“Finally,” I thought, “something I can actually execute! First thing’s first. I need a name.” In situations where there are few barriers to entry, naming and intellectual property assume an even greater importance. I needed something catchy that was easy to spell, easy to remember, and would rank well on Google. I played around with generic names like Skinny Tea or Teatox or Weight Loss Tea, but I knew that none of them would work. I needed a brand name — something that could be trademarked. Was I going to sell my products within New Zealand or would I have products that could also be sold internationally? If I was just targeting the New Zealand market, it would be a lot easier; I just needed a .co.nz domain and there were far fewer existing trademarks to worry about. If I was going to sell internationally, I needed a .com domain, which made things a lot harder. I also needed to know what markets I intended to target because I would have to register trademarks in those other countries at some point. I didn’t have a product yet, or suppliers and I had no idea how to set up a website, so I had a lot of difficulty trying to figure out what I was selling. Was I selling a weight loss tea to reduce bloating or was I selling a wonder blend of eight time-honoured herbs that detoxify the body from the inside out? Marketing spin did not come naturally to me. No-one would actually fall for that, right?
I spent over 20 hours coming up with a name. Every time I thought I had one, I would find out that the domain I needed was already taken or the trademark was already registered. I had to make a few compromises. The key with strong trademarks is to not use a name or phrase that a competitor might want to use in the day-to-day running of their own business. You can register the trademark “Apple” with respect to consumer electronics, but you can’t register it with respect to fruit. After much deliberation, I finally landed on the name OMGTEA. The “OMG” initialism was in vogue at the time and I thought it would appeal to the female 18-25 demographic that I assumed would be consuming my tea. While it wasn’t my favourite name, I was able to register omgtea.co along with all of the New Zealand-specific domains I needed. I didn’t know it at the time, but while the name served me well over the coming years, it severely restricted my ability to release additional products. I was essentially limited to releasing and selling tea products in perpetuity.
The key with strong trademarks is to not use a name or phrase that a competitor might want to use in the day-to-day running of their own business
What next? Is there some entrepreneur playbook I can turn to? I thought back to all of the business books I had read over the years. “They will definitely be able to help,” I thought to myself. I turned to my bookshelf and started leafing through the first book that caught my eye. It happened to be The 4-Hour Workweek by Tim Ferriss. I remember enjoying the book when I read it as a first-year lawyer, looking for an escape. I have a nasty habit of marking-up books and underlining sentences that interest me so I can later find important points without having to reread a book. Page 40: “Most people will choose unhappiness over uncertainty.” Most people don’t have to luxury of choosing uncertainty, but I largely agree Tim. Ok, next quote. Let’s keep moving. This is good. Page 68: “…set the stage for replacing yourself with Automation, which in turn permits Liberation.” This is really useful stuff. There must be other gems in here. Page 159: “It is said that if everyone is your customer, then no one is your customer.” That’s almost sage like, isn’t it? Cryptic and nonsensical in all the right places.
What about a more traditional business book? You can’t go wrong with Good to Great by Jim Collins. It’s a classic. Highly rated on Good Reads and Amazon, recommended by the Harvard Business Review and almost every business blog and business publication on earth. “While you can buy your way to growth, you absolutely cannot buy your way to greatness.” Profound. “Good is the enemy of great.” I can see why four million copies of the book have been sold and why Jim Collins has been lauded as a management guru.
Next up, The Lean Startup by Eric Ries. “The only way to win is to learn faster than anyone else.” Off the bat, there is real power behind those words. “If you cannot fail, you cannot learn.” None of these quotes are untrue. In fact, as far as quotes or ideas go, they are perfectly fine. I had to come to terms with the fact that I was a quote addict. I was addicted to short quotes and anecdotes. Who doesn’t want to hear positive affirmations from authors who have done nothing, telling you that you can do anything? I know I do. Did. I know I did. With the turn of each page there was another quote staring back at me. Toward the end of The Lean Startup I realised that I had made a terrible mistake. Unless a quote inspires you to act, it serves no purpose. I would go so far as to say that quotes serve no purpose at all. You can quote me on that.
Unless a quote inspires you to act, it serves no purpose — I would go so far as to say that quotes serve no purpose at all
After I came to terms with the fact that I had been taking life advice from do-nothing authors who had Kardashianed their way to fame and wealth, I then had to come to terms with the fact that there was a very good chance that I was going to be homeless at some point in the near future. I had left a very comfortable job at a respected law firm for a dream put into my head by unaccountable strangers who I suspect are completely uninspiring people in real life. I remember thinking that a reference from my previous employer would have been fantastic at the time.
