I think hard work is massively overrated in Entrepreneurship - there’s nothing sexy about swimming hard in the wrong pool. You want a think-ethic, not a work-ethic. If I worked a 16 hour day, I wouldn’t brag about it - I’d be embarrassed. I also don’t think you can do both: either you’re chopping the tree, or you’re sharpening the axe. Take pride in preventing fires, not fighting them.
6+ months ago a distributor from Israel asked if we wanted to expand Hiccapop into his country, and my answer was almost immediately ‘No.’ You might say it’s easy profit -- what’s the downside? But costs can be non-obvious: you increase revenue by 10%, but increase operational complexity by 25% (see below). In any case, the option won't disappear soon - Israel isn’t going anywhere. Once you’ve caught a wave, don’t worry about doing backflips. Just keep both feet solidly planted on the surfboard. Put differently: To finish first, first you have to finish.
If your car started getting 5 miles per gallon, you wouldn’t build a larger fuel tank...you’d fix the engine. But I constantly see this dynamic with Entrepreneurs. If you’re ever throwing man-hours at a problem, you need to take a break and reflect on what’s going on. Motion isn’t always progress.
People have asked if I’m scared of Amazon stealing Hiccapop’s products. I’ve never lost even a minute of sleep over it. If the customer can get a better value somewhere else, they should. We only win when our customers win. Whenever I hear people blaming competition, all I can think is: “OK, sounds like you’re going to be the first person on the chopping block.” They say most businesses die from suicide, not homicide.
Let’s say the government wants to protect me and my employees, and so bans Amazon from undercutting us with their own bed rails. Instead of buying a bed rail at $20 from Amazon, the customer now has to buy it at $30 from us. But the customer would have simply spent the extra $10 buying a book for his daughter. You helped one business (Hiccapop) at the expense of another (Bookstore) -- no new wealth was created. Just a rearrangement.
In fact, there was actually a net loss: $10 was diverted away from its highest and best use. Society lost a turn, so to speak. It was good for those on the inside looking out (Hiccapop), but bad for those on the outside looking in (Bookstore + Parent). You see that my business was protected, but you don’t see the bookstore owner who never made a sale. The author who never received a royalty. The daughter who never read a book.
“Davis, how did you make 30 Under 30?” — Practically, a friend nominated me out of the blue. He’s a few years younger than me, and we always talk about business, finance, etc. I think he was the only person who nominated me. From there, they reached out & sent me a questionnaire. Then we had a 20 minute phone call interview. I figured I had a decent chance at that point because Hiccapop has good revenue/profit figures, and we haven’t raised any outside venture capital. I thought my story was unique.
Broadly, I made the list because I focused more on the process (learning business fundamentals) than the accolades (Forbes). I can’t directly control whether or not I make 30u30 - but I can directly control how I run my business on a day-to-day basis. Don’t spend time trying to hack your way onto the list...spend your time focusing on the things that will make your selection inevitable.
Forbes 30u30 actually has 20 categories...I was in the Retail/Ecommerce category. So it’s more like 600u30. But still not bad :) — Finally, thank you to Forbes & the many wonderful people in my life.
People complain musicians get ripped off by Spotify, but Spotify itself doesn’t make money. It’s unprofitable. More subtly, artists aren't paid well because the 1,000,000th musician doesn't create much value. In a very real sense, there is no money to give them. You’d pay $1,000 / hour for great legal advice, but you wouldn’t pay $10 for a ditch you don’t need. You have the right to weave baskets all day, but you can’t force people to pay their hard-earned money for it.
Say a garbageman gets paid $100k / year, and a musician earns $20k. You & I (“society”) have collectively decided we need a new trash collector 5x more than we need a new musician. Prices are a veil over the real economy. When you & I drive to LA, we are telling the steel industry to divert steel from 747s to Priuses. We are causing layoffs at Boeing, and hiring at Toyota.
Spotify can’t pay artists money it doesn’t have. There are many musicians who should give up & collect trash. Musicians only get paid $500 per 100,000 streams. But if they truly created more than $500 in value, then a competing music entrepreneur would hire them away by paying slightly more…and still make tons of money. If there’s anybody “screwing” the artists, it’s you & me. Prices are merely the messenger.
We don’t manufacture in the USA because customers don’t want us to. I haven’t seen evidence that customers want to pay 50%+ more for basic consumer goods produced in the USA. Some people think the quality in USA is much better than China's, but customers are smart and know a bad deal when they see one. A 5% increase in “quality” is not worth a 50% increase in cost on a simple product. If the increase in quality actually compensated for the increase in cost, the market would have corrected itself already. Businesses pay attention to what customers actually do, not what they say they’ll do.
Manufacturing didn’t move to Asia simply because of their cheap labor. It’s just as accurate to say manufacturing moved because American wages were pushed up by American businesses competing against each other for workers. Put differently, American business itself pushed manufacturing out because it had a higher and better use for those labor hours. The opportunity cost of those man-hours got higher.
At its core, people who advocate for manufacturing to remain in the USA predict that those workers are incapable of adapting & reinventing themselves. This patronizing prediction won’t age well, and neither will all predictions betting on the inflexibility & helplessness of human beings.
I watched a video saying Goldman Sachs (a famous Wall St bank) wasn’t fulfilling any useful social function. It’s just a bunch of rich people getting even richer…right?
Debating Goldman Sachs’s social function is missing the point. Even the simplest business transaction has thousands (or millions) of side effects - it’s impossible to know what the net effect on society is. The freedom for two people to trade with whomever they want is the “function.” Freedom + autonomy are end-goals by themselves. Goldman Sachs’s only “social function” is providing a product that people voluntarily buy.
Perhaps the anarchy of free trade leads to a bad overall outcome, though. After all, we face complex problems that need strong, centralized action?
I read a famous anecdote about Soviet diplomats coming to NYC for the first time and being shocked by how well-stocked our bakeries were. They then asked to meet the person in charge of supplying bread to the city. The Americans explained that nobody was coordinating the bread supply…it was individual entrepreneurs competing for customers. The system worked so flawlessly that the Soviets assumed somebody was designing it from the top-down.
Similarly, debating the social function of Goldman Sachs is an overly “top-down” point of view.