David McKelfresh is a senior at Colorado State University, majoring in business and entrepreneurship. David is currently finishing up a study abroad experience at the University of Salamanca, coaches youth soccer, and is in the process of investigating a few opportunities to start his own business. (He’s also my brother-in-law, so we know each other quite well.)
Recently, David asked me a few questions about my transition to working on the Personal MBA and related projects full-time as part of a school project. As I was writing my responses, it struck me that you may be interested in reading this too, so here’s the entire interview – I hope you find it useful.
Would you tell me about yourself before you started your first venture?
I graduated from the University of Cincinnati Lindner College of Business with a BA in Information Systems, with minors in Real Estate and Philosophy. As a sophomore, I began working for Procter & Gamble full time as a part of UC’s cooperative education (extended internship) program. I spent ~6 years at P&G doing online marketing, new business development, retail marketing, and online marketing measurement. I started working full-time on my publishing business, Worldly Wisdom Ventures LLC, which I started in 2005, in November of 2008.
Who else did you know while you were growing up who had started or owned a business, and how did they influence you?
I have a very non-entrepreneurial background – my dad is a teacher / former elementary school principal, and my mom is a librarian. My hometown (New London, Ohio) is extremely rural and agriculturally influenced – most of the community is employed at a farm, local small manufacturing, or the school system. In high school, I worked for the school system fixing and maintaining computer systems, and I worked for a very small local computer company in New London for a few years. Outside of that, I had very little exposure to entrepreneurship until I was in college.
What was your education experience? In hindsight, was it helpful?
High school and college were very enjoyable, but marginally useful from an educational standpoint – most of what I know and use on a daily basis I’ve taught myself, either via reading / research, learning directly from the experiences of other practitioners, or experimentation.
I am a huge advocate of self-education: in my opinion, entrepreneurs should spend less time pursuing traditional educational experiences and more time reading and trying new things. My most successful products / services are a direct result of self-education and experimentation.
In particular, did you have any sales or marketing experience? How important was it, or a lack of it, to starting your company?
The extent of my sales experience was working at the local computer store – people would come in interested in looking at computer systems, and I’d try to help them as much as I could. The sales approach was very soft – the focus was on educating the customer about what’s important and being as helpful as possible, which ultimately led the customer to trust your advice. That was a good lesson to learn at an early age – I still find that sales approach most effective today.
When, under what circumstances, and from whom did you become interested in entrepreneurship and learn some of the critical lessons?
I came to entrepreneurship largely on my own. Making a living and supporting yourself and your family is a universal need – the question is how you go about doing it. The more I learned, the more I found that the happiest and most successful individuals ultimately started their own business. From a psychological standpoint, there’s a lot to be said for flexibility and the knowledge that you can support yourself by creating value for other people.
How did you spot the opportunity? How did it surface?
My first major success was the Personal MBA – a project devoted to helping people educate themselves about business. It started as a personal research project, but grew very quickly with a little help from Seth Godin, who was kind enough to encourage other people to check out what I was doing. There was a lot of positive feedback and encouragement from the people who saw the early versions of the project, so I kept working on it part time. Every year, the project grew, and ultimately I was able to leave P&G and work on my own small publishing and consulting company full-time.
How did you evaluate the opportunity in terms of the critical elements for success? The competition? The market? Did you have specific criteria you wanted to meet?
I want to spend my time learning useful things, experimenting, and sharing what I learn with other people – that’s what I’m uniquely good at. Publishing is a wonderful business in the sense that you can spend your time doing these things with minimal start-up costs and overhead. The business education market is massive, and I view my “competitors” as friends / peers / sources of information – as long as you’re creating something that’s unique and valuable, there’s enough room for everyone to be successful.
What kind of planning did you do? What kind of financing did you have?
Worldly Wisdom Ventures LLC was 100% self-financed: I took no loans or funding, aside from using a business AMEX to purchase some required infrastructure – my computer, recording equipment, and software. Now, all expenses and overhead are financed out of free cash flow.
My planning was focused primarily on experimentation – I had a few ideas about what I could create that other people would find useful, so I tested them as quickly and cheaply as I could. Some of them worked extremely well, and others flopped. Once I knew what worked, I tried to spend my time improving on that success and trying more new things. There was no “grand master plan” – most of my primary sources of revenue now come from projects I didn’t even think of when I started the business.