In a moment of clarity, I decided to stop thinking of myself as an entrepreneur. What did the word mean anyway? It’s not a job. Obviously, someone can have entrepreneurial inclinations, but you can’t actually be an entrepreneur. You can be a business owner. You can be an investor. You can be an employee. You can’t be an entrepreneur. It shouldn’t be a stand-alone noun. The word has been hijacked by flakes and do-nothing people who are too lazy to put in real work. It has supplanted “freelancer” as the go-to occupation of the unemployed on LinkedIn. I quickly changed my occupation from “entrepreneur” to “director” on LinkedIn and knew that I was better placed to take on the business world. Next stop, tea mogul.
The one thing they don’t teach you in business school is how to act. You get taught how to think, not how to do. I remember being involved case competitions and mandatory strategic management papers taught by professors who had never started anything in their lives. The academic model of the world is so simple.
Small business owners would come into class and we would savagely deconstruct their businesses and tell them what they were doing wrong. The same businesses they had spent the better part of 20 years building, that had cost them their families, and would probably cost them their lives. We obviously knew more than they did. Don’t you dare tell me that a fourth-year business school student with theoretical knowledge and no work or life experience doesn’t know more than a business owner who operates a business with a turnover in excess of $30 million a year. The consulting industry is insulted by the mere suggestion.
It was comforting to know that nothing I had read on my own or learnt in business school was going to help. Naturally, I turned to sarcasm to get me through. I had spent thousands of dollars on books and tens of thousands of dollars on a mediocre education. I should have put the money in Bitcoin. I am such an idiot. In desperation, I turned to my father’s MBA notes. “An MBA has to be useful,” I thought to myself. “Why else would my friend’s dog be doing one?” It turns out that an MBA is useful. It’s incredibly useful if you want a large student loan and an exceptionally dull corporate job surrounded by equally dull MBAs with God complexes. If, however, you are trying to start a business from scratch, an MBA is not the way to go.
I wasn’t surprised that my business school education proved to be unhelpful. There were plenty of red flags. I can recall taking a strategy paper where everyone in the class had to develop a detailed strategic plan for a business of our choosing. It was the cornerstone paper at my business school. The company I chose was Netflix. It was a strange choice. Netflix wasn’t available in New Zealand at the time and wouldn’t enter the New Zealand market for several years. At the time, it was just getting its streaming platform off the ground in the United States and was still making all of its money from DVD rentals. I can’t recall my exact thought process at the time, but I had been exposed to Netflix on a trip to the United States earlier that year. I developed a comprehensive and well-reasoned strategy for Netflix to create original content. At the time, there was nothing to publically indicate that they were looking into original content and they had yet to release their first Netflix-produced documentary. The professor taking the class was not moved. After a 30-minute verbal presentation, I had to defend my strategy. It was at this point that I realised just how displeased the professor was. “So, they just go from selling DVDs to creating content? How would they even do that? They have never done it before.” Caught off guard by his hostile approach, I went on the offensive. “The DVD side of the business is throwing off hundreds of millions of dollars in cash, so the company has the money to hire whatever talent they need to create those competencies within their business. Aside from hiring talent to produce original content, they also have the option of buying original content that has already been produced and doesn’t fit other more traditional methods of distribution.” The professor interjected at this point, “Even if that were true, which I find hard to believe, do you know how expensive it is to buy or produce a movie or a TV show?” Obviously, I didn’t know, because I was a fourth-year university student who didn’t actually work in the film and television industry, so I made something up: “I don’t know the exact figures, but I know that Netflix has ambitions beyond the United States, which means that the cost of buying or creating original content will be dwarfed by the astronomically high licencing fees associated with the worldwide distribution of a movie or television show.” I should have dropped the microphone at that point and walked out of the room. The circular questioning continued for another ten minutes. He would lob up negatively-geared questions and I would hit them out of the park.
My mark for this work? 66%. My lowest grade ever, in anything. He wasn’t a normal lecturer. He chose to verbally critique student work using a digital recorder and email it through as an MP3 — no doubt to prove how technologically savvy he was. (It is also possible that he was illiterate.) Somewhere in the middle of each 10-minute critique he would mention a grade in passing. It turned out that he just couldn’t wrap his head around the idea that Netflix would ever be able to produce original content since they hitherto never had. For someone who had a deep interest in business and business strategy, the grade was a huge blow to my confidence. How was I going to be a business savant if I couldn’t even do well in the one paper that mattered?
