Playing Business: How to Know If You’re Focusing on the Important Things
- Entrepreneurs who do business are able to isolate the few factors that make a business real: great products, great service, growing revenue and profits. Doing business is actually running a real business and producing economic value by serving real customers, generating revenue and making profits. Playing business is acting like you are running a business but without actually doing business. The purpose of this article is to distinguish between the two, which is not always easy to do, particularly in the infant stages of an enterprise where a startup is not proven. So, distinguishing between the people playing and doing business is not easy to do. Eventually, the people who do business will have real businesses, and the people who play business won't have any business.
I've come to learn that good entrepreneurs have an instinctual ability to separate B.S. from what is real. The longer I run a business and watch other businesses, the more convinced I am that, to some degree, this may be a God-given attribute. Entrepreneurs are able to cut to the essence of business issues that are material (I'm also open to the possibility that entrepreneurs learn how to do this over an extended period of time). However, I was always struck by the fact that when Microsoft started out, and even for a long time after inception, Bill Gates had the company running out of very basic, almost Spartan facilities. He must have just known even at an early age that the quality of a business's facilities does not have much to do with whether the business is real and successful. It also struck me, and still impresses me, that he was personally selling deals until Microsoft was doing around $100 million in revenue. To put this in perspective, up until a few years ago, there were only 200 software companies in the world that did more than $100 million in revenue each year. People seem to think that all software companies are huge and successful. But this is simply not the case. Bill Gates did business -- he didn't pretend or play at it.
Entrepreneurs who do business are able to isolate the few factors that make a business real: great products, great service, growing revenue and profits. They are not lulled into the trappings of business.
Now, let's talk about people who play business. These are people who are either focused on the trappings of what would seem to be a business or they are not focused on the right types of things. The people who start these businesses usually want the signs of a real business without the substance. Some of these signs include expensive facilities, lots of employees, lots of capital, big titles, a fancy board of directors, etc. In some ways, people who play at business want the result of a real business before they have a real business. These are people who spend a lot on travel, charge personal expenses to the company, and put thought into what they wear and how they appear. They are basically posers (to use the vernacular).
On a more subtle level, they probably spend a lot of time in meetings and setting up accounting systems and evaluating insurance plans and other non-revenue-producing activities. They spend time on superficial things, not real things.
- At root, when you start a business, you have to ask yourself whether you want something real or you want to appear a certain way. In a way, starting a business is an inside game, where the character of the founders is revealed in hundreds of small decisions and things they say or do. Interestingly, who you are usually informs the type of people that you hire and bring on. So doing business, versus playing business, cascades directly to what the organization becomes over time. About 15 years ago, a documentary called "Startup.com" came out about a software startup company. If you recall the movie, the people who starred in it played at business; they didn’t do it. They raised a ton of venture capital prior to the dotcom crash and received a lot of PR coverage. In the end, they failed on a large scale. They never developed a reliable product, and they never got revenue. It’s a great documentary to learn in reverse -- to think about what you DON’T want to do.