Transcription
Who should not be an entrepreneur and when do you know when to give up?
About two-thirds of America should not be entrepreneurs. And the reason you would know that is you're unable to make the first step. If you don't have the ability to take risk, you'll never be a successful entrepreneur because I'll give you an example. In great business schools, I teach at practically all of them. Almost half the class become consultants. They don't have the guts because think about a consultant. They never make any decisions of consequence. You get paid a lot. It's great. If you go to the top of your consulting firm, maybe you make $3-4 million bucks a year. That's great. Can't complain about that. But every decision you make is just a consultation. So that an executive who actually makes decisions, who's a real entrepreneur, can say yes or no to that idea. You're just making decisions of no consequence whatsoever. And the reason I don't hire consultants is after two years they get that virus. They're just generating opinions. They're not doing anything. And I don't mean to insult consultants. I would just never hire them. And so if you really, you know, jump off and become a consultant, you're going into a life of mediocrity. And I'm trying to define the difference between that life of mediocrity and one where that same graduate says, "I'm going to take a chance. I'm 28 years old. I don't have a family yet. I'm going to start a business. I don't know if it's going to work or not, but I have the ability to just take that risk, not seeing what's on the other side of the chasm." And I'm going to forego a salary of $200,000 a year because I want something more.
Those are the people who become free one day because they make $5 million in a day because they're entrepreneurs. And that consultant that you use, they're back enjoying their lives but in a sea of mediocrity.
Do you think you're born like that though? Because it seems as though there is a personality type that's more prone to becoming an entrepreneur who really pushes back against rules, against authority, and they want to take a different path.
I don't know if you're born that way. I think you have events that occur in your life that are jolting to you. And I every entrepreneur I talk to that's been successful has that defining moment where they say, "I remember this moment in my life and I remember what happened to me and it just changed my direction. It's like a meteorite in space. Knock it off course a fraction of an inch, a hundred years later it's a billion miles in a different place. Well, that's the same thing with an entrepreneur early in their lives. For me, it was getting fired the first day I ever had a job. I realized that that was just somebody else had power over me. I couldn't even deal with that concept. And so that was the I never worked again. And with all the hardships and everything else, but it's very similar. There's some event that triggers somebody. So, I'm not sure you're born with it. Just something in your DNA says I'm going to take that path of risk.
What do you think is more important for a successful entrepreneur? To be hungry for money, to be focused on profits, increasing revenue, decreasing expenses, or to be very passionate about the product or service that you're trying to sell.
Well, if you're hungry for money, I guarantee you'll fail 100%. If you start into entrepreneurship and on a journey and all you care about is getting rich, you will fail. You will fail miserably. Every entrepreneur, not some, every single one that achieved some massive liquidity event I've talked to, and I've met many of them, they don't even remember the day it happened, they just woke up and said, "Oh my goodness, I'm filthy rich." But they weren't calculating for that. It is because they created something of such value that someone else said, "Well, we want to buy that business." And you own whatever you owned of it. And that's what happened to me. I woke up one day and we sold the learning company for $4.2 billion. I was one of the founding members, I had founders shares. I wasn't even thinking about that the night before when we were negotiating the deal. And then the funny thing was when we all came back to the office, the 10 of us that were founders, we didn't know anything else except to go back to work. We didn't even know what to do. So the only difference was we were filthy rich. Now, over time, people changed sort of their momentum and their motivation. But if you think that you can calculate the exit and that somehow you can start a business because you know you're going to sell it, make a lot of money, you will fail 100%.
It's the second issue you talked about. It's the passion of loving what you do and getting up every day and working willing to work 25 hours a day, 8 days a week because you love it so much and you love to compete. That's how you become free. It's about not about the pursuit of capital. It's the pursuit of freedom, personal freedom. I don't have to work anymore. I work harder than I ever have. I really enjoy what I do. I love to compete. I love to do what we're doing right now, talking about this so that others may learn from my mistakes. But the whole idea is personal freedom. That is the American dream. And you have to set your course on that. And there's one attribute you need to pull that off. And I've taught so many people. It's the ability to differentiate the signal from the noise every minute of the day. People are going to chase you with stuff. You're going to get a thousand ideas. They're going to call you and ask you to do stuff. If it's not on task for the signal, it's noise. It's noise. And you have to just push it aside. Those are the great entrepreneurs. They don't deal with the noise.
Who are you competing against?
It's when I start a business, for example, let's say watch insurance. I'm a big watch collector. I've looked at every single policy there is for watches. None of them work for me.
Why? The problem with watches that if you go and get a rider on your home insurance, you know, you're going to notice when you actually read the fine print that you're going to end up in many cases with a depreciated value of the watch 10 years later when you lose it or get stolen or you break it. Except the majority of watches these days go up in value and sometimes geometrically. Certain brands quadruple in value. And your policy a decade later when that watch is out of production can't even contemplate its market value. So I want a policy that actually scrapes market value every 24 hours and I can insure it for exactly what it'll cost to replace it or I can insure it for the purchase price. I can decide myself, but I'd much rather insure my watches for what they were worth last night.
So I have a policy with Chubb and it's a stated value and I've started doing this with cars, too. I notice it becoming a lot more common. A stated value and then if that watch gets lost or stolen, they replace that, I think, plus 50% up to the total policy amount. So let's say you have $100,000 in watches. One of those watches is worth $20,000. You lose it, it gets stolen, they'll cover that up to $30,000 up to the total policy limit of $100,000 within a certain period of time.
Okay. What happens if that's a steel white-faced Daytona that you bought for $12,000 that's now trading for $58,000? A stated value of, you know...
And that eats up how much of your of what you've got left for the other five?
Whatever you say. So for my, I think I have five watches. I stated values on all of them and I stated the value based on what they're selling for on Chrono24. If I were to replace...
Few policies like that?
No, I get it. But I'd rather solve for a different problem. I have many watches. I only want to insure the 25 I travel with and I want to travel maybe for a month with these to go shoot Shark Tank, for example. I'm going to put them in a bank vault in LA. I want the value of every one of those watches that day should it get lost.
And I want to be able to turn that policy off when I swap it out for another 25 watches. Maybe I only have three watches. I only want to wear one. It doesn't matter. I want a different kind of insurance product. There's nothing wrong with what you've got, but it doesn't solve for me. If you think you're going to spend 1.72%, which is approximately what you're spending of the replacement value on your watches, I would want it to be accurate. I want to check the language regarding what theft is theft and what loss is loss because I'm writing it specifically for watches. And lastly, does it work internationally because I travel a lot?
And I've talked to thousands of people that are collectors of watches and they all want the same thing and they can't find it. There's nothing wrong with Chubb. There's nothing wrong with Lloyd's of London. When you make something specific for just watch owners, maybe you've made a better mousetrap. The biggest challenge the watch industry has in insurance is customer acquisition. I do not have that problem. There are millions of people who know I'm a watch collector. And when we tested this, I just put one 15-second ad out and got requests for 2,000 policies. No insurance company has ever been able to do that. So, I'm pretty confident that a year from now after I've launched this product, I'll be a great competitor and I'll make this industry better by offering a better product that people have to compete with. That's why I like to be a competitor. I see a hole in a market, I see a need, I see something that's required, I go pursue it.