In the beginning, measure everything you’re doing against money. Are you making money? Good. If not, tweak your process.
Then start doing things that can potentially pay off on a longer time scale.
A student asked me last week:
“I’m working hard. I’m doing all the things you taught me; fishing, Tribebuilding. But I’m not seeing crazy results yet.
What should my benchmark for success be?
Should I be satisfied that I’m taking action or should I focus on something else?”
At the time, I didn’t have a great answer.
I told them that I’m also still trying to figure that out and depending on the day, I’d likely answer that same question differently.
There’s a good argument to be made for a Michael Jordan-type mindset:
Only the outcome matters. Are you winning championships? If so, you should be happy. If not, you shouldn’t.
But also for a Bill Walsh-type attitude: Just focus on the process itself. If you work hard to implement a near-perfect process, the results will eventually follow. So even if you lose, as long as you implanted the process perfectly daily, you should be happy.
My best friend Wouter and I were hanging out last weekend (we studied mathematics together at Tilburg University). I asked him.
He believes in the process mindset.
This question has been bouncing around in my subconscious for a while and I think I’ve finally got an answer I’m satisfied with.
If you’re earning less than $10,000 a month, your core focus should be to get to that threshold.
You can’t say “success is following the process” cuz you’re still trying to figure out what that process should be to begin with.
This is what makes entrepreneurship different from something like bodybuilding, where the same roadmap can be used by everyone.
Suppose you’re shipping content for an entire year yet your audience isn’t growing and you’re also not making sales. That was not a productive or good year and something needs to change ASAP.
This is a direct result of implementing Seth Godin’s advice of just ship. And that was me early in my business. It’s incredibly demoralizing. There needs to be some feedback mechanism that prevents you from fucking around like this. Guys like him already have a huge following so in a sense, everything they do works.
So success, in the beginning, should be measured against revenue (or profit). That will force you to keep your head in reality and it will create some urgency.
After $10,000 a month, we can start having a longer time horizon.
If you dig through the literature, you’ll find that a lot has been written on business goals.
Namely that if you focus solely on revenue, that can create issues.
E.g. Maybe your revenue is high because you sell dollar bills for a dollar fifty. I.e. you’re losing money with every sale.
Remember that Theranos was valued at $10 Billion with Elizabeth Holmes’ net worth being half that. Yet there was nothing to back that up. This is why business goals are always a proxy. You’re trying to measure something using a target, but the second that measure is replaced with that actual target, it’s no longer a good measure because it will be gamed. (Goodhart’s law.)
Or maybe you focus on profit but it creates negative externalities where your profits are high but society is negatively impacted because of the actions of your company.
Ultimately, these are luxury principles.
In order to even consider these, there first has to be a business.