The Thesis: Good management is at fault for falling behind disruptive innovation.

Good management. Not poor management. Not ignorant management. Not stubborn management. We miss the next innovation tomorrow because we were focused on managing our companies with efficiency today. We make LinkedIn’s top 100 places to work, but miss the rumblings of that small destructive force off in the near-future.

And when it comes to growing our business or finding new markets to move into, it is far easier and far more attractive to move into larger markets (with higher gross margins) than smaller markets (with lower gross margins). We go from the $5,000/yr customer base into the $50,000/yr base. But by closing our door to the $500/yr base, are we leaving it wide open for a disruptive force to enter?

A simple NPV equation illustrates the decision process of good management. A Net Present Value calculation measures the return on two investments are in today’s dollars. A positive return means the project will make money, and given two positive NPVs, the higher result indicates which project is most profitable. Over the next ten years, should we pursue Project A or Project B? If Project A has a cost of $100,000 and produces annual inflows of $30,000, and Project B has a cost of $130,000 and produces annual inflows of $20,000, and assuming a required rate of return of 7%, Project A is the wiser investment. Project A has an NPV of $103,465. Project B has an NPV of $19,132. We can clearly expect Project A to have the greater payoff, and you’d be a fool to pick Project B.

But what the analysis cannot tell us – because the future is unknowable – is if the annual inflow forecasts are reliable. They’re not. (This is why they’re “disruptive” innovations.) Project A may have higher inflows. It may have better profitability. It may be exactly what our customers – and the customers we want – are asking us for.

But will that need exist at the end of our project life? Will its profitability drop off? Will our managerial decisions today seal our fate tomorrow? Will a derivative of Project B be released in year 4 that not only increases the inflows of that increment, but reduces Project A’s inflows to zero?

Impossible to know… that’s the frustration of The Innovator’s Dilemma. In the face of the unknown, doing what is safe, practical and profitable could A) be the reason for your continuing success, or, B) be the very reason your company and its product or service becomes obsolete.

Either we move upward into larger profitability through sustaining, effecient innovations and risk potentially becoming irrelevang. Or we move downward (or outward) into new markets that require new models that demand new ways of extracting profitability.

This is the call of the entreprenuer.

Do we move away from residential customers into commercial IT services? Or do we move deeper into residential services and find a different product or profit model? Do we develop a software package that touches a few users at a higher licensing price, or do we touch a billion users with a 99¢ app called Angry Birds? Do we work with startups with fewer resources and higher value on our services? Or with established developers that will replace us when something cheaper, faster or lighter comes along?

It’s The Dip that keeps most people in stable and secure jobs. It’s risk – and to find out which option is best for us, ultimately – after all the analysis and hand-wringing – we are going to have to pick a direction and test, stop and think, and test again.

Our presenter was Camellia George, who currently works for WaPo Labs, the innovation wing of the Washington Post, and her topic – and recently-presented Master’s thesis – drew parallels between the Star Trek replicator and the very-current fad of fab. Today’s 3D printers – or fabricators – are bringing to reality the science of a generation ago.

[Sidebar: A lot of the rest of the talk, was, sadly and freely admitted, the heady type of science fiction I can't comprehend. I'm an action scifi fan - Star Wars over Star Trek type. Talks of infinite personalization, data fluency, and whether fire or language may have been civilization's first artifact, make my head hurt. I'll take lightsaber battles, please.]

But this idea totally makes sense. The kids that grew up watching Star Trek are now creating in reality the stuff of fiction. I’m onboard with it. I think the 3D printer will be amazing. And it’s a discussion theme that reflects the truths I believe, and that drive The Green Abacus. Truth #1: Technology improves our analog lives. We see something in a TV show or hear something in a talk, we develop the idea, we create the technology needed, and it makes our real-world relationships with friends and family better.

Like all the @DT_DC meetups, this was an active-participation session. And though I couldn’t contribute much to the intellectualizing that was floating around [though I tried real hard to understand whether language is an artifact or not], I totally jumped on board with the application. Our assignment was to choose a YouTube clip from a favorite scifi show or movie, storyboard the clip, and then describe the physical capabilities and intellectual approach of our subject and their world.

My partner at the table was Amar. Earlier in the evening, we’d already established a mutual admiration [to preserve myself from gushing, I'll stick with "admiration"] for Battlestar Gallactica, so we went there. We couldn’t find a clip, but one of the most memorable types of tech in the show, for me, was the Cylon resurrection tub. In the show [light spoilers? I forgot to say that last night, and got yelled at...lol], when one of the Cylon models was killed, if they were in range of the Resurrection ship, they would be downloaded into one of their identical models, and continue on living – with all the memories, personality traits and ticks that they’d previously collected.

So we went with this for our demo. And we both were pretty excited about the ramifications, and hope to someday see our idea fulfilled.

First, we explored the physical and intellectual approach behind this idea of the resurrection tub.

This technology, first of all, redefines immortality. Unlike the fountain-of-youth or the vampire (sparkly or classic) understandings of immortality, we wouldn’t be in our same body, aging or not, for thousands of years. The Cylons still don’t grow old, but they can die. And when they die, they’re downloaded into a new model and continue on. Immortality now is not the holding on of who I am, but the transferring of who I am into another suitable vessel. In a way, it’s almost like reincarnation, without the loss of the original person.

