Staying Small as an End Goal - Begin

Company Of One: Why Staying Small Is the Next Big Thing for Business - Paul Jarvis 2019

Staying Small as an End Goal
Begin

SEAN D’SOUZA DOESN’T WANT TO grow his company.

He decided that $500,000 a year of profit was all he wanted to earn and that his business shouldn’t exceed it. So that’s what Psychotactics—his consultancy that teaches other businesses the psychology of why their customers buy (or don’t buy)—earns through its website and in-person training workshops.

Sean feels that his job as a business owner is not to endlessly increase profits, or even to defeat the competition, but instead to create better and better products and services that his customers benefit from in their lives and work. Implementation, he’s found, is the key to retaining his customers and persuading them to keep buying—that is, if they’re using what he makes, they see successes in their own business and then keep buying more from him.

Sean is only interested in reaching his target limit. This goal feels very counterintuitive to what we’re taught about business and success. Society says that business goals should focus on ever-increasing profit and that, as profit increases, so should everything else—more employees, more expenses, more growth. But like many others, Sean feels that the opposite is true—that success can be personally defined, and that while profit and sustainability are absolutely important to a business, they aren’t the only driving forces, metrics, or factors in business success.

Sean’s goal of achieving a target profit and not exceeding it comes from shaping his business around an optimal life he wants to lead—complete with taking a three-month vacation each year with his wife and spending hours walking, cooking, and teaching and tutoring his two young nieces each day.

Typically awake by 4:00 AM—no alarm clock required—Sean goes to work early from a small office located in his backyard. By starting this early, Sean can record audio for his podcast before the world around him becomes too noisy. It’s an idyllic life filled with hourlong walks and ample coffee breaks. His work routine revolves mostly around answering questions for his customers in his private message board on his website.

Sean is easily able to meet his $500,000 per year profit goal, not through marketing and promotion, but by paying close attention to his existing customer base. His audience has grown slowly and sustainably because those listeners share his work with their own audiences and contacts—his current customers gladly become his (unpaid) sales force.

Too often businesses forget about their current audience—the people who are already listening, buying, and engaging. These should be the most important people to your business—far more so than anyone you wish you were reaching. Whether your audience is ten people, a hundred people, or even a thousand people, if you’re not doing right by them, right now, nothing you do regarding growth or marketing will make a lick of difference. Make sure you’re listening to, communicating with, and helping the people who are already paying attention to you.

Sean sees lots of people in the online education world focusing their time entirely on marketing, but his focus is on making his products better for his existing audience. He works to get more and better results for his existing customers, who in turn continue to buy from him, both established products and new products as he releases them. He likens his business to a kind of “Hotel California”—“You can check in anytime, but you can never leave”—except that his version is less psychedelically creepy and doesn’t feature pink champagne on ice; it features chocolate.

Part of Sean’s customer retention strategy involves sending his customers a box of chocolates, with a handwritten note and sometimes a small cartoon he draws himself. The package costs him approximately $20, which includes shipping from New Zealand (where he lives currently), but it’s the one thing his customers talk about. They’ll buy a $2,000 training program from him and talk about the chocolate. He’ll give a speech at an event, and people will talk about the chocolate. His customers love these small touches, and the attention his business gives them, because his company of one focuses solely on serving his existing customers, not on infinite growth.

When a friend of Sean’s had a remarkably profitable year, they cracked open the champagne (possibly pink champagne, on ice) in a meeting and vowed to double that profit in the following year. But Sean is absolutely certain that his end goal is to keep his business small. He questions the blind growth mind-set because he doesn’t require it. If he were to double his profits, like his friend was trying to do, how much more work would be involved? How would that extra work affect his family or his life overall? Sean doesn’t want that complexity, the added stress and responsibility. He’d much rather make a great living without his work taking over all aspects and hours of his life. So succeeding, for Sean, means staying small.

Sean’s Psychotactics business is a great example of a company of one finding its optimum size and staying put. He purposely keeps his business small as a long-term strategy that makes sense for maximizing his profits and his lifestyle. With Psychotactics at its current size, he’s able to get to know and better help his customers, who in turn are eager to spend thousands on his training products every year—as long as he also sends them $20 worth of chocolate.

