Stacking the Bricks Podcast
EP21 - The most dangerous room in the house
In this episode…
Let us show you how most of the "risk" in starting a business isn't really risk at all.
- Just one instance of infamous tweet mentioned in this episode: https://twitter.com/amyhoy/status/699722679788703744 (notice the replies)
- "Petting puppies with Peter Drucker" also mentioned in this episode
Amy Hoy: Despite the fact that I tweet lots of totally seemingly random stuff, I also have these sort of business tweets that are queued up with Edgar.
Alex Hillman: These are a lot of the things that are in between cat photos, chair photos, and various interaction, design rants…
Amy Hoy: And rants about other things, but yes, I don’t really see Twitter as a business development tool, but I occasionally like to tweet things that are relevant to my business interests. So I sorted all my tweets ever by how many retweets and likes and stuff they got and then I put them in a schedule.
I repeatedly tweet – probably about once a week – that 1000 customers is less risky than one employer. Which it is. And like clockwork, whenever this tweet goes out, at least two or three people write back, “Sure. But it’s getting to the 1000 customers part that’s risky.” I honestly don’t know how in 140 characters to shake them and make them understand how ludicrous that is.
Alex Hillman: Which is why we’re sitting down on the microphone today.
Amy Hoy: Correct. Prepare for many, many characters on how ludicrous that is.
Alex Hillman: All right, so let’s, let’s unpack that a little bit.
Amy Hoy: When people see 1000 customers, I can only assume that they look at that and say, “Well, that’s a big number. I might not be able to hit that, that’s risky!” Whereas they know they can get a job because they’ve gotten jobs before and they know how getting a job works.
Alex Hillman: Or a lot of people don’t even see getting a job as selling themselves, they don’t see it on the sales spectrum.
Amy Hoy: You are correct and of course they are wrong, and it is actually pretty impressive to go into a business and say, “You should give me $60,000 this year”. Yet people do it on the regular and they don’t think anything of it after the first couple of times, which are terrifying, but it is actually risky because that one person can say no and that’s it.
Alex Hillman: They can also say yes and then change their mind when some other variable in the business changes, or they’re not happy with your performance. So, we’re talking about actual risk about placement of liability. A single source of income is actually a larger liability than the exact same amount of income distributed across 10 people, a hundred people, a thousand people.
Amy Hoy: One connection to your financial livelihood is easier to snip than a hundred or a thousand, for sure. But people don’t look at it that way because they look at having a job as the thing that everybody does and so it seems safe just because they never questioned it – until they wake up one day and get laid off and they don’t have enough money in savings, and they realize that they’re in deep shit.
Alex Hillman: If we think about people’s reaction to this tweet of yours, essentially suggesting that it is less risky, their reaction sounds to me a lot, like “I’m afraid”, versus anything to do with actual risk.
Amy Hoy: Right. I can only assume that if they actually sat down and thought about it, that they wouldn’t tweet that because what I write is objectively true that a thousand customers is a much safer position than one.
Alex Hillman: But people categorically don’t think before the type words into Twitter!
Amy Hoy: I know, which is why we probably shouldn’t bother discussing this at all! But it makes me so irritated!
Alex Hillman: I mean, it’s interesting, we can tackle this in so many different ways. One of the ways that I describe what is different between selling yourself once to get a job and learning how to sell products is the sort of the spectrum between where you have to convince one person through one – or maybe a series of conversations that you have – what they need, but you also have the ability to listen to what they need and sort of modify it once.
Amy Hoy: So you’re saying it’s because you can react live to this situation?
Alex Hillman: I think people that are good at job interviews are good at two things; doing at least a little bit of research beforehand, to be able to go in and say, “I understand what the company is and therefore I know what I can bring to you”, and they also have the ability to interact with whoever they’re interviewing with and ultimately tailor that conversation appropriately. I’ve been in enough bad job interviews to know that when that dialogue is not going well, that that person isn’t actually listening to the conversation that’s happening.
