even though the postal service has furiously cut staff over that time period, it's still pleading with regulators to allow it to consider additional strategic responses to address the disruption clearly affecting its business.

That's not what scared me though. I found the years from 2000 to 2006 to be particularly frightening, when nothing much was happening in mail volume.

How could a relatively flat line be scary?

It just looked so eerily familiar. Go back and look at what happened to CD sales from 1996 to 2001. Or check out newspaper company revenues from 1996 to 2005. Or Kodak's film sales during the 1990s. Or Blockbuster's revenues in the early part of the 2000s. Or Digital Equipment Corporation's revenues in the 1980s. And on and on and on.

In the early days of transformation, market leaders tend not to feel deep pain. The transformation takes root away from the mainstream, or in a seemingly non-connected market. It's not yet good enough for mainstream markets. Or, the overall increase in consumption acts as a "rising tide" that lifts the boats in the mainstream market. This makes it easy for executives to say, "I get what you are talking about. But my business is healthy! It's all overblown."

It's only after the not-good-enough transformation gets better that a "Big Switch" begins. And when that magic tipping point hits, the switch accelerates rapidly.

The lesson for executives is that it's important to look beyond revenue or basic market share data to determine whether or not a would-be disruption is a legitimate threat. If the U.S. Postal Service had measured its market share of "pieces of communication" (which, it very well might have) it would have noticed sharp share declines even as its revenue was increasing. Similarly, while Digital Equipment Corp. might have felt great that its revenues went up from $3 billion to $11 billion during the 1980s, that growth paled in comparison to the explosive growth in the personal computer market.

Another Big Switch in the offing might be television viewership. I remember an executive from a leading cable broadcaster telling me a couple of years ago, "This YouTube thing is all hype. You add up all the hours ever spent on YouTube, and it's less aggregate time then one night of primetime."

That's correct, and while television ratings have declined over the past few years, they haven't fallen off a cliff. But I have observed my own family's habits shifting. We increasingly watch content on portable devices and our computers. For the most part, this viewing is additive, but you can see the Big Switch coming. I hope that cable executive is looking at share the right way, and responding accordingly.

Spotting transformation requires looking beyond the traditional boundaries of your business. Growing revenues can hide a looming threat that demands your immediate attention.