Like Sean, Ricardo Semler, CEO of Semco Partners, has found the right organic size for the businesses he owns and invests in. And it’s working for him, as he’s grown Semco into a business worth more than $160 million. He believes that companies need to focus on becoming better instead of simply growing bigger. His approach is to question the idea that growth is always good and always unlimited. Ricardo works at determining the size at which each company he manages can enjoy worldwide competitive advantages and then stop growth from there in order to turn the focus away from getting bigger and toward getting better instead.

The current business paradigm teaches us that to make a lot of money or to achieve lasting success, we need to scale our businesses—as if larger businesses are less prone to fail or to become unprofitable (obviously not true). In fact, according to this view, before our imagined businesses are even off the ground we need to create them with the sole purpose of growth—and possibly eventual sale for a huge profit. This paradigm, however, isn’t rooted in truth, nor does it hold up to critical investigation.

A study done by the Startup Genome Project, which analyzed more than 3,200 high-growth tech startups, found that 74 percent of those businesses failed, not because of competition or bad business plans, but because they scaled up too quickly. Growth, as a primary focus, is not only a bad business strategy, but an entirely harmful one. In failing—as defined in the study—these high-growth startups had massive layoffs, closed shop completely, or sold off their business for pennies on the dollar. Putting growth over profit as a strategy, however trendy as business advice, was their downfall.

When the Kauffman Foundation and Inc. magazine did a follow-up study on a list of the 5,000 fastest-growing companies five to eight years later, they found that more than two-thirds of them were out of business, had undergone massive layoffs, or had been sold below their market value, confirming the findings of the Startup Genome Project. These companies weren’t able to become self-sustaining because they spent and grew based on where they thought their revenue would hit—or they grew based on venture capital injections of funds, not on where revenues were actually at.

Venture capital can be a quick way to infuse money into a company to help it succeed, but it’s not a requirement and it definitely comes with certain pitfalls. The Kauffman Foundation study also illustrated that almost 86 percent of companies that succeeded in the long term did not take VC money. Why? Because a company’s interests may not always align with the interests of its backers. Worse, investor interests may not always align with what’s best for a business’s end customers. Capital infusion can also leave a business with less control, resilience, speed, and simplicity—the main traits required for companies of one.

Paul Graham, the cofounder of Y Combinator (one of the largest and most notable VC firms for startups) explains that VCs don’t invest millions in companies because that’s what those companies might need; rather, they invest the amount that their own VC business requires to see growth in their own portfolios, coming from the few companies that actually give them a positive return. Graham notes that sudden and large investments tend to turn companies into “armies of employees who sit around having meetings.”

Startups, as serial entrepreneur Salim Ismail states, are extremely fragile by nature. They’re designed to be temporary organizations that may grow into large companies, under conditions of extreme uncertainty. They expend money and resources in the anticipation that revenue will catch up to spending. Most startups fail because that doesn’t happen often.

Although a lot of these examples involve companies that would be considered startups, companies of one aren’t always startups in the traditional sense. Many startups focus on growth, buyouts, employees, lavish offices with foosball tables and open-concept floor plans, and massive profits at any cost, and they tend to rely on investors for initial cash. Companies of one instead focus on stability, simplicity, independence, and long-term resilience and rely on starting small and becoming as profitable as possible, without the need for outside investment. Companies of one, with their focus on what can be done in the here and now, not what can be done with investment, can also be started without an injection of capital.

Not all startups can be lumped together—some are challenging the mantras of blind startup growth. For instance, Buffer, a social media scheduling tool with more than three million users, has seventy-two employees and isn’t looking to grow that number quickly, unless it absolutely has to. Buffer wasn’t always in the mind-set of challenging growth—a few years ago the company got caught up in a hiring frenzy because it was looking to do a large round of raising capital. The idea was to be ambitious in hiring in order to do more to capture more of the market share and hit new revenue targets that investors were going to want to see. But Buffer hired more people than it had revenue to pay.

Two shifts then happened: Buffer realized that even after securing funding, it still had to lay off 11 percent of the team. That employees could be hired and paid based on revenue targets (instead of on actual and current profits) wasn’t a reasonable assumption to have made. Second, they realized that their leadership team was divided about what success meant to their company. The CEO wanted a more profit-driven, holistic, slow-growth plan and believed in hiring more employees only when the money was there, not in the hopes that it would materialize. Buffer’s COO and CTO, by contrast, were more motivated by high stakes and high growth—in other words, the typical startup game. In the end, they left the company and no other employees left or were let go; those who remained shared their CEO’s vision of slower, profit-based growth.