Second, it means that everything that makes us who we are is transferable. If it’s transferable, then it’s all data. Everything that we think is unique to us can actually be cataloged and moved and decoded. In the show, there were even two iterations of the #8 model (Sharon, as Boomer and as Athena). One Sharon model (and all subsequent iterations) followed the Boomer timeline, in love with Chief Tyrol and ultimately siding with the Cylons, while the other Sharon model (and all subsequent iterations) followed the Athena timeline, rescuing and marrying Helo, taking on the callsign Athena to distinguish her personality from the traitorous personality, and continuing on as a human-allied Cylon. In the show, these two women developed to have serious personality differences based on their experiences, and these personality traits would transfer if/when the current model would die. I don’t want to spoil too much, but it’s enough to say that other Cylon models experienced something similar – diverging personality branches from within the same tree.

And finally, the intellectual consideration of what it would mean to have the same close-knit group of companions for hundreds of thousands of years. What would that do to societal structures? How intimately acquainted would we become? Would we have multiple shallow relationships that only last the relatively short hundred years? Or would we seek out the 5 or 6 people we really want to get to know and befriend, and be satisfied that way for the next million years? It’s an interesting thought… in our 80 year lifespans, we consider a 2 year relationship short, 20 years longtime friends, and 60 years as family-only. What would it mean if a 60 year friendship was considered holding on loosely?

And finally, as extra credit, Amar and I wanted to figure out a way this tech could have a real world impact in the near future. I’m always losing my thoughts. I can’t write them down or record them fast enough, no matter how close I keep my Evernote app. They enter, and they disappear, without a second to think about them. So my immediate application for the Cylon Resurrection “Tub” would be a bed. Every night, I would fall asleep in the bed and process every action for the day. Dreams already do this, but are of little use to most people. And because nighttime and dreaming is meant for sleep and recovery, reviewing the days actions would not be very restful. So what the bed would do is record and catalog the day’s events, for review at a later time. Since our personality can be recorded as data, I want to download my personality to this harddrive, like a regularly scheduled daily backup, and have it searchable later on the next day, the next week, or at an annual weeklong rethink and redirect vacation.

Not to cross genres too much here, but it would be similar to Dumbledore’s Pensieve (the memory bowl) from the Prisoner of Azkaban… a place where I can store my thoughts now, while I’m overwhelmed and have too much to do, for review later, on the days I might have a whole afternoon with nothing going on. The problem with the Pensieve, and with task recorders like Evernote, and even with Evernote’s voice recorder function, is that they all require you to capture that thought and record it. That is where I lose most of my thoughts, because I cannot capture them in the first place.

So that was our idea. We shared with the group, and were excited to get some good feedback. But I have no idea how to start about designing this bed. I’m an accountant. I love tech, but cannot develop tech. I give it away to you, to consider and someday (hopefully soon) bring the prototype to market, just as the Replicator from the 90s is becoming the Fabricator of the 10s. Make it so.

I’m listening to The Accidental Creative right now (author, Todd Henry). In chapter 3, he has a whole subparagraph on the fear of success, that I am going to copy at length (largely, because it’s so rare to ever see it in print).

There is a second and more subversive form of fear I’ve seen at work in many creatives. In your head, it sounds something like this: Do I really want to knock this one out of the park? Do I really want to set myself up for that kind of future expectation? What will everyone else think? Will I be able to continue to sustain that pace? Will I be able to continue to provide creative insight at that level? Maybe I should pace myself instead.

 

None of these thoughts are necessarily conscious, but they flit through our minds as we go about our work. This kind of fear plays on the paranoia that we can’t continue to perform at a certain level of expectation, or deal with the ongoing execution of an idea once it’s launched. As a result, we are hesitant to engage fully because we don’t want to get in over our heads or deal with the consequences of success.

 

Fear of success can become an epidemic within creative teams. A blind eye is turned toward sub-par performance, and there’s a strong “you scratch my back, I’ll scratch yours” ethic, in which everyone rationalizes team members’ work as great, in order to maintain stability and avoid stretching themselves. The rationale is, that by doing this, we can lower expectations across the board, resulting in less risk of sustained future expectations for us and for our team.

 

It sounds ridiculous on the surface. But I’ll bet that if you think hard, you can probably identify at least one instance where you’ve experienced this dynamic at work. It often begins with a single instance when the team underperforms, but the results are rationalized as good in some way. Once the team sees that performance has become a subjective thing, rather than one measured against hard metrics, rationalization for other subpar work often begins. It’s not an effort to shirk hard work – it’s simply the group’s way of dealing with its fear about increased future expectations.

 

Some creatives struggle with this fear of success for their entire career. They perpetually shrink back from challenges because they’re afraid they will end up out of their league, or with more work on their plate than they can handle. While we have to be wise about the amount of work we choose to take on, we also must be willing to ignore these subtle and destructive impulses to coast or go with the flow. If we don’t stretch ourselves, we don’t grow. Growth is uncomfortable. But without the discomfort, our capacity doesn’t remain the same… it shrinks. If we’re not growing, we’re dying.