Amy Hoy: Or worse. I always enjoy reading Ian Landsman tweets. Ian Landsman is one of our bootstrapper friends and he’s been hiring for – I don’t even know what position, but he just occasionally tweets out things like, “If the website says you absolutely must include a cover letter, include a cover letter”, and things like that. Like, “Oh, thanks for putting the wrong name on your cover letter that you clearly copied and pasted from a different company”, stuff like that. Like really egregiously, terrible stuff.
Alex Hillman: So the bar is so incredibly low.
Amy Hoy: So low! So, to have someone who actually pays attention to your business needs and thinks about them and then thinks, “Okay, well, how can I slot in here and serve those needs and make money or save money?” I mean, as someone who hires people, that’s magical.
Alex Hillman: Agreed, so there’s a second stage in this. This is one that I can think of very personally, as people viewing as risky, is when you go from having a single job to being a freelancer or consultant. When people find out about my background, my history and my story and they hear about the part where I quit my job to become a freelancer they ask, was that a tough decision?
Amy Hoy: Still today?
Alex Hillman: To this day and forever. I get why, because when I think back to the time when I came home from work and I told my girlfriend at the time – we were living together, I said, “I think I’m going to quit my job and do the stuff that I do nights and weekends, full time.” Her initial response was, “Oh, my God. We’re going to live in a box on the side of the road!”
There’s never been a time in my life where I’ve lived in a box on the side of the road. So, I think what people assume is the case when you go from a job to consulting, is that you sell yourself the same way you sell a job where all of the risk is loaded into one person.
Amy Hoy: That makes sense. I also think people assume that you go from one to the other.
Alex Hillman: When in reality, what had been happening was I was getting my sea legs – so to speak, for freelancing nights and weekends,
Amy Hoy: T-Mobile time!
Alex Hillman: What I was doing was some arithmetic saying if I can make this much money in, essentially my off work time – and I’m not even really working all that hard at it, how much could I make if I had enough time and energy to actually put effort into it on a full-time basis, and that’s arithmetic.
Amy Hoy: I agree, that is called math!
Alex Hillman: The arithmetic led me to, there are very good odds that I can do this full-time and make as much or more money than I’m making full time. It’s a different kind of work, for sure, but I’d already proven to myself that I could do it. I think that’s where people perceive risk is if they’ve never done it before, they don’t trust themselves enough to say that “I can do it”.
Amy Hoy: They also don’t bother looking around and saying, “Gee, how many other thousands upon thousands of people are doing really well this way?”
They act as if they’re the first people ever to try freelancing or to launch a product, which is to me just silly. So, I was thinking about this the other day while I was driving and I was like, risk, risk, risk. Why do people not understand risk? How can I get people to understand risk? I’ve written so much about risk and I’ve tweeted about it. I wrote a really funny blog post, Petting Puppies with Peter Drucker.
Alex Hillman: I don’t think I remember this one?
Amy Hoy: Oh my God, you’ve totally read this one. So Peter Drucker is one of the sort of leading lights of management theory over the 20th century and he actually pointed out that there are different types of risk.
In this book from, I think it was like the 1980s, specifically said the tech businesses do not act as if there’s more than one type of risk. They assume that they must be the hostess with the mostest or the fustest with the mostest – is actually what he said, which was anyway, not funny, but that the only way for a tech business to succeed – that tech entrepreneurs think – is to come in and literally take over everything and an entire market.
He’s like, that’s ludicrous. That is one strategy. It rarely works. It works in these situations. There are all these other strategies here they are. Here’s a list. Here’s what those look like.
Alex Hillman: Sort of the winner-take-all mindset blinds them of any other potential outcomes?
Amy Hoy: Exactly. The fustest with the mostest was like a sort of colloquial slang version of the fastest with the most, which was the sort of military strategy of appearing first and with overwhelming force. But that’s only one military strategy. There are many, so he specifically made fun of tech entrepreneurs for this way before the startup craze – which is hilarious.
Alex Hillman: Do you have a theory about where that comes from in tech specifically? Why is that such a dominant mindset in tech?