When businesses require endless growth to turn a profit, it can be difficult to keep up with increasingly higher targets. Whereas, if a business turns a good profit at its current size, then growth can be a choice, made when it makes sense to succeed, and not a requirement for success.

For companies of one, the question is always what can I do to make my business better?, instead of what can I do to grow my business larger?

THE DOWNSIDE OF EXCESSIVE GROWTH AS AN END GOAL

Often, in the pursuit of growth, companies or founders have to battle what Danielle LaPorte refers to as “the Beast.” A company focused on growth often puts into place complicated systems to handle exponential volume and scale, which require more resources (human and financial) to manage, which then require more complex systems to manage the increased resources, and so on and so on.

Danielle’s “Beast” was the system and structure (financial and technological) she created to match her grand vision for her business. She invested in a million-dollar website to take her business to the next level. The problem was that a million-dollar website requires a team of experts to manage and run it at all times. Updating blog posts or products can incur tremendous costs.

The Beast had an ever-growing appetite and required constant feeding. To keep the Beast satiated, Danielle’s focus was pulled away from her center—that is, from her purpose in creating and running a business in the first place. As her focus became muddied she found herself busier with feeding the Beast than in taking care of her core business. When Danielle realized that she didn’t want to exponentially grow to continue feeding the Beast, she decided it had to be destroyed.

In “killing her own Kraken,” as she put it, she began to radically simplify. Her strategy shifted from “broadcasting light . . . to as many people as possible” to “broadcasting light . . . to the people with eyes to see it.” Not focusing on growth and scale, she believes, was the best way to remove the Beast from her company of one and return her focus to the people who were already paying attention to her work. She likens her decision to stop trying to reach infinitely more people through paid channels to feeding only those people who show up for dinner—the ones who naturally or organically find her work through word of mouth or who are hanging out where her business hangs out. The fact is that she still has hundreds of thousands of ravenous fans showing up for “dinner.”

Lusting after the Beast, of course, feels completely understandable and human—even in business, we all need to feel loved and wanted, some of us more than others. However, unless we truly question this need and how relevant it is to our business, we can perish because of it. Buddhists call the Beast the “hungry ghost”—a pitiable creature with an insatiable appetite. There is never enough for the hungry ghost, so it’s always looking for more. In business, the hungry ghost is the quest for more growth, more profit, more followers, more likes.

Even large and established companies aren’t immune to the perils of chasing the Beast of high and infinite growth. Starbucks, Krispy Kreme, and Pets.com all pursued aggressive scaling and have paid a steep price in various ways.

Starbucks was opening hundreds of stores around the world but decided that it could scale faster by adding sandwiches, CDs, and fancier drinks to its offerings. This rapid expansion ended up diluting the Starbucks brand, and in an equally rapid contraction, the company was forced to close 900 stores. Subsequently, Starbucks returned its focus to doing its one thing—coffee—better. It renewed its efforts to recapture a boutique coffee shop experience by upgrading coffee machinery, retraining staff in the art of making a perfect espresso shot, and removing a lot of the superfluous products like music and lunch food. Starbucks learned the hard way that better isn’t always bigger.

Krispy Kreme’s freshly cooked novelty treats were so popular (and delicious) that it seemed like the company couldn’t fail. Its FRESHLY BAKED sign would regularly lead to lines that went on for blocks. But in focusing on expansion into grocery stores, gas stations, and even multiple locations in small areas, Krispy Kreme diluted the very scarcity it had once capitalized on. As franchises were pitted against each other, the company found itself chasing diminishing profits: it dropped 18 percent in sales over the two years from 2004 to 2006. Krispy Kreme’s newly massive size also created some accounting and reporting nightmares that forced it into a $75 million settlement with the U.S. Securities and Exchange Commission.

Finally, Pets.com is, by most measures, the epitome of the dot-com boom-and-bust cycle—an example of prioritizing uncontrolled and overfunded growth while doing things like selling products far below cost (which obviously isn’t sustainable). Pets.com spent more than $17 million on advertising involving sock puppets in the second quarter of 2000 alone; meanwhile, their revenue (not profit) at that time was only $8.8 million. Pets.com was spending based on growth it hoped to see, not on where the company was currently at, and it ended up losing an estimated $300 million in investment capital along the way.