 

Fear of success is often more destructive than fear of failure, because it’s masked in the guise of wisdom. It sounds like our friend. It can feel like a mature attitude toward knowing your role, playing your part, and pacing yourself. But ultimately, it will cause us to miss opportunities.

It’s a subtle fear. It sometimes affects our work without us knowing it’s there. By knowing it’s a real and present fear, maybe we’ll be better able to face it and fight it.

Performance Oversupply is when the feature that draws customers to your product because so plenteous that consumers no long are willing to pay a premium for the feature.

When 3.5″ disk drives first started competing with 5.25″ drives, the larger drives had a larger capacity than the smaller drives, andoo they were largely ignored by the predominant purchasers of disk drives, the desktop computer market.

But as the 3.5″ capacity started to increase to match consumer requirements – even while 5.25″ drives continued to increase, far past requirements – capacity was no longer the determining value indicator. Space requirements began to be more important, and purchasers were willing to pay the premium for a smaller driver -smaller both in capacity, and physical size – than a larger drive – larger size, with much greater storage capacity.

And then, as drive makers started to focus on size, and the needs for both size and capacity in 3.5″ drive were oversupplied for, the focus then shifted to reliability and error reduction. The drives that could best withstand shock were now the premium drives.

But eventually, this premium also shrank, as dependable drives flourish and unreliable drive manufacturers went out of business. So now (finally, one would think!), the determining factor became price. Since all drives met (or overmet) the capacity, space, and durability requirements of the market, the one who could do all three for the cheapest would win the business.

It’s an interesting discussion. First of all, it proves that price is not always the first determining factor in the decision process. Your 5.25″ drive might be larger in capacity and 1/4 the price of the 3.5″ drives, but if size is my value driver, then I’m not necessarily interested in the cheapest solution. Because you don’t provide what I value.

Second, it shows that what we focus on and deliver and market today might not reflect what the market is looking for. When every tax preparer has some form of Continuing Education requirement, and the occurrence of errors in an accepted e-file return approaches zero, competance in a CPA, EA or tax preparer is no longer a differentiator. Customer service at a fast food restaurant like Chick-fil-A is only remarkable when everyone else sucks at it. Once the market equalizes, customer service is expected – but not a reason to pay more. As business owners, we must continually be pushing towards new sustaining innovations – the kind of innovations that adjust or introduce new features as we see the market shifting its value indicators.

Third, we must know when to stop pushing. We may end up over-differentiating our way out of the market, pushing deeper into a value indicator than desired, where “good enough” might have been good enough. If your service is one error in a million, is the market asking for one error in ten million? Or should we stop tweaking that one and move on to something new?

Fourth, while significant benefits accrue to the first to market, what is a premium today will be expected tomorrow. When the market assumes reliability, and moves onto price, the firms still focusing on catching up in reliability will die. There is great benefit to being first to market, and disaster for being last to market. You will not always be there first, but you must keep up with the pack.

And finally, the types of innovations thus far discussed are all sustaining innovations. While the 3.5″ comapnies focused its efforts on the features requested by their customers, the 1.8″ drive caught up to the 3.5″ drive and eventually would disrupt the game, just as 3.5″ drives had done to 5.25″ drives a decade earlier.

This is the hardest realization, and the focus of the Innovator’s Dilemma, because keeping up with (or leading in) sustaining innovations is the very reason we ignore the new markets that allow the disruptive innovations to take root. No one in the desktop market paid attention to the 3.5″ disk drive, because its capacity was so far below what the customer demanded from their drives. But it found a home in the laptop market, where it grew and matured to the point where could move up market into the desktop realm. And 1.8″ drives did the same to 3.5″ drives, finding a home in the portable device market.

So while we’re focused on sustaining innovations, building and differentiating our CPA firms (and the premium on “Not your average CPA firm starts to disappear), we might be missing the markets where a different type of disrupting innovation is taking root.

What is your premium offering? How did you develop it?

Is it still something your customers (or desired customers) are looking for, or has the price premium they’ve been willing to pay for that begun to shrink?

What are some services your best competition is offering that you must catch up with just to stay in business?

What are some features that no one yet has asked for, that might create a market?

And finally, what are the markets you’re ignoring because they don’t meet your value offering, and what is developing in those markets that should be monitored?

Namely, resources are the people, customers, assets, inventory and brainpower that we can harness to create value. Resources can be bought, sold, hired and fired.

Values are the perspective by which our company approaches the workforce.

Processes are how we turn our resources into marketable goods or services in accordance with our values.

Don’t be a newb… work your processes

To help me explain and better understand resources, values and processes, I thought I’d return to my favored analogy, Starcraft, to help.

Resources, in Starcraft, are our obvious mineral deposits and Vespene geysers. It is also our SCVs, our supply depots, and our buildings – manufacturing, research and defense. This is the stuff that is interchangeable among the three races. We can expand our base to find new resources, and we need to consider resources, especially in the early stages of the game, as we make our decisions.

Resources are equivalent, regardless of the player. In most multiplayer scenarios, no player can claim a resource disadvantage caused their loss.

