Dissecting Derek – Starting the New Year with @Sivers

Jan 1, 2013 Wisdom 0 comments

The clock ticked over to a new year … so WHAT are you and your business going to do differently in 2013?

‘War stories’ from successful entrepreneurs like Derek Sivers are powerful because they can also help us figure out WHY we’re doing what we’re doing. In the first of an occasional series, Hugh Mason dissects the insights Derek has published to look for questions that could prompt useful New Year resolutions.

Derek Sivers was originally a professional musician and circus clown. In 1998 he created CD Baby, which became the largest seller of independent music online, with $100M in sales for 150,000 musicians. Ten years on, Derek sold the business for $22M and gave the money he made to a charitable trust. His TED talks have been viewed over 5 million times and it has been a joy to know him as a personal friend and a friend of JFDI.Asia over the last year or so since he moved to Singapore.

Since Derek wrote a bestselling book about his experience, many more people have got the chance to know him. Anything You Want is a great read because everything in it comes from personal experience: there’s no pontificating or abstract theory. It helps that he’s ruthlessly honest about when things went wrong, how he learned from his mistakes and came out stronger.

Anything You Want is an unusual book because it’s designed to be read in an hour yet it manages to makemore than fifty incredibly useful lessons that Derek learned entertaining at the same time. It follows in a long tradition of first-hand accounts of start-up success, like Rework from the 37 Signals team or Do More Faster from the guys behind TechStars.

The value of books like this is their immediacy. You’re hearing from people who have been at the front line. Yet the challenge for many of us is: how can I apply it to my own life?

So we have decided to make this the first in an occasional series when we dissect a book that seems to hold powerful lessons for start-ups, listing the questions it has prompted us to ask ourselves. What follows is just our interpretation, so please comment, challenge it and share your own insights.

If you’re new to Sivers-ology then do take a peek at Derek’s book, blog or videos too because our list of key points doesn’t begin to do justice this wonderful, warm and wise man. Happy New Year!