Of course, economies of scale can sometimes be required for success in certain markets and for some products, but often they aren’t required and it is ego, not a strong business strategy, that is forcing growth where growth isn’t necessary.

When you feel like you have to start out competing with the largest player in the market, you end up chasing your competitor’s growth instead of bettering your own offering. Sometimes finding and working with a single customer, then adding another, and then another, is a very useful and solid way to begin. And sometimes that can even be the end goal—one where your focus is on the relationship and the paid work at hand. Sometimes the best plan is focused on your current customers’ success, not on chasing leads and growth.

Not everything needs to scale to succeed—as Leah Andrews, founder of Queen of Snow Globes, discovered almost by accident. She runs an extremely unscalable business: creating intricate and unique snow globes, one at a time, for her customers. From the start, she was inundated with requests for these custom pieces of art, from big names like Quentin Tarantino and Channing Tatum and even from Netflix’s corporate offices. Instead of scaling production, she focused on raising her prices higher and higher until the demand leveled off to where she could handle orders. She focused on creating an amazing product that was better than the competition—mass-produced snow globes—and was able to charge a huge premium for her work. Because she focused on making the best product, not the most scalable product, she grew her profits quickly without scaling production, which would have also scaled complexity and expenses.

Pat Riley, the Hall of Fame basketball coach who led five teams to the NBA championship, coined the term “the disease of more.” He noticed time and time again that winning players, just like some startups, focused on more instead of better. Once they won, they’d let their own ego get in the way of all the tasks that had helped them win in the first place—like practice and focus—and instead become lured into more endorsements, more accolades, and more media attention. As a result, they ultimately lost to internal forces, not to competitors.

When you focus on doing business and serving customers in better and better ways, your company of one can end up profiting more from the same amount of work because you can raise the prices until your demand flattens out to where you can handle it. I did the same when my business was a client-focused design business: I doubled my rates over and over until the demand only slightly exceeded the time I had available to do the work. In doing so, I didn’t need to hire more people to grow profits; I just needed to focus on doing better and better work—putting in the same number of hours but vastly increasing the revenue generated from the work I did. Staying small is still my end goal, because like Sean’s and Ricardo’s visions for corporate success, I look toward betterment instead of infinite scalability.

There’s nothing wrong with finding the right size and then focusing on being better. Small can be a long-term plan, not just a stepping-stone.

IS THE TRADITIONAL WAY OF DOING BUSINESS BROKEN?

Traditional ways of working—in offices with strict rules and corporate hierarchies—are giving way to gig-based, remote work with more autonomy. The business world is constantly being disrupted with new automations and technologies, and this is a good thing. Changes in how we work give us a chance to scale with the bare minimum in investments, people, and time.

Traditionally, having a small business was thought of as a good starting point, or as what happens when a business finds only limited success. But there’s a new breed of business that starts small and stays small, and not for lack of vision or strategy, but because these days one person (or a tiny team) can accomplish a lot. Technology is constantly improving, allowing us to do things like automate sales funnels, or drop-ship physical products with no need for warehouses and staff, or print-on-demand without investing in machinery and storage.

WordPress, the software that powers 26 percent of all websites on the internet, closed its gorgeous San Francisco office, not because the company was out of money (it’s extremely profitable) but because employees were barely working at the office, opting instead to work at home. The 15,000-square-foot WordPress office was being used by approximately five people a day; having 3,000 square feet to work in is definitely a bit too much space. Because technology makes it easy to work from anywhere, on any computer, less spending on overhead (like offices and the things that come with offices) is required.

Pieter Levels is a digital nomad and Dutch programmer who is challenging the status quo of business tradition. Working from any location around the globe with an internet connection (currently in a village in Thailand), he builds software that competes with VC-funded Silicon Valley companies with teams of twenty or more people. Pieter runs his online service, Nomad List—a community list of cities around the world ranked by how easy and fun it is to work from them—and earns $400,000 a year without employees or even an office. With the New York Times, Wired, CNN, and Forbes having all reported on Nomad List, Pieter needs no PR or marketing team, just a focus on a great and always improving service. Because the company is just Pieter and a handful of contractors he uses as he needs them, he can implement ideas as he has them, test them to see if there’s a market fit, and quickly pivot if there’s not. He’s able to be top of his industry, above much larger companies, as a team of one—and he currently doesn’t even have a traditional mailing address. By automating what he can with existing software, he’s even able to be offline for weeks at a time and still have steady revenues.