Values are what we as a player bring to the game. Our values determine if we’re a Zerg rush type of player, or an advanced build player. Our values will determine which race we choose, and how quickly we choose to explore, expand and exterminate. Values determine whether we’ll be defensive or offensive. Values determine whether we’ll play 1v1, 2v2, or 1v2. Our values will cause us to play in the way that brings us the most enjoyment.

Values are unique to us. And in a way, the values we bring to Starcraft carry forward in life, because values are not specific to the game.

Processes are the way we bring our values to bear on the resources we have. Processes, in Starcraft, determine whether we will be a successful player. I can have all the same resources as my opponent, and values that say I’ll strive for the early kill, but if my opponent’s processes (his build order) are better tuned than mine, he will succeed.

Processes will determine how many barracks I build in the first few minutes. Processes determine how much lead on supply depots I will maintain before building another. Processes determine how soon (or if) I move into advanced structures or upgrading weapons and armor. Processes are memorizing the hotkeys to squeeze out an extra second.

Processes become stronger through training. We adjust our processes towards efficiency with every additional game. Processes, not resources or values, are what determine a gold medal player in the South Korean invitational and a weekend hobby player.

And interestingly, our processes are also our greatest potential for weakness. Our processes determine whether we’ll be able to shift our strategy when the situation changes. In The Innovator’s Dilemma, it is the processes that make successful companies successful that also ensure they missed the new disruptive innovations that would eventually put them out of business. It’s a danger of processes. It shouldn’t keep us from developing processes, but it is something we must keep in mind as seasons change.

In Starcraft, it’s our processes our ground force optimization processes that ensure we haven’t made any progress in air superiority – the upgrades, buildings and units we haven’t purchased because all attention has been focused on building a superior ground force. When the game shifts, you realize it. You have a short window to alter your processes and values to compensate. And how well you’re positioned to shift will show you to either be a one-trick pony or an adept gamer capable of a variety of build orders.

When you’re getting ready to launch your project, what are the resources you have available? Education? Hunger for learning? Money or investors? An idea?

What are the values that will determine how you will use those resources? What will you do? What won’t you do? Who will you do it for? What will you do in the meantime while you build your dream?

And finally, you will spend time developing your processes to bring your values to bear on your resources in a way that is profitable. Tweaking your build order continually is the key to delivering a superior service consistently, and building raving fans.

I had a really great time. Better than I’ve ever had at my local chapter meetings of Certified Public Accountants.

Why is it that these professionals can associate with their local “competition” and not be silent about their business, their clients, their struggles (“I’m really clueless about bookkeeping”), and their employees? (Admittedly, I have this online, in Thriveal, and at the state level, with the MACPA, and love both. But nothing local, where I can grab a weekly/monthly cup of coffee with peers)

I go to a meeting of CPAs, and you either have the CPAs that are so quiet that you can’t even tell they have customers, or you have the braggers that are so vocal because they want everyone to know how well they’re doing. You have the good ol’ boys who’ve been professional adversaries since the tax code was established, and you’ve got the timid staffers afraid to speak up in the presence of their employers.

SMAPPs wasn’t organized because anyone told them they had to. They’re not there to achieve their annual required Continuing Education. They’re not there because a higher state level mandated a local branch. They’re not there to form a lobby of professionals to legislate against amateurs.

They’re there because they enjoy each other. They’re there because a pet sitter has a better grasp on their service limits than CPAs do. They’re there because their combined strengths outweigh the risk of exposing themselves to their competitors.

Here’s is what I took away, and want to build around my craft. And, surveying my tech customers, I can see benefits for them to build and nurture the same.

1) You can’t service the whole region.

There was an application submitted today for a new member. On the back was a list of 30+ ZIP codes that this new member listed as her service area. The other business owners chuckle about this, remembering back to their early days when they thought they could cover a 40 miles radius as well. From experience, they knew that wouldn’t last long.

I think we need to associate with others, because we meet people every day in our businesses that would be better served by our most competent competitors. We need to send them to the best, instead of claiming we can serve them, or sending them away to find someone less competent on their own. It raises public perception of our art, and makes us look more professional on top of that. You can’t fit everyone. Know who else is out there, and generously give good clients away.

Santa Claus got it right, in Miracle on 34th Street, when he sent parents to competing stores who had the gift the child wanted.

2) You have to love what you do.

I may be wrong here, but no one is born into the pet sitting business, and it’s not likely they enter the profession to pull in a 7 figure salary (though I’m sure they could claim better margins than many CPA and tech firms…).

They do what they do because they love their customers (the pets, of course). And because they love what they do, a win for pets (no matter who serves them) is a win for them.

Do you love what you do? Do you celebrate when someone else brings out a new app that’s been in the back of your head, but never executed on? Do you cringe when someone mentions they’re learning to code, or rejoice that your tools are becoming more well received?

Art survives good and healthy competition. Monopolies (either due to an underserved area or due to a governmentally-enforced legislative action) only serve to bring the worst to the top – those who work harder to hide more secrets and cut the throats of anyone in their way. The company with the most lawyers, not the most love for the art, thrives in the monopoly.

Rather, strive to build a healthy culture in your community around your passion, whether it’s you selling it or not.

3) It doesn’t have to be all show.