Amy Hoy: I don’t know. I honestly don’t know. I’m in tech, I think a little bit too much to know where it comes from. Certainly, our sort of startup narratives are like that, but people said Apple was dying, when Apple was declining, in the nineties. But Apple had so much freaking money. They’re like
“Pray, Apple is dead!” It’s like they have like hundreds and hundreds of millions of dollars in cash, just sitting in the bank, even then – now it’s billions. They are not going anywhere and people are like, “Oh, they’re dead!” As a teenager, I was reading these magazine articles and thinking that doesn’t make any sense. I don’t know where it came from?
Alex Hillman: I think a lot of it might come down to maybe too tight of an association with narrative stories that maybe we grew up with, where there has to be a winner and a loser?
Amy Hoy: Are you saying maybe just because tech people are simplistic in terms of humanity or bigger suckers for stories., because I think maybe that’s it!
Alex Hillman: I think it might be…I’m going to make some…
Amy Hoy: Let’s offend people!
Alex Hillman: We’re going to offend some people now. I think a lot of this roots in the fact that we got beat up and picked on as kids and we were the loser, we were thought of as the losers and when we suddenly have the possibility of being a winner, of having an upper hand, that there can’t possibly be any middle ground. There certainly wasn’t middle ground on the losing side, it was, I’m getting beat up, or what, I’m just getting beat up.
Amy Hoy: So they’re talking very Lord of the flies, arrested development – not the TV show.
Alex Hillman: I think there’s something deeply psychological in the underdog overcome story.
Amy Hoy: You mean like every single, horrible, super-hero movie ever? They make me ill.
Alex Hillman: Absolutely. I think that’s what’s rooted in. I think there’s more to it. I think we could get a panel of psychologists in here and unpack that more. That gotta be for another day.
Amy Hoy: I like how you’re like, let’s do it for real, another day!
Alex Hillman: I think there’s something – it’s too prevalent to not be something that significant.
Amy Hoy: It’s true, you’re right. I read a lot of other business stuff as well that’s nothing to do with tech stuff and the stories tend to on average be far more nuanced.
Alex Hillman: It’s not as simple as a jocks versus geek story, which is essentially what I think most geeks boil a success narrative down to, is somebody going to win. In the past it’s been not me, and if it’s going to be me I have to make sure that the other people lose. Which is how I will win.
Amy Hoy: If you define success as beating everyone else in the entire world, you’re not going to win. No one wins that game. No one has in the history of the world ever won that game.
Alex Hillman: Nope. Even the Greek, who for a while, did a pretty good job in that direction – eventually lost.
Amy Hoy: Yeah. Plus there are all these continents that they never even made it to. So it was an illusion. Which brings us back to risk. If you define your success scenario as defeating, literally everyone and capturing a hundred percent of the market it will never work because no one has ever captured 100% of the market, in modern times. The market’s too big. It’s too fragmented.
Just not succeeding doesn’t mean you failed, which I don’t think people understand, what is the risk? Exactly? What are people afraid of? They’re afraid of not getting everything they wanted, but that’s not risk. Risk is permanent negative effects.
Alex Hillman: Damage.
Amy Hoy: Death. Bankruptcy. Injury.
Alex Hillman: Relative irreparable harm.
Amy Hoy: Exactly. If you lose all your money in the stock market, that’s a risk. But when you invest in the stock market, you know for a fact that your money will go down at some point; that is the whole point of the game, essentially. It will go down and then hopefully it will go up again.
Alex Hillman: So this is risk as part of a calculation part of a management strategy. So I think back to when I quit my job to become a freelancer. What I was doing in my head, I was doing arithmetic. I was doing my risk analysis essentially in saying…
Amy Hoy: I can always get another job.
Alex Hillman: That is my worst-case scenario is I go back to a job, which I’ve already gotten a job once before, so I know I can. I also am more informed. I know what I don’t want, so I can be smart. I can actually, my worst-case scenario could still be better than the job I’m in now, if I’m unhappy.
Amy Hoy: When you freelance, you learn a lot of business skills and self-management skills and service skills that most employed people don’t have. When you then go back to the job market, you can say, well, I actually ran my own business and I did not only the technical stuff or the design stuff, but I also did customer care, invoicing, project management, you know, those kinds of executive skills you need. That’s exactly how I got a job after I freelanced for like a decade.
