FOUR
Zig Number 1—Drive to Profitability

As children leave the comforts of home for the first time, they typically fall into one of two categories. There are those who, having grown accustomed to a nice house, an abundance of food, and easy access to a car, feel they should enjoy this same lifestyle now that they are out on their own. If their solution is to max out credit cards and run up student loans, then what happens? They get partway to their destination—whether that’s schooling or building a career—and run out of resources. Then there are those who ration what little they have, avoid borrowing at every turn, and wait until they’re firmly established before trying to live the same life it took their parents years to build.

As I share my ideas on focusing your first zig down the hill on your drive to profitability, I know some readers are going to feel I’m placing an undue emphasis on business principles. And while I probably am, in part because that’s the world I live in, I also want to point out that the principle of driving toward profitability has application in all aspects of our lives, whether we’re bootstrapping a business, building a family, or overseeing a multimillion-dollar enterprise. In fact, I would contend that this first zig of getting to profitability is important in every aspect of our lives because while it’s true that money can’t buy happiness, being broke can sure cause a lot of headaches.

When my wife and I first got married, we were both in school and broke, and I had to take several jobs I wasn’t all that excited about. I even had to work late-night shifts when I would have preferred being home because I instinctively knew I needed to do whatever it took to get to profitability. Neither of us had come from an abundance of wealth, but during our early years we tightened our budget and were so conservative that the humble origins we had grown up in looked like the lifestyle of the rich and famous. So, we drove that old Dodge Colt that had been given to me, even though I’m sure we could have qualified for a loan to buy a new car.

We had enough resources to pay our bills, even though our $15-per-week food budget did require that we eat a lot of potatoes during those times. My wife reminds me that I used to always say, “We will live like you won’t now, so we can live like you can’t later.” At that stage of my life, I hadn’t given words to the idea of driving to profitability, but I knew instinctively the importance of that principle.

Whether you are starting out in life or starting a business—or are broke and starting over—your first zig always needs to take you toward profitability. Profitability means you’re able to pay all of your bills and have enough cash to move forward with your plans. Given the ease of finding money, whether it’s from a credit card, a government grant, a small business loan, or help from family, it’s easy to bypass this first step. But at some point the wells of easy cash will dry up, and you’ll find yourself at a day of reckoning where if you don’t have real cash coming in, you’re going to be stopped dead in your tracks. So, don’t let the easy allure of available cash sidetrack you from finding the path that will get you to that critical point of profitability.

This first zig requires sheer grit and raw determination. I often joke that when I am starting a new business I will go out in the street and dance in a tutu if that is what it takes to get to profitability. And while my efforts have never come to that, I will do what it takes, within the framework of my values, to get enough cash to move forward. Operating from the black gives you a much higher level of confidence and a sense of durability that you can’t have if you’re always worrying about draining your bank account. If you have money in the bank or cash in your pocket, you can breathe a sigh of relief as you keep trying different things until you get one of your ideas to work. And if you can’t get an idea to be profitable, then check it off your list and try something different. (This is what I call failing efficiently, which we’ll discuss in more detail later in the chapter.)

Just before the dot.com bubble burst in the early 2000s, I was working as the general manager of a company called MyJobSearch.com. It was a heavily funded business in the web 1.0 Internet bubble phase. This was a wild and crazy time when companies were being built and funded by people writing business plans on paper napkins. This company had hired 40 or 50 employees, and we didn’t even know what the exact product was that we were building. And, because we were living on investment bankers, we had no clue how we were ever going to get to profitability. Heck, we didn’t need to!

When the bubble burst, everything imploded. Not just for this company but for almost every other company in the web industry. The reason this company and those other companies failed was because they were not built for profitability. We had never needed to pursue that strategy. In fact, during this time, the strategy for most of these companies was to get an IPO and then get bought up by a bigger company. But, as countless people who lost huge sums of money found out, that is not a business plan that can be sustained.

So many businesses I’ve seen think that all they have to do is head straight for that beacon in the fog. It doesn’t work. The first zig always needs to be to get cash!