This association meets for breakfast once a month. Yes, they have an agenda. Yes, they collect membership dues. But they’re not wrapped up in the pomp of giving speeches, or congratulating their leaders on leading well, or outdressing each other. We gathered for breakfast, to eat together (one of the oldest and most intimate of social interactions) and enjoy each others’ company. The agenda guided the meeting, but wasn’t a written script that told us what to say and when. There was a lot of time for sharing and questions.

Your new meeting (the one I hope you’ve been planning as you’ve been reading this) doesn’t need to be anything more than a group of like-minded friends sitting around a table, eating and talking about issues you are facing. Bring in a presenter to give a few simple pointers on a given topic (that was my role) if the topics get stale or you hit a funk.

But you don’t need to go overboard, with a venue and a podium and a mailing list, and ten attendees doesn’t need to look like failure. It’s better to start small, with a group of people dedicated to whatever issue you want to focus on, than to grow big too fast with some vague understanding of what you meet for.

I was humbled. These pet sitters get it. They understand the connection economy better than most business advisors. On the way home from breakfast, I reached out to a local bookkeeper about grabbing a cup of coffee and talking about our mutual love for Xero. I’m looking forward to building something with her.

What’s your group going to do? How can you connect with your “opposition” and see how the two of you can grow together?

She shared that she was always a procrastinator in school, and would study right before the test, pass with a great grade, and get away with it. Over the years, she learned that would be all life would require of us.

Talking to her made me laugh. Because I’m the exact same way. I am that procrastinator. I did (do) always wait till the last day to study, and if there wasn’t an external deadline, chances are good it wouldn’t get done.

So how are we supposed to continue being productive, now that we’re both freed from the external restraints of sitting in an office all day, and seeing others around us being (k, probably “acting”) productive?

There are a couple steps you can take to self-motivate and hold yourself accountable. These are guidelines I use, and have helped me 1) survive my first year on my own, and 2) impart my motivation to others and help them.

1) Set your own goals. 

I hate the word “quota”. They are not motivating, at all. The way to get around your imposed quotas (or the goals that you’ve promised to customers) is to set your own personal goals above or better than the goals set for you. And not because you want to beat whatever is set, but because you have different reasons for your own goals.

The only way to motivate someone else is for them to motivate themselves. Dan Pink talks about this in his new book, To Sell Is Human. Atunement is the practice of putting yourself into the perspective (on the same side) as whoever you are selling to, and helping them reach their own conclusions. This is how motivation works. External carrots and sticks will not keep you excited, long term.

In the Marines, when our company commander would want to see us formed up by 0900, he’d tell the company gunnery sergeant. The company gunny would then relay to the platoon commanders that he wanted to see everyone in formation by 0845. The platoon commanders would pass that on to the squad or fireteam leaders as 0830, and the squad leaders would pass it off to their fireteams as 0815. While it eventually becomes a joke (“Make sure you’re there fifteen minutes prior to fifteen minutes prior” or “Fifteen minutes early is on time, on time is late”), it did teach us to set our own goals, in spite of the goals set for us.

This gives you Autonomy, even in a role where there might not be much inherently.

2) Take control of your education. 

I used to complain about my employer never sending me to any classes. I used to desire my employer to put good materials into my hands, for me to read and watch. Finally, I stopped waiting to be told what to learn, and started learning what I wanted to learn.

No one cares about your future more than you (should). You could work for the most impressive company in the world (Zappos, maybe?), but if you don’t care about furthering yourself, you’re going to hate it there.

I’ve spoken to so many employees that are in the enviable position of working for a boss that cares about their education. They’re given books, sent to seminars, have a company library, etc. Everything I ever wanted and asked for in an employer, and they have it. And they hate it. This is closely related to #1 above, and its because these books, these seminars, this education is forced on them. They really don’t care about that, or, more likely, they haven’t gone out and found a medium of education that speaks to them.

You need to take control of your professional development. Yes, it’s cool when your employer will pay/refund you for those costs, but don’t let the absence of that keep you from growing. I paid for my CFP exam, my degree, my CPA exam (with the assistance of my parents), and every book I’ve ever read, and it has freed me up from working for an employer to becoming my own employer. And I have to pay for everything now anyways, so at least I already built that habit.

Stop waiting. Start learning. You are the only person who will fight to make sure that you are still hireable in twenty years. This is the principle of Mastery.

3) Know your own reasons for working.

Why are you in your profession? Why are you working for this company? Why are you building this startup? What is going to be your impact on your community? What does your service provide to your customers’ customers?

Purpose was a hard one for me in public accounting. We file taxes. Once we’re done, we start preparing to file next year’s taxes.

But purpose can be found in any task. The story goes… there once were three bricklayers, working on a section of wall. The first was asked, “What are you doing?” He said, “I’m building this wall. I lay a brick, pick up another, and lay it. I repeat this over and over.” The second was asked, “What are you doing?” to which he replied, “I’m building this one section of a wall that will become part of this bigger building. This building is a part of a bigger community.” The third was asked, “What are you doing?” and he responded, with awe, “I am worshiping my God with the laying of these bricks, which will become a place of worship where His word will be preached and people will learn of Him.”