Alex Hillman: I also didn’t know this when I left, but within four months of leaving a job, I ended up going back to the job as a consultant and making a multiple, because I had domain knowledge that I didn’t realize how valuable it was inside that company. They came back and they said, “Are you available for a few hours from time to time?”
Amy Hoy: Will be nice.
Alex Hillman: And I mean, I, I left on good terms otherwise that wouldn’t have happened. But the ability for me to know my value, and also them to know my value, gave me an upper hand.
Amy Hoy: That is so common of a story too, is when someone who’s really good at their job leaves their job and then the company hires them back to consult. It’s basically a cliche. It’s called a boomerang. There’s a word for it – I read stuff – I know these things. So yeah, that’s a good thing. Or people going back to their former employer after having taken a stint away and getting like a 40% raise, you cannot get a 40% raise in-house typically, but when you leave and come back that somehow raises your market value in their eyes.
I mean, there are all these strategies you could do to be, to be smart about it, but people do stupid stuff. They set themselves up for failure and then they fail and they’re like, “Oh, it’s because it was risky!”
It’s like, no, it’s because you made stupid choices. Let’s be honest, which is, I mean, there are a lot of scary things in this world. You the listener, have you ever Googled the most dangerous room in the house?
Alex Hillman: It’s probably not the boiler room. I would actually imagine the kitchen because there’s things that can catch on fire?
Amy Hoy: Yeah. Or cut you or burn you. I mean, I burned myself on my oven a bunch of times.
Alex Hillman: I’m going to guess though, that it’s not kitchen?
Amy Hoy: It’s not the kitchen! 22 million people in America every year are injured in their bathroom resulting in 250,000 emergency room visits.
Alex Hillman: What the hell are you people doing in your bathrooms?
Amy Hoy: About 15% of people are admitted to the hospital after these emergency visits, so we’re talking 50, 60,000 people admitted to the ER because of the bathroom. Apparently, most are slip and fall in the bathtub, for example. You can kill yourself by slipping in the shower. Like you really can; young, healthy people can die from slipping in the bathtub or shower.
Alex Hillman: Crack your head on the tile or something.
Amy Hoy: You could drown or give yourself a concussion – or worse. People fall and break their hips, elderly people. People injure themselves getting on and off the toilet, mostly elderly people again, but as someone who’s extremely clumsy, I could totally see hurting myself. I once gave myself a bruise about six by four inches, deep black when I slipped on a shower curtain and landed on the edge of the tub.
Alex Hillman: All right. I’m starting to see the danger in the bathroom!
Amy Hoy: People die in their bathrooms. And yet no one who goes into a bathroom is frightened unless they’ve already injured themselves. After a while, you’ll start eyeballing the porcelain as your potential murderer, but, most people are not afraid of the bathrooms. How many people die in car accidents in the US every day, 50,000 per year or so and yet people are not – for the most part – terrified of getting in their car, when it’s something that could actually kill them. Forever.
Alex Hillman: We basically get into an explosion powered weapon.
Amy Hoy: Yeah. It’s a murder can, we drive around in a murder can!
Alex Hillman: Then also we drive around, and we check Facebook and text and stuff like that.
Amy Hoy: I can look at my phone for just a second, the traffic is slow, it will be fine. Those are the last thoughts of more than a few people every year. But you tell people who get in their cars and spend like an hour and a half in their cars every day, commuting with their risk exposure to death or dismemberment is enormous. You tell them, “Maybe you should write a blog and build up a mailing list?” They’re like, “Oh, Too risky!”
Well, you shouldn’t do it in your murder can, but you do it in the safety of your own basement or whatever it is, where you keep your computer.
Alex Hillman: Don’t blog and drive, my friends!
Amy Hoy: Don’t blog and drive. Funnily enough, I listened to a podcast that a guy records while he drives to work, it’s called Drive to Work. It’s really cool. I wouldn’t recommend recording that way though for safety. There are a million things you do every day that could literally kill you. So being afraid of starting a business on the side, incrementally, seems a little bit silly, but people just don’t think of it that way.
