Lessons from the book 📚 How I built this

Insights from Chapter 1

#1

Good ideas are hard to find; you have to try a lot of things. And it’s hard to know if you’ve found a good idea until you try it out.

#2

The intersection of passion and problem solving is where good ideas are born and how great businesses are built.

#3

The passion has to be for the customer and not for the entrepreneur, because the greatest forms of organic growth are repeat customers and word of mouth.

#4

When coming up with ideas, start thinking about problems you have. But make sure enough people have those problems too.

Insights from Chapter 2

#1

The problem that stops many first-time entrepreneurs is they have difficulty leaving the relative safety of stable everyday employment to start a new business.

#2

It’s scary to leave a safe job, but it’s not dangerous. The danger to Jim Koch, who eventually opened his own brewery, was being stranded in a job he hated.

#3

Michael Dell began by fixing and selling computers as a hobby out of his dorm room, before being told not to by his parents. He eventually decided college was not for him.

#4

Entrepreneurs like Dell have made leaving college less scary and dangerous.

Insights from Chapter 3

#1

As an entrepreneur, you need to take the leap with a backup plan in mind.

#2

FUBU took off with the ascendancy of hip hop in pop culture as Daymond John figured out a way to have his product associated with that movement.

#3

A lot of successful entrepreneurs started their passion project as a side project, splitting time between that and their more steady jobs.

#4

It’s always good to have a fallback plan to starting your own business - it can also help with funding if problems strike.

Insights from Chapter 4

#1

To be an inventor, you have to do your research. You have to research the problem, research the solution, research the market, research the competition.

#2

Steph Korey and Jen Rubio of Away first had to figure out what people wanted, what was possible, and what they could actually build. They did their research.

#3

Research can’t be trusted wholesale. It should be used as knowledge, so you can provide customers not with what they want, but with what they need.

#4

Successful entrepreneurs rely on research to teach them, which gives them the confidence to lean on their instincts and trust their creative visions when it comes time to decide exactly what they want to build.

Insights from Chapter 5

#1

One of the biggest reasons startups fail is due to sole ownership. Companies, like humans, need partnerships.

#2

You need a partner whose skill set complements yours; who does what you cannot.

#3

Eric Ryan and Adam Lowry’s story of creating Method involves a lot of luck and coincidence, but when they eventually became partners, it was clear they balanced each other out.

#4

Partners aren’t just for helping the business survive, but you as well.

Insights from Chapter 6

#1

Bootstrapping is using what you have at your disposal as a first-time business owner to get yourself where you want to be.

#2

Joe Gebbia, one of the co-founders of Airbnb, was living in San Francisco and couldn’t afford rent. So he and his roommate, Brain Chesky, came up with the idea to rent out airbeds in their apartment to attendees of a design conference.

#3

They couldn’t get anyone to take them seriously, so they decided to try and make the idea more popular by relaunching it at the same time as the Democratic National Convention.

#4

Despite getting incredible attention and more listings, they still could not get any funding, so they continued maxing out credit cards to stay afloat.

#5

Brian and Joe figured out there was a problem with the listings’ poor quality photos, so they decided to take the photos themselves for free. Their sales went up as a result.

Insights from Chapter 7

#1

The origin stories of some of the most successful products show that they are the result of a simple brainstorming session.

#2

A great, and cheap, way to advertise your brand is to tell your brand’s story, because every business is a story.

#3

The story of your brand must explain at a fundamental level why you exist. It is a story you have to tell to your customers, investors, employees, and ultimately yourself. It is a way to differentiate and answer questions.

#4

Whitney Wolfe had an idea to start a female social media service, but rethought it into the dating app Bumble when she realized the problem was how dating was constructed and constrictive for women.

#5

The Airbnb guys had a difficult time early on with investors because they hadn’t figured out their own story yet. Doing so can help answer a lot of questions surrounding your company, and you don’t need to have it ready right from the start.

Insights from Chapter 8

#1

Bootstrapping only gets a company so far, and then the founder needs OPM, other people’s money.

#2

You don’t always need to go to investors, as you don’t want to lose stake in your company. After bootstrapping, soliciting money from friends and family can help you keep moving.

#3

Receiving money from friends and family versus private investors is much easier because it is an investment in you, not so much your idea. Though of course not everyone has access to large sums of money.

#4

It is important to realize the ability to leverage money is available to all of us through crowdfunding, and we just need to leverage our relationships to make it work.

Insights from Chapter 9

#1

Iteration is the incremental evolution of a product or service. It is a phenomenon that is natural to innovation and foundational to the development of products.

#2

The amount of time you spend in the first phase of development isn’t as important as making sure you don’t get stuck there for too long. You have to get it out into the world and see if people like it.

#3

A company can create a successful product if it does the research, knows its market, and is willing to work hard.

#4

The founders of RXBar are like a lot of other people who have successful startups. They had a problem they wanted to solve, were not afraid of negative feedback, and they used the iterative process to solve it.