How much time did it take from conception to the first day of business? How many hours a day did you spend working on it?
I started working on the Personal MBA part-time in March of 2005, and I went full-time in November of 2008. Time spent on the business each day ebbed and flowed – at first, the demands of my day job left little time and energy each day, so most of the research and business development happened on the weekends. Now, it’s not uncommon for me to spend 12+ hours a day “working” in some manner – reading, writing, researching, and meeting with clients by phone.
How much capital did it take? How long did it take to reach a positive cash flow and break-even sales volume? If you did not have enough money at the time, what were some ways in which you bootstrapped the venture (bartering, borrowing, and the like). Tell me about the pressures and crises during that early survival period.
Since I bootstrapped the company, most of the capital requirements revolved around basic infrastructure: computer hardware and software, web hosting, and educational materials. In total, I’d estimate somewhere around $15,000, which I funded via my day job.
What outside help did you get? Did you have experienced advisors? Lawyers? Accountants? Tax experts? Patent experts? How did you develop these networks and how long did it take?
I don’t have any employees – when I need help doing something specific, I work with a freelancer or contractor. As a result, it’s possible to get things done while keeping costs low and maintaining flexibility. I wanted to keep the complexity of the business to a minimum – one of my major frustrations working at a large company was the fact that you spend more time talking about what you’re going to do than actually doing things.
I have a bias for doing things myself as a learning experience, which is very much a double-edged sword. I’ve learned a lot by doing things myself, but you only have so much time and energy each day to get things done. I’m getting much better at bringing in help to ensure I’m spending my time and attention on the things I can do uniquely well. (Example: I’m in the process of outsourcing my accounting and bookkeeping now.)
I also have a very strong network of peers, whom I’ve met mostly via reaching out to them via e-mail or phone. There are a lot of people doing interesting work in this area, and I try to meet as many people as I can.
What did you perceive to be the strengths of your venture? Weaknesses?
Strengths: minimal overhead; maximum flexibility; significant revenue potential; fit with my interests and skills.
Weaknesses: too many good opportunities / ideas to explore by myself; personal productivity = business productivity.
What was your most triumphant moment? Your worst moment?
I was very happy when a reporter from BusinessWeek called me up in 2006 and interviewed me for a story – people still find the Personal MBA via that article to this day. It was a tremendous validation that this is important work that people find useful.
One of the business’ most stressful moments was being featured by Lifehacker (an extremely popular productivity blog), which was thrilling until the tidal wave of visitors brought my website down for 2 solid days. I learned how to administrate Linux systems and optimize web servers in record time, but the pressure was intense. It was a great example of “too much of a good thing” – it was terribly frustrating to have so many people interested in learning more about the project, but not being able to reach them.
What were the most difficult gaps to fill and problems to solve as you began to grow rapidly?
I’m actually facing my most difficult challenge now – learning how to build a team of people I trust to help me get things done, and creating the systems and processes that will ensure the business runs smoothly. Every business has a lot of moving parts, and it’s important to figure out how to get the right people involved in a way that allows you to continue focusing on improving the business vs. getting bogged down in project management.
Do you spend more time, the same amount of time, or less time with your business now than in the early years?
I spend a lot more time on the business now, but most of that is a function of working on it full time vs. part time. I anticipate that my time investment will stay roughly the same over the next few years.
In your ideal world, how many days a year would you want to work? Please explain.
I’m thinking and learning new things all the time, so in a sense I’m “working” 365 days a year, but it doesn’t really feel like work. The trick for me is to capture thoughts and ideas in a form I can act on later, so I can still enjoy my downtime. I also intentionally schedule time to do research and writing, so I can focus and get things done more effectively vs. feeling like I need to be working all the time.
I only meet with clients 4 days a week – I need to set aside some time just to think and work on my next experiments. That seems to be working well so far, so I’ll stick with it. I’m also planning to take vacations / small breaks more regularly – there’s no reason not to take advantage of the business’ flexibility to recharge and explore new things.
What were/are the most demanding conflicts or trade-offs you face? (E.g. the business vs. personal hobbies or relationships.)