They’re used to getting a job or they’re used to the idea that they might get laid off, or they’re used to the idea that they drive everywhere all day and so it’s not scary. So that’s my theory. It’s because it’s novel.
Alex Hillman: I think in addition to that, the pop business world – not the business world – the pop business world.
Amy Hoy: You mean like fast company?
Alex Hillman: Fast company, entrepreneur tech crunch, et cetera, glamorizes risk-taking of entrepreneurs. Often the risks that are taken by those entrepreneurs are not really risking of themselves, but it’s a story. It’s the same thing I was saying. It’s the hero’s journey. There’s so much battle language in the startup world that people look at it and go, “It must be bloody out there!”
Amy Hoy: You know what’s way bloodier than running a business? Gardening. Gardening is war. Those fricking squirrels eat all of my plants’ buds before they even fruit!
Alex Hillman: Gardening is war!
Amy Hoy: Gardening is war – it’s literally trying to destroy you. Typically there aren’t that many market forces trying to actually destroy you.
Alex Hillman: And there are industries that are bloodier and cutthroat. I mean, the work I’ve been doing the last 10 months in real estate. That’s a battle.
Amy Hoy: They’re trying to kill you.
Alex Hillman: And each other! You may not even be any, you get close and there throwing daggers and knives, and it’s bizarre.
Amy Hoy: It’s like Smash Brothers!
Alex Hillman: But even in that, what is the actual liability other than lost time? Which is frustrating – absolutely.
Amy Hoy: I mean, you can go bankrupt in real estate pretty easily if you do not play your cards right.
Alex Hillman: But to your point, bootstrapping a business, starting a business that relies on you, your time, your built in know-how, your ability and willingness to help other people is categorically much, much safer.
Amy Hoy: I like that you brought up bootstrap because the biggest thing you can do risk-wise is to take other people’s money. I mean, unless you’re one of those people who’s going to be like,
I’m gonna quit my job and have no savings, and I’m going to have a one month runway and I’m going to make my rent or not”. I mean, that’s dumb, but the second, most dumb thing you can do is take money from other people.
Alex Hillman: Because you’re setting up an expectation, before you’ve even started in most cases, of what success needs to look like in order for you to be able to succeed.
Amy Hoy: And you don’t get to change it because it’s someone else’s idea of success, and by the way, they bought you or a share of you and then you have to deliver – or potentially they could kill your business without your permission.
Alex Hillman: So, in all of these cases, actual risk comes down to a measurable outcome that is outside of your control. The odds of something bad happening, regardless of anything you do. The bullet is hurdling towards you. It’s going to hit you if you don’t move fast enough. The trick here is to choose things where you can see the bullet coming long before and get out of the way – or never be in the path of the bullet in the first place.
Amy Hoy: I was going to say, I don’t think there’s always a bullet. I think sometimes people go super-fast and they set up a gun and they fire it, pull the trigger, and then they like run in front of a gun. Whereas I’m like, I don’t touch guns. Guns are dangerous! I mean, in real life, I actually do occasionally touch guns. I’ve gone skeet shooting and shot pistols and stuff. I don’t own them.
My business, everything I do is low risk exposure and I think people don’t believe me when I say that. I actually hate real risk. I loathe it. So I run my own business. People don’t get that.
Alex Hillman: What’s the thing that people assume that you do that is risky, that you actually know is not risky?
Amy Hoy: Let’s see. So, I think people don’t understand why I curse in writing and in Twitter and public talks and stuff. They think that I might turn people off, but I’m not actually concerned if I turn people off, that’s not a risk to me. That’s just the nature of doing business. To me, a much bigger risk is spending my entire life trying to fake a persona that would be extra effort and that I wouldn’t like, that’s a real risk.
Alex Hillman: That nobody would connect with?
Amy Hoy: Right. Yeah. Feeling disconnected because you have to be fake sucks. So I never want to do that again in my life. I say whatever I want, pretty much, there are things I don’t say – secrets – I don’t reveal private facts about individuals, et cetera. I’m not worried about cursing or if some people think that my responses are brusque or like, shutting down Charm, people thought was crazy. Quick background, my husband and I started a second Software as a Service called Charm, for customer support and relationship management. Not sales, actual customer relationship management.