Insights from Chapter 10

#1

Sometimes being a niche product that gives you a side door into the market can be just as valuable as going a traditional route and competing with other similar products.

#2

As a company, you always aim to have a monopoly and to avoid competition. Microsoft had a monopoly in operating systems, which meant they could charge whatever they wanted and force their software on PC makers.

#3

Do everything within your power to find your way into the market where you are likely to have the most success.

Insights from Chapter 11

#1

Companies should pick the best place for them to be.

#2

It all depends on your company - whether to go where there is competition but plenty of resources, or to go somewhere with no competition but no system in place.

#3

Some companies had to move in order to break into their industries; some had to move in order to break out of them; and some were perfect right where they were. Your job is to decide which camp your business belongs in.

Insights from Chapter 12

#1

Buzz is a precursor to word of mouth. It’s a way to inform people that your product exists. It’s a way to get people talking about your product.

#2

There is good buzz and bad buzz - both mean people are talking about your company, but one will build you up while the other will burn you down.

#3

As impressive as it is to create a company, it is also just as important to create that buzz to make sure your company not only exists, but arrives to its competition and customers.

Insights from Chapter 13

#1

Word of mouth is the best type of buzz you can get because it fosters customer development and loyalty.

#2

Word of mouth buzz can sometimes enable good companies to not spend any money on advertising.

#3

To create word of mouth, you need to make a really, really good product.

#4

Five Guys was created to be different from all the other burger and fries restaurants, and it was successful because of this.

Insights from Chapter 14

#1

There will come a day when you think about quitting.

#2

The founders’ idea wasn’t the problem, it was their execution. With their own factory, Stonyfield yogurt finally began turning a profit.

#3

To know what to do during a crisis, you need to have a true understanding of your situation.

#4

The hope and goal is to get through from day to day, keeping the business alive, until you are able to see your situation clearly and notice the patterns that will illuminate your path towards success.

Insights from Chapter 15

#1

Not every founder can build a unicorn, but if you want to build a big business, you will need to raise a lot of money from venture capitalists.

#2

VCs are human, just like the rest of us. The most successful ones are usually the luckiest ones.

#3

If investors don’t understand your business, it’s your job to educate them.

#4

Sometimes it’s not how you think about your product, but how you think about venture capital.

#5

Melanie Perkins of Canva, an online graphic design and publishing tool, went through months of trying to receive funding. She eventually learned what VCs were looking for and began to address and answer all those concerns in her meetings.

#6

While VCs might have all the power over the money, that doesn’t mean they are necessarily wiser than you or that they are always right.

Insights from Chapter 16

#1

James Dyson learned the importance of ownership of intellectual property and of having a majority share in your own company after losing several battles in court over his wheelbarrow designs.

#2

Knowing when not to sue is just as important as knowing when to do so. And knowing why you’re suing is even more important.

#3

Dippin’ Dots is an example of the importance of knowing when not to sue. The company spent millions on litigation fees and ultimately lost its patent.

#4

By suing, Dippin’ Dots put itself in unnecessary risk, threatening its brand when it should have been protecting it. The business was based on the brand, not the idea.

Insights from Chapter 17

#1

When Tylenol pills were tampered with, the CEO of the company recalled all Tylenol pills and came out with tamper-free products, something completely unprecedented at the time.

#2

With the recall and redistribution, the CEO was able to re-establish public trust in Tylenol, and it rebounded exceptionally quickly.

#3

Trust is the cornerstone of every great business.

#4

Jeni’s Splendid Ice Cream, a significantly smaller company, was able to rebound from a similar public health scare because they had already established trust with the public before they recalled their products.

#5

Ford and Firestone blamed each other for tire failures, resulting in turmoil and financial loss for both companies.

Insights from Chapter 18

#1

Stacy Madison and Mark Andrus had to choose between pita chips or their pita sandwich shop. They chose to merchandise the chips and went on to sell the company for $250 million.

#2

It’s not often companies pivot from a bad idea to a good idea, but rather a good idea to a great idea.

#3

A pivotal moment in many businesses is the realization that the work they did to grow their ideas was fundamentally different from the work they now had to do to grow their businesses.

#4

All the things Stewart Butterfield had done with Glitch had been about helping people communicate and work together better. So they pivoted to a communication software for companies, Slack.

#5

It takes a lot of courage to quit a business that’s not working and sometimes realize the problem might be the idea, not the business.

Insights from Chapter 19

#1

Having a defined mission is extremely valuable when money is scarce because it gives you a reason to keep fighting. You can leap into bad decisions following money as opposed to your mission.

#2

Jenn Hyman could have been a millionaire any number of ways, but she decided to stick it out with her business Rent the Runway because she believed in her mission.

#3

Drinkworks is a company that was having a difficult time getting their product off the ground, despite great publicity. Their issue was they didn’t really have any established mission.

#4

While Drinkworks had an established product and no mission, Andy Puddicombe had a mission of spreading meditation but no product yet before he came up with Headspace.