If purpose can be found in laying bricks, it can even be found in preparing taxes. What does your task enable your customers’ businesses to do? Are you merely laying telephone wiring, or are you bringing a new business online that will help them reach a city with their great purpose? Are you merely reconciling books, or are you freeing up a director to focus their efforts within their non-profit on entrepreneurial activities in Saharan Africa?

You are a part of something bigger than yourself. See yourself in that, and that will help with your down days. This is the principle of Purpose.

Finally, 4) Give yourself a break. 

I love Dan Pink’s book, Drive, where these three principles of Autonomy, Mastery and Purpose originate. It’s one of my top reads of all time.

But he forgot one (or, I need a fourth one), and it’s “Chill”. Or maybe “grace”…

Some days, I cannot get motivated. That’s fine. Some days, I need a day where I stay in PJs and don’t make any headway. I’ve learned to live with that, semi-guilt-free.

I work odd hours. I work on weekends. I work at times others are sleeping, or partying, or working. So if I want to take an afternoon and watch a movie, or play a video game, or go to the zoo with my kids, I’m going to.

As long as you’re not making a destructive habit of it, to the point where you cannot keep your other goals (A, M & P) or its becoming detrimental to your immediate survival, give yourself a break once in a while. Rest up – without remorse. Because that work will be there tomorrow.

Bottom line: Motivating yourself, when no one else will or should take responsibility for your results, is difficult and the methods may change depending on your stage in life. But it requires you to know what works for you, and to stick with it most of the time, and to not feel guilty when you need a break. 

Get to work. Startups won’t start themselves

And being a gamer, and a CPA, and a blogger, I thought I’d write a semi-serious post about how this past year starting The Green Abacus is a lot like those critical first starting minutes of a new mission. Some of my readers won’t get it, some will chuckle, and some (hopefully?) will take these lessons from my experience to heart – both in the game, and in their real-life startup.

First, Assess Your Situation

When you start a new mission, the first thing you’ll get is an introduction to the level. You’ll get an overview of the scenario, a look at what units you’ll start with, and a quick glance to the top right corner to survey your immediate resources. The gamer needs to quickly assess where they are and what they have to work with. Where are your minerals deposits? Did you start out with any buildings, or just a Command Center, $50 and a handful of SCVs? Is your base already under seige? How quickly will the enemy be at your doorstep?

Starting The Green Abacus was like being dropped into the middle of a world, with scarce resources and a short narrative of the scenario. I was a dad of two, with a stay-at-home wife and an ill-funded emergency fund. My resources included an old laptop (my command center), a constant stream of business theory from books and blogs (my SCVs), and my own good looks (worth roughly $50). I walked out with no customers. I had very little in the form of cloud-based software knowledge – I knew a bit about what was out there, and knew it was better than what we had in public practice, but I was clueless about how to implement it for myself, much less a customer. And I had a vague idea of my objectives – Survive till the end of the year.

Assessing your situation is a snap decision. If you take too long at the beginning, you’ll fall behind. Look at what you have, list out your immediate needs and strengths to meet those needs. Then move on. This will be a step you’ll revisit often, if you get to step 2 and make sure you’re still around to have a situation to assess.

Second, Start Working

The first thing you want to do is get your SCVs busy gathering minerals. Vespene gas can wait. Most defenses can wait. If nothing is on fire, repairs can wait. You need to gather 50 minerals, so you can buy another SCV and get them started on gathering. Every time you get close to 50, you’ll be focused on your Command Center, jamming on S to queue up another. You’re not looking at how soon you can get nuclear silos. You’re looking at how quick you can raise 50 minerals, buy an SCV, raise a couple more and get some supply depots, and then as soon as possible, build a barracks.

My first few months of The Green Abacus were a scramble. I was attending every event I could, especially the free ones. I was working for fellow CPAs. Last June, I walked into 14 local martial arts dojos in one day. I got rejected by most of them, some were courteous, and 2 even followed up with me. What I didn’t do – and I regret it later – was start a second and third job right out of the gate. I thought I could make money show up  if I was working full time on the business to the exclusion of anything else. That was backwards. I needed to make money show up, then find time to work on building my base.

After you’ve assessed your strengths, you need to get to work. Start bringing in money. Today. Get a small, steady stream of money coming in, giving you resources to move on to step 3.

Third, Build Quick Defenses

One of the most fun (and frustrating) tactics of online play is the Zerg Rush. It can be done with any of the three races, but it’s basically a race to build as many of your cheapest units as possible, then send them at your enemy and try to end the game. A well-executed Zerg rush means the game won’t last more than a few minutes. You’re killing off the enemy before they even get a home base established.

If you’re a startup, you’re not setting up a Zerg Rush… You’re defending against it. To defend against it, you need to build in a way that protects your entry points. You need to get a few Marines trained. Last resort, you might even need to use your SCVs to join in the defense.

The quickest thing that will kill your business before you even get established will be your personal bills. Most business are at break-even within the first quarter. That’s easy. If you’re not bringing in income, you don’t spend money. But you don’t need your business income to only cover your business expenses – you need it to replace your salary and have a profit that you can take home. You’re going to be pulling every extra dollar out of your business to defend against the Zerg Rush of your utility bills.