Through careful planning and strategically executing personalized sales funnels, people like Brennan Dunn, who runs an email automation and training consultancy, are able to launch products without even lifting a finger. Brennan can leave home, not even bringing a computer, and still have record sales because he’s built a system that drives ideal buyers to his website, converts them into subscribers, sends them personalized emails that change content based on their actions or behavior on the site and list, and finally turns them into buyers. It’s a process that generates revenue whether or not he’s present, and it’s all done through software (email service providers like MailChimp or Drip) that costs a few hundred dollars a month to use. Brennan started down the traditional path of hiring employees, having an office, and scaling people, investments, and resources to get his business to succeed. But now that he’s scaled back to having no office and only a handful of remote contractors, he spends less time on work—and far less on overhead—and generates more revenue by using off-the-digital-shelf technology.

Tools that used to be expensive enterprise software—or hadn’t even been developed yet—today are cheap, easy to master, and easy to use without spending a lot of time on them. For example, I can run a 30,000-person mailing list that generates the bulk of my income by spending approximately an hour a week on it. I can create a document that’s both editable and shareable around the world for free with Google Documents or share any file, of any size, using a service like Dropbox. I can replace an entire IT department with one on-contract systems administrator in Berlin who works one to two hours a month for me, and I can learn everything I need to know about the visitors to the websites that run my business with free analytics software. Technology has made it easy to do what used to cost thousands or require a team of people. The new reality of business makes it easier than ever to be a company of one and not have massive growth as an end goal.

Working for Yourself: Too Risky?

Risk isn’t just the name of a famous, amazing, and all-consuming board game—it’s what most people think is involved in working for yourself! And sure, there is definitely risk that can’t be mitigated in working for yourself, but we should challenge the idea that being your own company of one is riskier than working at a traditional company.

Just as the traditional way of doing business is changing, the outdated, fear-ridden assumption that entrepreneurialism is a hazardous venture needs to change as well. In today’s world, there is no longer the single track to security of going to school, getting a degree, and finding and keeping a job until retirement. Jobs and career tracks are no longer as secure as they were decades ago. Quite simply, the days of throwing retirement parties for employees of fifty years and sending them off with a gold watch and a great pension are long gone.

Miranda Hixon, founder and principal of MilkWood Designs, does workspace design for small startups in the Bay Area. Think of her work as intentional workspace design based on a company’s specific internal style and communication style—basically the physical manifestation of a company’s culture. Her role with clients can include buying or custom-making beautiful furniture pieces, planning the organization of a space, and adjusting a space as a company experiences growth spurts or downsizing.

Growing up in the 1980s, Miranda dreamed of wearing power suits to a corporate job. (Hey, both were the rage back then.) When she was a child, her father, Steve Hixon, began working for himself after being laid off from a large architecture firm. The job he was forced to leave was supposed to be stable and secure, but when businesses or economies change, large companies downsize—something most employees have no control over.

Miranda’s father ran his new project management business from the family garage in the suburbs of San Francisco—a windowless room the family referred to as “the Box,” as in, “Where’s Dad? Is he out in the Box?” In this not-so-luxurious home office was the one and only family computer, and stuck to the monitor was a Post-it that read “OVERHEAD = DEATH,” which was his philosophy for running the business. Far ahead of his time, he kept things small by using a network of freelance architects, engineers, and estimators, and only as he needed them. Since the company was just him, he was also able to pivot several times when shifts in the market and specific types of work he enjoyed doing led him to niches to focus on. Keeping his company of one small (just him) enabled him to set his own flexible hours, so he could coach Miranda’s swim and basketball teams on some days and then work in the evenings instead.

Miranda made her first foray into a postschool career with startups in Silicon Valley. While she enjoyed the friendships, travel, and community these jobs gave her, she also found herself hitting a glass ceiling fairly hard. Although the mostly white, wealthy, and male leadership preached total inclusivity and open values to their communities, she was constantly met with resistance on her own career growth. This led her to venture out on her own, where she could be more autonomous and have more control over the limits to her career—or scrap them altogether.