#5

Andy was certain of his mission of spreading meditation, but couldn’t figure out how to get it out past his small clinic.

#6

Andy found a partner and together began doing live events to spread meditation. Eventually, they came up with the idea of turning “Headspace” into an app and reaching millions of users virtually.

Insights from Chapter 20

#1

“The culture deck” is a document that explains Netflix’s company culture, which is the way they want to act with each other. It was also used to vet possible job applicants.

#2

Early entrepreneurs sometimes have a hard time understanding that doing everything as the founder of the company will not lead to success, but instead lead to the company being about the founder, not the business.

#3

The founder of American Apparel was so obsessed with his business that he began controlling every aspect. He became the company and the company became him, for better and, mostly, for worse.

#4

A leader has to be intentional about creating a culture and values that will foster the growth of the company.

#5

If you’re going to build a company that lasts, you have to know your values. And when you do, and so do your employees, they’re the ones who breathe life into the business.

Insights from Chapter 21

#1

Wells Fargo, instead of focusing on expanding at all costs, focused on one area, San Francisco, and were rewarded with loyalty and continuing business.

#2

Chet Pipkin was interested in entering the world of computers, but saw far too much competition, so he waited and learned about the industry until he found a niche he could exploit.

#3

Chet began making cables that allowed the first PCs to work with the first printers.

#4

Like all the companies that rode the financial waves of the Gold Rush, Chet carved out a space for himself in the beginning of the PC revolution. While other big companies were focused on producing enough PCs, he found his niche and served it.

#5

There are plenty of examples, like Southwest Airlines, where companies starting out were not thinking big, but rather serving a niche and being very good at it.

Insights from Chapter 22

#1

A company is like a family: it is always more complicated than at first glance. And like parents, business partners can sometimes not work together and must separate.

#2

As the co-founders of Reddit found out, running a company with your best friend is not as easy as coming up with the idea for one.

#3

Brad Black and Susan Griffin-Black are an example of business affecting personal relationships, as they ended up getting a divorce, but still remained devoted to their business. Both stayed on to run it together.

#4

Employees, like children, can tell when the founders/parents are arguing.

Insights from Chapter 23

#1

When growth begins to accelerate, it’s even more critical to know who you are as a founder and who you are as a company.

#2

A message to the employees of Bonobos was not received well, and instead backfired. It created an environment of cutthroat business, instead of unity or cohesion.

#3

By opening a new office for their tech team in Palo Alto, it actually divided the team more, each side of tech and fashion thinking they were the main force behind Bonobos.

#4

The AOL-Time Warner merger was a disaster because it was about two teams working together to do something they couldn’t do on their own. The teams were not aligned and didn’t work well together.

#5

Bonobos finally became a valuable company when they learned what sort of business they were, and started focusing solely on that.

Insights from Chapter 24

#1

There comes a point for every founder with a growing business to choose between money or control; most times they choose incorrectly, and end up being forced out before they expected or wanted to leave.

#2

Gary Erickson and Lisa Thomas were offered $120 million to sell Clif Bar, and they initially agreed before Gary backed out. He chose the third option that growing businesses have to choose from: happiness.

#3

Gary would have to buy out his partner Lisa, putting the company into debt. He chose correctly, because not only did Clif Bar get out of debt, Gary remained happy because he made sure things stayed the same for his employees/family.

#4

Angie and Dan Bastian were looking for a way to make some money for their kids’ college educations, and stumbled upon making kettle corn.

#5

It was easy for Angie and Dan when the time came to sell because they had achieved their goal of paying for their children’s tuition, but also could pay back all the people that helped them get started.

Insights from Chapter 25

#1

As a founder, you will have many jobs, but one of the most important is uniting your employees. Because the way you make your business succeed is by making your employees succeed.

#2

Kindness is a free investment that can have great returns for your company. People need to stand by your company for any hopes of succeeding.

#3

There are so many stories of owners being generous with their employees; for example, Eileen Fisher sold her fashion company back to her employees.

#4

Kim Jordan and Jeff Lebesch of New Belgian Beer Co. started by setting up a phantom stock plan and distributing shares to employees. They made new employees stand up in front of their co-workers - and now fellow owners - to talk about why they wanted to be an owner.

#5

The owner of Patagonia has instilled great respect and confidence into his employees that they are empowered to do their jobs however works best for them.

#6

Only two things are truly necessary when it comes to building a kind, long-lasting company: one, that the things you do advance your mission and match your values, and two, that you do them from the beginning.

Insights from Chapter 26

#1

After creating such a successful podcast and establishing a great audience base, Guy Raz feels, most of all, lucky.

#2

Understanding where luck played into running a successful business is like looking through the cracks of triumph and misfortune and trying to understand what went in between.

#3

Plenty of successful entrepreneurs can point to luck for getting their business rolling.

#4

Luck is an opportunity waiting to be taken advantage of.