It was awesome and we were having intense trouble keeping it going because it was so demanding. A customer support tool has to be online all the time and to make it work the way I designed it was technically quite difficult, and so we actually chose not to run the business. We chose to gracefully, shut it down. People like could not freaking believe that – they lost their mind. Not our customers. Our customers understood. I explained it to them and give them back their money. People on Hacker News and stuff had all these conspiracy theories why we were really doing it. They could not comprehend that our reputations would not be horribly damaged, and that people wouldn’t hate us and that we wouldn’t fail at life – just because we were shutting down a product that didn’t work for us.
Alex Hillman: You said something really interesting that I think plays into people’s sort of broken risk calculation, is reputation. The example you gave is people’s unwillingness to hit publish on a blog post to build a mailing list. People are deeply afraid of the implications of their reputation. This goes back to the point you make all the time, which is you choose something that has no impact on your identity, positive or negative, which if the goal is to grow and evolve and do something better, your choice of inaction to avoid the threat is by default, choosing failure.
Amy Hoy: When people are afraid that other people will not like their blog post or whatever, and they decide then not to post it at all.
Alex Hillman: Keeps them from getting what they actually want in the first place.
Amy Hoy: Right. They’re choosing to fail. Yeah, absolutely. “You miss every ball, you don’t swing for”, or whatever the sports metaphor is. That’s the most sports metaphor I’m ever going to say!
Alex Hillman: I love that you didn’t even specify, I mean, you sort of did because it was swinging, so I’m going to guess baseball?
Amy Hoy: It’s baseball, right? Just checking. What is it? You strike out every time you don’t swing or something? I don’t know.
Alex Hillman: I actually think the funny thing is, I’m pretty sure it was a Michael Jordan basketball quote that you turned into a baseball.
Amy Hoy: I definitely heard swing. You don’t swing in basketball, right? I’m just checking.
Alex Hillman: No, you don’t. I believe “You miss 100% of the shots you don’t take”. I’m pretty sure it was Michael Jordan and basketball.
Amy Hoy: Yay! I am 100% track record of getting sports wrong, but that’s a risk I take!
Alex Hillman: We’ve talked about a couple of the things that we do to manage our risks because I think that’s what this is about.
Amy Hoy: Absolutely. It’s deliberately like designing your risk profile.
Alex Hillman: So again, to my example of leaving a job to become a freelancer, it was calculated. It was the worst-case scenario is, I can’t survive freelancing and so I go get a job, which protects me from the theoretical worst case scenario, which is I live in a box on the side of the road.
Amy Hoy: There would have to be a lot of other failure cascades before you actually, literally ended up in the box, though.
Alex Hillman: Yeah. I imagine there would be a drug addiction somewhere along the way.
Amy Hoy: Yeah. Like your parents would have to disown you or something for something, and they haven’t done it yet so it would probably have to be something pretty big. He’s nodding, you can’t tell.
You have to look at what the real risks are. People bat about statistics like “ah, 96% of all new businesses fail”. But if you Google those statistics, you’ll find actually that a lot of people don’t agree with them at all. Profile changes over time and it changes dramatically based on what industry, it changes dramatically again, based on what type of business and the business structure and the age of the business and so on.
These facts aren’t facts. Most facts aren’t, they are just opinions that are ladled with some data. So, you do some research and find out what is actually the likelihood of dramatic failure or risk or injury or bankruptcy or lawsuits, and where possible – avoid that. For example, before you decide to create a business on the side, check the contract you signed with your employer. That is an element of risk. People forget all the time. Now a real risk is that you might build a business and then discover that your employer owns it – at least in the United States – you need to check your employment contract.
Alex Hillman: Comparing that to a perceived risk of, if I put something out there, people will tell me how terrible I am, or something like that.