Derek’s Wisdom	So How?
You need to know your personal philosophy of what makes you happy and what’s worth doing.	What makes each of the team happy and what does everyone feel is worth doing?
Your business plan is moot. You don’t know what people really want until you start doing it.	Once you get started, take time to re-evaluate. What do our customers really want, enough to pay for?
You can’t please everyone, so proudly exclude people.	Who are we consciously excluding?
Make yourself unnecessary to the running of your business.	How are we going to become unnecessary to the running of the business?
I wrote down my utopian dream-come-true distribution deal from my musician’s point of view. In a perfect world, my distributor would…	Who are we doing this for? What would be their dream-come-true deal?
I figured if it worked for her, it was fine for me.	Who are our role-models that we can learn from?
A few days later, I realized that $35 feels about the same as $25, so I bumped it up to $35 per album, which left me room to give discounts and still make a profit.	Are we being fair to everyone, including ourselves, in the deal we offer?
When you’re on to something great, it won’t feel like revolution. It’ll feel like uncommon sense.	What is it that we do that people like so much?
If it’s not a hit, switch	What do people really, really like about what we are doing?
Success comes from persistently improving and inventing, not from persistently doing what’s not working.	What are the bits of what we do that are not working? Let’s dump them. Today.
Don’t waste years fighting uphill battles against locked doors. Improve or invent until you get that huge response.	Where does it feel like we are banging our heads against the wall? Shall we stop that right now?
When deciding whether to do something, if you feel anything less than “Wow! That would be amazing! Absolutely! Hell yeah!”—then say “no.”	Do we actually want to do all that we are committing ourselves to do?
Most business owners I knew would tell you about their businesses by talking about their second round of funding, their fancy encrypted replicated load-balancing database server, their twenty-person development team, their nice midtown office with a pool table, and their weekly promotion parties. When you asked what the business actually did, they couldn’t explain it clearly. Then they would talk about LOI, ROI, NDAs, IPOs, and all kinds of things that also had nothing to do with actually helping people.	Is there a risk that we get too driven by the priorities of investors who don’t really share our passion for making ideas real?
Never forget that absolutely everything you do is for your customers. Make every decision—even decisions about whether to expand the business, raise money, or promote someone—according to what’s best for your customers.	Who are our customers? What problems are we really solving for them? How can we give them more, so they want to give us more?
If you want to be useful, you can always start now, with only 1 percent of what you have in your grand vision. It’ll be a humble prototype version of your grand vision, but you’ll be in the game. You’ll be ahead of the rest, because you actually started, while others are waiting for the finish line to magically appear at the starting line.	What can we do today to get started, with what we have to hand, rather than what we would like to have?
Starting small puts 100 percent of your energy on actually solving real problems for real people. It gives you a stronger foundation to grow from. It eliminates the friction of big infrastructure and gets right to the point. And it will let you change your plan in an instant, as you’re working closely with those first customers telling you what they really need.	What can we test and understand, armed with the limited resources we have?
I spent only $500 to start CD Baby. The first month, I earned back $300. But the second month I made $700, and it’s been profitable every month since.	How can we start making a profit, however small, without laying out a load of cash or raising a ton of money first?
I’m not interested until I see their execution.	Make a list of all the things we have achieved already and celebrate it.
Do you passionately love the “Terms & Conditions” and “Privacy Policy” pages on other websites? Have you even read them? If not, then why would you go putting that garbage on your website?	Is there anything we are doing which is meaningless ass-covering?
If you do land the big client, that organization will practically own you.	Are we being dicked around by a bully? How can we drop them?
Instead, imagine that you have designed your business to have NO big clients, just lots of little clients.	What is the optimum number of clients of what size for us?
You don’t need to change what you do to please one client; you need to please only the majority (or yourself).	Can we pass on the clients we don’t want to help to someone who can help them?
So much of the music business is actually the star business— people hoping to catch the coattails of a huge mega-star. But I wanted nothing to do with that, for these same reasons.	Are we trying to hang on someone else’s success when we should be building our own?
When you build your business on serving thousands of customers, not dozens, you don’t have to worry about any one customer leaving or making special demands. If most of your customers love what you do, but one doesn’t, you can just say goodbye and wish him the best, with no hard feelings.	What are the top 3 things that every one of our customers wants?
You need to confidently exclude people, and proudly say what you’re not. By doing so, you will win the hearts of the people you want.	Who do we want to shut out?
In a perfect world, would your website be covered with advertising?	Are we getting distracted into earning small amounts of money and compromising on what’s really valuable?
What I thought was “the” way the song went was really just one of an infinite number of options.	Are there ways to ‘re-frame’ the core of what we do that might be better?
So please don’t think you need a huge vision. Just stay focused on helping people today.	Who are we trying to help? How can we help them today?
Are you helping people? Are they happy? Are you happy? Are you profitable? Isn’t that enough?	What are the three key metrics we should look at every month to know we are on course? Are we profitable? How many people have we helped?
How do you grade yourself?	If we achieve success, how will we know we have done it? Can we measure our path along the way?
It’s kind of like the grand tales, in which the hero needs to be prepared to die to save the day. Your company should be willing to die for your customers.	Do we really like the customers we are working with?