In the beginning, there was a significant tradeoff between the time I spent on my day job and the time I could devote to the business – it’s very hard to work 50-60+ hours a week in a demanding corporate environment, then come home and focus on being productive vs. re-energizing for the next day. I’m ultimately glad I had the experience of working at P&G, but ultimately the opportunity cost of continuing to spend the majority of my time working for someone else overshadowed the financial benefits.
In terms of personal relationships, running my own business is actually easier – since Kelsey (my wife) works on Saturday and has Monday off, we can spend more time together now that my schedule is more flexible. The key is to schedule your work around your personal life, vs. scheduling your life around your work – constraining your work hours helps you make choices about what’s really important and what’s not.
What do you consider your most valuable asset—the thing that enabled you to make it?
I’m curious about many different things, which motivates me to learn as much as I can as quickly as I can. Once you learn something, it’s a relatively small step to sharing what you know with others, and doing so in a way they (1) find it useful, and (2) will pay you for the knowledge. I really credit Mom and Dad with my natural inclination to learn and teach – they’ve encouraged me to explore everything I’m interested in and help other people as much as possible.
If you had it to do over again, would you do it again, in the same way?
Yes, although I might have transitioned to full-time entrepreneurship more quickly, given the response I’ve had on my new projects and offerings. There’s an old saying: “A year from now you may wish you started yesterday.” It’s absolutely true.
As you look back, what do you feel are the most critical concepts, skills, attitudes, and know-how you needed to get your company started and grown to where it is today? What will be needed for the next five years? To what extent can any of these be learned?
I think it’s mostly a shift of thinking: assuming something must be perfect the first time vs. experimenting and improving as you go. I used to be a major perfectionist – I’d get physically ill at the thought of doing sub-par work – and that was a major barrier to getting things done. Now that I’ve given myself permission to experiment, it’s a lot easier to try new things and improve upon the experiments that work.
There’s no doubt in my mind that the business knowledge needed to start your own company can be learned – that’s actually the focus of my next business education course, which is called Business Mental Models. The core set of concepts, techniques, mindsets, etc. that provide most of the value of business study is actually pretty small, and I’m currently focusing on teaching people (particularly people with non-business backgrounds) what they are and how they can use that knowledge to improve their lives and their businesses.
In my opinion, the people who will be successful over the next five years will:
- Have a broad foundational understanding of what businesses are, how they work, and what ultimately makes businesses successful.
- Spend most of their time finding new ways to help more people or provide more value to the people they’re already serving vs. focusing solely on “money-getting”.
- Quickly / inexpensively test a lot of different approaches to see what works before committing a lot of time and resources to a new project.
From a skills standpoint, being able to communicate clearly in written and verbal form is absolutely essential. Learning how to write, speak, and have a productive conversation is mostly a matter of interest and practice.
What advice would you give an aspiring entrepreneur? Could you suggest the three most important lessons you have learned? How can I learn them while minimizing the tuition?
- Learn as much as you can via reading and discussing business with other people who have already done what you’re trying to do – it’s a way of benefiting from the experience of other people without repeating their mistakes. I’ve gladly paid for $2,000+ training sessions that were worth every penny: they’ve helped me avoid making mistakes that would have cost hundreds or thousands of times more than the tuition. (The Personal MBA Recommended Reading List and Business Mental Models will help you learn the ropes without wading your way through most of the not-so-useful business information out there, which will save you a lot of time and energy.)
- Bootstrap – fund the business yourself, and keep your overhead as low as possible. The only reason to take funding via a commercial loan or venture capital is to obtain essential infrastructure or resources you can get no other way. Commercial loans put an immediate strain on your cash flow, and VCs will push you towards a liquidity event as quickly as possible, even if it’s not in the long-term interest of you or the company. There’s no sense in mortgaging or selling off a piece of the business if you don’t absolutely have to. The more funding you obtain, the less flexibility and autonomy you have, which are two of your most valuable assets when starting a new company.
- Experiment as much as possible – test your assumptions. Try new things, even if you don’t know exactly what you’re doing yet. Being knee-deep in a project is a great way to encourage yourself to learn even more. Even if the experiment doesn’t work out, the education is priceless, which provides the foundation for later experiments. Every part of my business that is currently working well is a direct result of an experiment that worked – you can’t test your ideas and assumptions enough.
I hope you find this useful – if you have any questions, leave a comment!