Hiring too fast can also be a Zerg Rush. You’re going to be overwhelmed your first few months. You’re going to think hiring someone to help will relieve that pressure. It likely won’t. They’ll need instruction. They’re not like you; they can’t look at what needs to be done and start doing it. Most employees, especially in a new business, will wait for permission instead of taking initiative. And then, they’ll need to be paid. If you’re new, and still scratching for minerals, you don’t need to be hiring. You don’t need to be paying for a consultant. You don’t need to be hiring me to handle your books. You need to be working 60-70 hours a week, doing everything that needs to be done. Defend your bank account against the Zerg Rush of promised payments.

The third threat is similar to the first, and it’s your creditors. Borrowing money to start, or starting a company with preexisting personal debts, is dangerous. Your credit card becomes your cash flow, and you start to think that paying off your lender is more important than feeding your family. You don’t need credit. You need revenue. You need to cut your lifestyle to be within what you can afford. Defend your bank  account against the Zerg Rush of borrowing on the promise of future income.

The fourth threat is real, and can kill you early, but is more of a looming long term threat (like knowing your enemy is streamlining their base to go for the Muta-Rush). The fourth Zerg Rush threat is the IRS. Regulations will kill your ability to generate an income. Income taxes will hit you next year if you’re not putting money away as you go. Interest and penalties can pile up quick. The best defense you have here is to be aware of your obligations, and prepare for them. Put money away for taxes every month. If you do hire, never get behind on payroll taxes. The IRS is now your most important creditor, and they have jailtime and SWAT teams standing behind them to get you to pay your taxes. Know your due dates. Get a quick estimate of what you need to be paying. But you’re still scraping for minerals, so don’t go too overboard.

Defend against the Zerg rush to keep yourself in the game. But don’t get stuck here.

Fourth, Plan Your Expansion Order

One of the biggest threats of the Zerg Rush is that it forces you to make decisions between immediate threats and mid- to long-term threats. If you  go overboard on defending the rush, you’ll find yourself with a handful of Marines and no long-term expansion. You’ll get wiped out when the enemy rolls in with their mid-level builds as they’ve moved up the tech tree while you’re still sitting at the bottom.

Spending all your resources on immediate needs (SCVs and Marines) is short-sighted. Necessary, but short-sighted. Do you want to build a ground based army of Seige Tanks and Infantry? Are you going for air superiority? A combination of both? Do you need to expand your resource gathering into other areas of the map? Are you going to put everything on the line to go nuclear, and hope the gamble pays off? What are the mission objectives that must be accomplished? Are there any secondary (nice, but not necessary) mission objectives?

Drawing everything out of your business is also short-sighted. Necessary, but short-sighted.

Even when it hurts, you need to start saving up money – Something. Anything. No matter how small –  for 3-6 months from now. You’re going to have large one-time expenses that will force you to borrow if you don’t have a plan. Put aside money for taxes. Put aside money for future expenses. But aside something for a cash cushion, that will allow you to make small gambles when the time is right. Put aside money to wean yourself off of credit, if that’s where you are. If it’s funded with cash, risk becomes less risky. Not fully, but it is lessened.

And you need to start setting some intermediate goals – something beyond “Survive” and something shorter than “Pass this business on to my grandchildren”.  If you don’t plan ahead, you’ll keep churning out Marines and getting wiped out, wondering why you can’t gain a foothold. And eventually, the one who plans for the future wins out over the day-to-day builder. Once you stop worrying about every 50 bucks that comes through your door, what kind of base do you want to build? What customers are you serving today, and do you want more or less of that kind six months from now? What will your “end-game” look like? Sale? Inheritance? Venture capitalist takeover? A lifestyle business?

Then, you should start scouting. What is your competition doing really well? What are your customers asking for? Where is your profession as a whole going? Will there be a need for what you do in 20 years? Is there some aspect of your business that you can really drill down into and become the best at?

Repeat

So that’s it. Four simple steps to surviving your first year as a startup. The examples may be super-technical and proudly, a bit nerdy, but the principles work. Assess, Work, Defend, Expand.

And something I’m learning now, as I start year 2, is the cycle of starting the campaign never really ends. There isn’t a point of arrival. Like Battle.net multiplayer action, once I work through the cycle and “win”, it’s time to hop back in and start again. Rest is for the weak. The gamers don’t sleep in South Korea, why do I get that luxury? Assess, Work, Defend, Expand. Repeat.

The companies were exciting. They range from a science-education app for toddlers to a medical data aggregator for patients to a Kickstarter-esque platform for small clubs looking to raise $1000-1500 (No more Boy Scout Christmas tree sales!). Really interesting stuff.

The attitudes of the investors was a polar-opposite from the entrepreneurs. They seemed almost reluctant to lend. With good reason, too, because they’re up to lose the real money in your baby, that you are certain could never possibly fail. It was an awesome shot of realism.

There were a number of great points raised by the Angels. Here were a few commonalities:

1) There are very few commonalities. Every VC is different. That was perhaps the biggest reveal to me. Some angels were looking to invest as little as $10k, some were dumping $25-50 million into their portfolio companies. Some will bring on advisors (the more “accelerator” types of startup funders) to expose you to bigger networks, others made it clear that they were going to be very strict with their expectations (one angel called himself “Mr. Cranky.”). Just as there are customer niches, and you have to know who you’re looking for, there are also VC niches. Know what types of involvement you want besides monetary when you look for funding.