Her father’s “OVERHEAD = DEATH” mentality seeped into Miranda’s subconsciousness, and she runs her business as he ran his. She hires painters, movers, installation workers, and carpenters only as she needs them, and from a pool of trusted people with whom she’s worked in the past or who have been referred to her directly. She also pays them above-average wages to incentivize them to work on smaller projects or on weekends. Because she pays them what she feels is fair, they do better-than-average work, for which she can charge her clients a premium. And by keeping her business small, she’s able to work in a niche—smaller startups—that interior design firms with lots of employees and overhead have to avoid as they chase higher revenues.

Her childhood vision of power suits in corner offices died off, not because shoulder pads are no longer in vogue, but because she realized that constant growth often brings on stress and anxiety. When you hire employees, you’re responsible for them. You’re their source of income that goes toward paying their mortgages, feeding their families, and even sending their children to college. That’s a heavy responsibility. But keeping people on contract as freelancers makes you responsible for them only for a specific project, and you know that what you’re getting paid includes what you’ll pay them.

Miranda has found a way to have enough responsibility to succeed on her own terms, but not so much responsibility that she becomes stressed and has to spend lots of time managing others. Able to retreat for long stretches of time to a yurt she built in the Sierra Nevada foothills, she finds that her overall life is less stressed as well.

I’ve worked for myself for nearly twenty years and have had stable, increasing income every single year. That’s in direct contrast to many of my friends who have worked at larger companies or startups and been laid off or downsized every time the economy changes. In the United States, the number of non-employee establishments (people who work for themselves and have no employees) with an annual revenue of $1 million grew by nearly 6 percent in 2015, according to the U.S. Census Bureau. It found that 38,029 companies (of one) were bringing in seven-figure revenues, doing everything from the usual high-tech and scientific work to equipment repair and laundry services.

The Census Bureau data shows that each year it becomes easier and less risky to work for yourself and still make a decent living. You can outsource or hire freelancers to cover tasks that were traditionally done by an employee. And unlike a corporation, you, as the boss, can’t be downsized or hit a gender-based glass ceiling. As long as you’re doing great work that’s in demand, working for yourself has no limits—or, as we’ll see next, only smart upper limits that you put in place yourself.

UPPER BOUNDS

Most businesses set goals and targets, but few consider having an upper bound to them. Paying attention instead to the lower bound of a goal, they focus on ever-exceeding increases in areas like profit and reach and set goals like, “I want to make at least $1 million this quarter,” or, “We need to grow our mailing list by 2,000 people per day.” They set the minimum threshold they want to reach, with the implication that if more happens, that’s even better.

What if we set upper limits to our goals instead? For instance, “I want to make at least $1 million this quarter, but not more than $1.4 million,” or, “We need to grow our list by 2,000 people per day, but not more than 2,200”?

In most areas of business, there’s a magic zone for sustainability that relates to the concept brought up at the start of this book about having “enough.” If growth happens too quickly, problems can arise—like not being able to hire fast enough to keep up, or not having enough infrastructure to handle increased volume. The lower limit can be important, for example, if you need to make enough revenue to be profitable. But more than that? How useful is it to make more than you need to be profitable? How does it benefit you, your business, or your customers if you blow past your company’s goals?

James Clear, a successful blogger on the topic of habits and productivity, tells the story of Southwest Airlines being faced with an interesting problem way back in 1996: the airline had methodically expanded from a tiny regional carrier to having a bit more of a national presence. And at a time when most other airlines were losing money or going under, over 100 cities were begging Southwest to service their location. However, that’s not the interesting part. What’s interesting is that Southwest turned down over 95 percent of those offers and began serving only four new locations. It turned down exponential growth because company leadership had set an upper limit for growth.

Sure, Southwest’s executives wanted to grow each year, but they didn’t want to grow too much. Unlike Starbucks, Krispy Kreme, and Pets.com, they wanted to set their own pace, one that could be sustained in the long term. By doing this, they established a safety margin for growth that helped them continue to thrive at a time when the other airlines were flailing.