Since the bulk of the coursework had been completed, the professor decided to profile a few books in the final class. He kicked things off with Mindset by Carol Dweck. He went on the summarise the basic premise of the book — a person will invariably have one of two mindsets when looking at the world and making decisions: either a fixed or a growth mindset. A fixed mindset assumes that things won’t change in a meaningful way no matter how much effort is exerted. A growth mindset on the other hand, assumes that we can always change a situation and grow, even though we may have failed in the past. Perhaps it is better explained with a hypothetical example. Say you have a lecturer, let’s call him Dr Dumb. Now, Dr Dumb has a very fixed mindset. He thinks that because a company has no core competencies in an area it means that they will never be able to change and gain expertise in that area. One day he gets into an argument with a student of his, Sammy Sensible, who points out the illogicality of his argument. “Your reasoning is unnecessarily fatalistic. You’re saying that Company A can’t make Product B because it doesn’t have the skills to do so. The only way for Company A to gain those skills is by making Product B, which it can’t do because it never has.” Sammy is a firm believer in the idea that everyone should adopt a growth mindset and continues to press Dr Dumb, “Company A has the option of hiring talent with experience making Product B or they can use existing resources to attempt to make it themselves. They also have the option of finding a third party to make Product B for them.” Dr Dumb’s face went red. He was seething with anger, but didn’t have the cognitive ability to come up with an intelligible retort. Dr Dumb did what he does best. He shut the discussion down: “You don’t know what you’re talking about. You’re just being stupid. I don’t have time for this.” If you are ever losing an argument, this tactic is highly effective — especially if you are in the position of power. Just call the other person dumb and you win. It’s Trump-esk in its beauty and simplicity.
Perhaps my reflective criticism here is unwarranted. Maybe it can be brushed off as nothing more than the bitterness of a low achieving student. That may very well be the case. Of course, there is a counter argument here that our unflinching social deference towards persons in positions of power needs to be re-examined. What happens when we think for ourselves? Can we trust Dr Dumb more than we can trust Pete, our local rubbish truck driver? If the answer is yes, why is that the case? How can we possibly know without knowing more about each person? We take shortcuts and make assumptions. We assume that because Dr Dumb is a lecturer, he is in some way more trustworthy than Pete, who is just a lowly rubbish truck driver. It is this same laziness that leads us to blindly follow the advice of doctors without doing independent research. Can a doctor be wrong in her diagnosis, even though she is a doctor? Absolutely. Just as a police officer may lie or a lecturer may be a complete idiot.
Our unflinching social deference towards persons in positions of power needs to be re-examined
All humans are fallible — including me. I read the wrong books and studied the wrong things and lived in the wrong country. I received undeserved praise as a lawyer, simply because of my position. Now that I was no longer a lawyer, I no longer had that respect. I was the same person, minus the title. It’s an interesting position to be in. I remember having the same thought when I started out in law: “A week ago I was sitting on my couch in my underwear watching Oprah reruns. Now I am being trusted to play a small part in a fifty-million-dollar financing transaction.” All of a sudden, my opinion mattered; I was instantly respected by my parents and my peers. I was the same person, just with a suit and a job title. As soon as I left law, it all went away. My once valued opinion was worth very little in the business world. If I wanted respect, I had to earn it.
With no mentor for guidance or playbook to follow, I did the only thing I could do at the time. I picked up my favourite Muji pen and a single sheet of white paper and wrote out some action steps. I needed a tea supplier. I needed to set up an ecommerce store, as well as set up the company and company bank accounts. I had to register domains. I needed someone who could print stickers, as well as a packaging supplier. I had to design a logo and also come up with a design for the stickers themselves. I felt a great sense of relief. It was so nice to get past the idea stage and have something to work on. “Well,” I thought, “it may not be an enterprise platform, but at least I am doing something.” I wasn’t risking much money, so I didn’t bother with a formal business plan. I decided to start (very) small, with a NZ$1500 investment. I didn’t have a source of income, so I couldn’t afford to take a bigger risk.
This was my first mistake. At conception, the business was severely undercapitalised. When selling a tangible product, there is a finite amount of money that can be made by selling product stock. With no new injection of capital, the best thing a business can hope for is that its capital will grow and snowball over time. If you purchase stock for $500, the idea is that you sell that stock for a profit, say $1000. You then take out taxes and other expenses and you may be left with $600. So, you have turned $500 into $600, for a $100 profit. You now have to reinvest. You take that $600 and you try to turn it into $1200. Once you sell that stock, you are left with $720; a further $120 in profit after taxes and expenses are deducted. This process continues ad infinitum. When a business is undercapitalised, it feels like being in a poverty cycle that can, depending on sales, take years to break out of.
By trying to mitigate the risk of financial loss, I had handicapped the business before it had made a single dollar. Without a source of income, my risk tolerance was almost zero. If I lost money, I had no way of making that money back. This is why you should never leave your day job before starting a small business. It was nice to learn that lesson first-hand. Having an external source of income to cover any losses you experience while learning and making mistakes in business is essential. My only saving grace was that I had saved about half a year’s salary, so I had six months of runway to start making money.