2) They were all experienced. Some of these VCs looked to be younger than me (and I’m only 28). Others were in their 40s & 50s, and represented VC teams even older. But all had exit-experience. They’d all been there, sold that, and were looking to continue entrepreneurial endeavors as funders. There was good experience and advice all around. It was clear that besides investing money into your company, choosing a VC means you will also be having an influx of knowledge as well. I’d find this experience to be almost equal to the monetary gain…

3) Their goals are different than yours. The startups had different ideas as to their purpose, bigger than money. They were idealists. The funders though, are looking to make a real return on their money. They’re not in it for world-changing (they are changing it – for good even – but not in the idealistic “my product will make the world a better place” sense). They’re into revenue (do you have any?) and buyout potential. Some would only touch enterprise-level solutions. And they don’t look at your project as a source of side-revenue finally allowing you to quit your day job. Some aren’t even interested in the multi-million buyout; they’re looking for the billion-dollar deals.

And all were very clear – if you can get funding from anywhere else, do it. We will dilute your ownership stake, control your dream, and cash out when we are ready. Venture funding should be seen as a option when all others are worn out.

I had the chance to ask a question, on behalf of my customers: What recommendations – specifically financial [of course I'd ask this, I'm the CPA] – would you give to someone to prepare themselves for funding? I was told “Know your profit model. How are you going to make money, and what will be your projected costs as you grow?” Venture funding, for certain, is not a “I feel this could…” You will be asked. You can’t stumble on this one. One funded company was even told by a VC to come back when they hit $1 million in revenue… and not before then. Investors are more likely to invest in proven successes.

It was an exhilarating night. It wasn’t all deflating. There was a lot of realism from the funding side, but overall, they also made it clear they were looking for passion. It is critical! Are you excited about your product? If not, why should we be? But they want passion backed by empirical evidence of potential profitability. Realistic enthusiasm.

There was great energy last night as we continued over to the bar. The room had over 1000 attendees, and ended up being standing room only (even in the balcony!). A lot of passion. A lot of networking. It’s a crowd I’m happy to watch and advise.

PS. There were some technical glitches during the startup presentations. The crowd was pretty forgiving. But it reminds me of a point David Rose said in this TED Talk: Don’t ever do a live demo. Anyone looking to make a pitch (funding pitch or otherwise) would do well to watch this 15 minute talk.

PSS. This book, Venture Deals, was recommended as the startup guidebook in response to my question, by one of the hosts of the event.

PSSS. Here were the 5 startups presented last night: Crowdvance, Partyista, AppTalia, SmartThings, and Luminate Health.

But you might also notice a few changes to the website if you look around. I am very excited to announce my focus and niche for the future: Tech companies. To explain, I’ll post the year-end letter I sent to my customers.

To my great customers:

Thank you for your business in 2012. It has been really cool to start The Green Abacus from scratch in 2012, and I am very appreciative of your participation in what I’ve done. I made it through the year! That is an accomplishment in itself, and one that I look upon with pleasure.

I’ve been writing and wrestling with industry niches for the past few months. It’s been a heavy focus of the coaching I receive within the Thriveal CPA Network. It’s something I spend a lot of brainpower on, along with what a business stands for (My “Why”, to borrow Simon Sinek’s term). My why became clear to me over the summer – I exist to support the innovative underground in their pursuit of creative disruption. My strengths are in idea generation and short bursts of passionate attention given toward disruptive innovation. I get excited working with new and young businesses overcome their slumps. It’s why I continue to push myself.

But my niche, or specific industry, to apply this energy towards has been harder to identify. Too many projects interest me! If we’ve talked, I’ve likely encouraged you to specialize deep in one area, instead of remaining a generalist. One of my favorite new sayings is: If you’re a generalist, everyone is your competition and you’re competition to no one. So I decided that 2013 was going to be a year of focus. 2013 will be my experiment to prove how well the niche-focus works for the new business venture.

And you have helped me solidify that niche. As I examined my customer list, one feature stood out: 75% of my customers are tech companies. This happened by chance; 2013 will be purposeful.

Next year, I want to remove all the brakes I’ve imposed on my business growth. I’ve set an ambitious goal of adding 50 recurring monthly customers by December 2013. I want to keep 85-90% of these businesses within the tech field – hardware, software, web design/SEO, managed systems, break-fix, and app design. Along with this growth, I plan to add my first team members to assist me with providing you the best quality service I can. They will free me up to continue to provide the personalized explanation of your financial picture that I consider a distinctive of The Green Abacus.

I am excited to see what can happen when one becomes laser-focused on their purpose and ideal customer. I hope you will join me, and educate me on how I can provide you more value. I’d like you to continue to be an active part of what makes The Green Abacus awesome.

As a token of my appreciation, I’ve designed these calendars. I think the Demotivational Posters from despair.com are brilliant. I love sarcasm, and these calendars are a great reminder to me that pithy quotes don’t make business happen, work does.

Thank you for 2012. Onward to 2013!

Barrett Young
Owner, The Green Abacus