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Assessing Resources—What’s in Your Pocket?

After I wrote my first book, Bootstrap Business, which told the story of how my partner, Ron Porter, and I took $5,000 and within one year grew it into a $1.2 million business, I had the opportunity to be interviewed by Garrett Gunderson for a national radio show. Garrett is the author of the New York Times bestseller, Killing Sacred Cows, and he started the interview by asking, “Rich, tell me about how you started this last business.” I said, “Oh, I took $5,000 and …” Garrett interrupted me midsentence and said, “No! No you didn’t.”

I was kind of stunned and tried to explain, “Well, yes, I actually did start it with $5,000.” He corrected me again, “No you didn’t.” And I retorted, “Yes, I did!”

After what I initially thought was a rather awkward beginning, Garrett went on to explain that the $5,000 my partner and I put up was the smallest part of the equation. In fact, in his words, the money was really meaningless. And in making that point, Garrett was teaching an invaluable lesson.

Most people assume we need to have money to succeed in business and to reach our goals in life. If we want to start a business, the reasoning goes, we first need capital. If we’re given a major project at work, we immediately want to know what our budget is. If we want to take our family on a much-needed vacation, the first thing we do is check the balance of our bank account (or, if we really enjoy paying interest, our credit cards). That view develops a straight-line mentality as we undertake whatever we have set our sights on—whether it’s a house, a business, a contribution to our team at work, a strong marriage and a stable family … you name it. But if all you think in terms of is how much money you need to achieve your goals, you’re missing the fact that success is actually the result of identifying and maximizing a couple of foundational resources that have nothing to do with our traditional view of “capital” and have everything to do with zigzagging toward our intended outcome.

The point Garrett was making was that Ron and I succeeded because of what he calls “The Value Equation,” which is that mental capital (meaning our knowledge, skills, talents, and passions) plus our relationship capital (meaning the quality of our relationships with a broad pool of friends and associates) will equal financial capital.

Yes, at some point money is often needed if we are to reach our goals. But that form of capital will grow out of the knowledge and the relationships we have, and the pace at which it grows will be influenced in large measure by our passion. If you need proof of this point, consider this extremely condensed list of transformative businesses that got their start in a college dorm room or garage: Apple, Facebook, Microsoft, Hewlett-Packard, and Google. And while the founders of each of these companies are now household names worth billions, they all began with little more than their smarts and their passion to achieve their goals, combined with their networks of friends.

This view of capital is very different from how most of us think about resources, and most people get the equation backwards. We think, “If only I had some money, I could reach my goals or realize my dreams.” Money cannot build intelligence, relationships, or passion. But intelligence, relationships, and passion can always yield money. Coming to this view, though, may require you to adjust your thinking.

A few years after I graduated from college with a degree in electronic engineering, I enrolled in an executive MBA program while working for Novell, then the pioneer in computer networking (and yet another company founded by four guys with little capital, a bright idea, and a lot of passion—who are now multimillionaires). The vice president in charge of the division where I worked was Dave Owens. As I neared the completion of my MBA, I was preparing to move to another division in the company. Before I made the move, Dave called me into his office and asked me a simple question: “Rich, who do you work for?” The answer seemed obvious, and I told him I worked for him. His response was “Wrong!” and that was the end of that meeting.

A week later he called me back in and again asked me, “Rich, who do you work for?” Well, I had been thinking about his question, and this time I confidently told him, “Novell!” Again, he told me I was wrong. A week or so later, his administrative assistant made yet another appointment. I rather timidly went into his office, only to be asked the same question for the third time. But this time when he asked, “Who do you work for?” I answered, “I work for myself.”

Finally, I had found the right answer, and as a result my view of resources shifted dramatically. Whether we work for someone or are off on our own, seeing ourselves as the person we work for will light a fire under us to identify the resources we can access, rather than waiting for buckets of money to appear through venture capital coups or budget allocations.