When someone’s doing something for love, being generous instead of stingy, trusting instead of fearful, it triggers this law: We want to give to those who give.	How can we create something that our customers want to give us money for, rather than something we have to try and sell to them?
It’s important to resist that simplistic, angry, reactionary urge to punish everyone, and step back to look at the big picture.	Have we over-reacted to any bad experiences?
It’s too overwhelming to remember that at the end of every computer is a real person, a lot like you, whose birthday was last week, who has three best friends but nobody to spoon at night, and who is personally affected by what you say.	We get so many people contacting us and liking us on Facebook. Instead of seeing that as a chore, how can we do something for every one of them, and have them do something for our community in return?
I see new websites trying to look impressive, filled with hundreds of puffy unnecessary sentences.	We have a shedload of words on our website. Maybe we should try and hack it all down. Because right now people aren’t reading it.
That one goofy email created thousands of new customers.	What can we do that puts fun into our offering?
Sometimes, after we had done the forty-five minutes of work to add a new album to the store, the musician would change his mind and ask us to do it over again with a different album cover or different audio clips. I wanted to say yes but let him know that this was really hard to do, so I made a policy that made us both smile: “We’ll do anything for a pizza.” If you needed a big special favor, we’d give you the number of our local pizza delivery place. If you bought us a pizza, we’d do any favor you wanted. When we’d tell people about this on the phone, they’d often laugh, not believing we were serious. But we’d get a pizza every few weeks. I’d often hear from musicians later that this was the moment they fell in love with us.	How can we make it easy for someone who asks us for something we can’t charge for to do something for us in return?
Don’t try to impress an invisible jury of MBA professors. It’s OK to be casual.	Is the way we work shaped by old habits of looking for someone to give us a gold star?
There’s a benefit to being naïve about the norms of the world— deciding from scratch what seems like the right thing to do, instead of just doing what others do.	How are we different?
Instead, if your internal processes are always designed to handle twice your existing load, it sends an attractive “come on in, we’ve got plenty of room” message to everyone.	Are we planning to maximise or success, or restricting ourselves by planning to minimize the downside?
You might get bigger faster and make millions if you outsourced everything to the experts. But what’s the point of getting bigger and making millions? To be happy, right?	Let’s keep the stuff we enjoy in house.
Ever since I started my company in 1998, I had been offering excellent service. I could make promises and keep them because I was in full control. Now, for the first time, I had promised something that was out of my control.	Let’s always know what we are promising and make sure we can deliver it
It was my fault for not reading what I signed. My fault for letting a bank teller’s quick advice make that major decision for my business structure.	Have we got someone on the team who’s looking at all the details?
I asked one person to start a manual, write down the answer to this one situation, and write down the philosophy behind it.	How do we capture our know-how and share it with new team-members as we grow?
I was still working twelve-hour days, but now I was spending all my time on improvements, optimizations, and innovations. To me, this was the fun stuff. This was play, not work.	How can we hire people who enjoy running things when we as founders are best at starting things?
Anything you hate to do, someone else loves. So find that person and let him do it.	What do we hate doing? Who can we find who loves doing it?
Happiness is the real reason you’re doing anything, right? Even if you say it’s for the money, the money is just a means to happiness, right? But what if it’s proven that after a certain point, money doesn’t create any happiness at all, but only headaches? You may be much happier as a $1 million business than a $1 billion business.	Do we really want to run a massive empire? What feels comfortable?
Make sure you know what makes you happy, and don’t forget it.	What makes us all happy?
Trust, but verify.	Are we allowing enough time to supervise the people who join us and to help them learn to do things right?
Then I realized that there’s such a thing as over-delegation. I had empowered my employees so much that I gave them all the power. After a complete communication breakdown, it was eight-five people (my employees) against one (me). I became the scapegoat for all of their dissatisfactions.	How can we involve and motivate everyone as we grow, without setting up unrealistic expectations of shared decision making?
Lesson learned too late: Delegate, but don’t abdicate.	There will be challenges with staff and perhaps with each other as we grow the business. We have to address those before they poison us. If that means letting people go, we should do it.
I realized that the bigger learning and growing challenge for me was letting go, not staying on.	Maybe we should view this business from the start as a stepping stone for each of us, as something we are doing to move on from, not something we are going to do forever.
Kurt Vonnegut and Joseph Heller were at a party at a billionaire’s extravagant estate. Kurt said, “Wow! Look at this place! This guy has everything!” Joseph said, “Yes, but I have something he’ll never have…. Enough.”	What is enough for each of us? Let’s talk about that frankly so we understand each other.
I created a charitable trust called the Independent Musicians Charitable Remainder Unitrust. When I die, all of its assets will go to music education. But while I’m alive, it pays out 5 percent of its value per year to me.	Could we write a press release now dated the day that we sell the business to help visualise what we are all aiming to achieve?
Just pay close attention to what excites you and what drains you. Pay close attention to when you’re being the real you and when you’re trying to impress an invisible jury.	Can we help each other be consistent and true to our purpose?
As my company got bigger, my stories about it were less happy. That was my lesson learned. I’m happier with five employees than with eighty-five, and happiest working alone.	How big do we really want to be? Could we hand over the business beyond that point?

Dissecting Derek – Starting the New Year with @Sivers

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