Southwest is interesting because its leaders did what they could to sustain their business, and not more. From an evolutionary point of view, there’s probably a good reason to want to accumulate more and more. With more food, more water, more protection against predators, and so on, we may be less likely to die (probably by being eaten by something larger than us). So in the past, not having an upper bound to our goals served us well and kept us fed, protected, and evolving. But now, in modern society, having goals that grow and grow without limit can often be problematic. Most of us don’t have to worry about food or protection, but we’re still wired to want to collect more and more without end. This mind-set carries over to the businesses we create and run as well.

Culturally, growth feeds our ego and social standing. The bigger the company you own, with more profits and more employees than the next person, the better you might feel. James Clear figured that 10,000 subscribers to his new blog’s newsletter would be the magic number that would signify his success. But then he hit 10,000 quickly and nothing in his blogging business changed. He adjusted his goal to 100,000 subscribers, but still, when he quickly hit that number, nothing changed. As much as we don’t want to be, or admit to being, guided by external factors and peer pressure in setting goals, to some degree we are. It’s good to feel accepted and valued by a group. If our goals were completely internalized at all times, we wouldn’t chase growth as much as we do. Even James now focuses on upper and lower bounds for his business and lets his goals be guided partially by the reasons for his work (as well as a little bit by external and peer factors).

ENVY: THE ULCER OF THE SOUL (AND OF BUSINESS GROWTH)

Socrates said that envy is the ulcer of the soul, meaning that we can easily become negatively affected by the success of others. Who we are and what we actually want become overshadowed when we internally compare ourselves to others. We idolize people like Steve Jobs, Elon Musk, and Oprah and think that their path to success—creating massive empires—is our own key to happiness and career fulfillment.

For some reason, when our business is just us, or when it isn’t growing, we feel a societal pressure to keep up with other, larger businesses in order to be seen as “making it.” After a person answers the question “What do you do?” by saying that they work for themselves, the second question is typically “How big is your business?” You may be slightly embarrassed if you have to answer that the business is just you and that you have no plans to grow. Really, though, running a business of any size is hard work. Having made it sustainable and profitable, whether it’s big or small, should be something to be proud of.

External pressure and even some internal wishing for growth mostly comes from this envy. We see another business and assume that, if it’s large, that business has made it. Even very transparent companies typically share only their gross numbers or MRR (monthly recurring revenue), which is only a small part of the picture and doesn’t account for what their actual profit or margins are. A business that’s making $500,000 a month could be hemorrhaging key staff due to overworking, and its burn rate could be $550,000 a month—making it unprofitable and potentially unsustainable once the VC money runs out.

Envy is hard to manage, as it’s a socially unacceptable emotion, even though it’s something most people feel. Envy also takes the focus off your work, your business, and your customers. When we give in to envious feelings, the best we can hope for is second best, since we’re focused on copying someone else’s path and not forging our own.

Envy is also based on a false comparison, like comparing uncooked ingredients to a delicious baked pie. Envying others, we see only the end result or the final product—the delicious dessert. But in ourselves, we see all the not-so-tasty starting ingredients and are aware of all the real work required to combine them into a successful end product. We too often compare our sometimes messy selves to only the best and shiniest part of others and come up short. Remember, every business has not only its successes but also its failures.

But there is one way that envy can be useful: as a tool to recognize in ourselves what we truly value. For example, if I’m envious that you make more money than I do, then I need to recognize that making more money might be important to me, work toward figuring out if that’s truly the case, and then, if it is, determine how I can best make more of it. Once we learn what triggers our envy, we can focus on how to rethink or move forward.

In an ancient language from India called Pali, there’s a term, “mudita,” which seems like the opposite of envy, because it means “to delight in the good fortunes or the accomplishments of others.” (Interestingly, it has no counterpart in English.) Outside of altruism, mudita is useful in business: we can be pleased that people like Musk or Oprah exist and thrive, while at the same time not letting their prolifically growing empires affect what we do or how we see our own businesses. We can be open to the insight that others have their own business successes but are not the sole factor in steering our own.

We don’t need an attitude of world domination and crushing it in our work in order to make a great living or even have a substantial impact. Our work can start and finish small while still being useful—focused on moving toward better instead of more.

BEGIN TO THINK ABOUT:

· Whether you are paying attention to your existing customers or to just your potential customers

· Whether you could make your business better (however you define that) instead of just making it bigger

· Whether your business really needs scale to succeed

· Where the upper bound to that scale might be, the place where profit and enjoyment have diminishing returns

· How you could turn envy of others into enjoying their successes and learning from them