Amy Hoy: “Everyone will hate me across the entire internet”. I mean, you have to get comfortable with the feeling that you’ve done something not as good as you could’ve. That’s just the way that life is. So, are you likely to end up in a box? No. Is your business likely to kill you? Exceedingly unlikely? I mean, if your business is, you know, bootstrapped murder bots, then maybe! You’re far more likely to die as a pizza delivery boy than you are writing eBooks, let’s be honest. It’s unlikely that you’ll be sued into the ground for selling eBooks or time-tracking software or whatever little thing that you start.
If you write blog posts and people don’t like them, they will not show up at your house and stone you. If people do not sign up for your mailing list, you will not be evicted from your home. Get realistic about what the consequences are and where possible avoid the actual risk. Don’t take out business loans. Don’t start a business on credit cards. Do not violate your employment contract. Do not sell things that are dangerous, do not become a drug dealer – unless you’re a state where it’s legal, in which case, go for it. You know, it’s basic stuff.
Alex Hillman: The other side of it is when there is a risk that can be taken, see how much of the outcome of that risk is in your control. I think that’s a little more of an advanced technique and maybe something you work up to; but looking at it and saying how much influence over the outcome do I actually have?
Amy Hoy: Right. Actually, I think a good metaphor for that is the conference that we run.
Alex Hillman: That’s a great example.
Amy Hoy: Right? So, when you run a conference, you run the risk that for example, all of your speakers might not show up.
Alex Hillman: You run the risk that you don’t sell enough tickets to cover the prepaid cost of a venue.
Amy Hoy: Also true, or that someone falls and breaks a leg and sues you, for example. There’s a bunch of things that can really screw up your life if you run a conference. With our conference, we actually were just about to sign the contract on a venue for the first one we hosted here in Philly and I called you and said…
Alex Hillman: I was actually at a conference.
Amy Hoy: You were at a conference! I forgot that part. I was literally about to write the check. I wrote out $5,000 for the deposit for the $40,000 venue and catering bill. And I was like, why are we doing this after we’d fought so long to get them to give us a fricking date. I was about to secure that date and I called Alex and I said, “Do we really want to do it this way?” Because that $5,000 was like risk and the idea that we would then have to commit to spending 40 grand at this hotel to host our event.
Alex Hillman: It wasn’t the $5,000, it was what came next.
Amy Hoy: It was the commitment and now being actually risk averse, I was like, “I don’t want to commit to spending $40,000 at a hotel, that feels wrong”. So I was going to call my lifeline and we agreed instead that we would host it at my office, which worked out splendidly and was essentially free.
Alex Hillman: It also gave us a new set of constraints that allowed us to remove additional other risks.
Amy Hoy: Absolutely.
Alex Hillman: Including time commitments from both of us and our respective teams. It basically made something – people assume that running a conference is a very difficult thing and it certainly can be, but we very actively chose conference on easy mode in all of the ways that typically make it a painful experience. So many of my friends run events that are truly excellent, but the first thing they say at the after party is, “I’m never doing that again!”
Amy Hoy: And then they do.
Alex Hillman: They always do because our memories for those things are so terrible, but we wanted to avoid that entirely and actually be able to enjoy the event that we were producing during the event. That became the new framework for creating an experience that would not just be beneficial for our attendees but make it worth it to us. That’s the kind of thing where you can take passive choice of running a conference and then assume all of the risk that comes with running a conference, you can make an active decision to say, “Well, what if we ran something that is kind of risky in a less risky way?”
Amy Hoy: The assumption is that a conference has a professional venue and that is an element of risk because you don’t know how the venue runs their stuff or whatever. You have no idea. You have no guarantees that everything will work out. I’ve been to multiple, extremely expensive and professional conferences where for example, the internet stopped working and my audio, went out. As a speaker, that happens.
Alex Hillman: That’s a pretty common situation.
Amy Hoy: People pay hundreds of thousands of dollars for these venues and that still happens. So we took the, “Oh, well, when you in a conference, you do X” and we’re like, hold on a second, stop. How can we reduce the number of parts here? How can we make this easier? How can we make this actually less risky?
The same thing is true when you start a business, people think, “Oh, well you have to save up three months of runway and then quit your job and then build your plane on the way down”, or whatever the metaphor is. What is the metaphor? X on the way down, build a parachute It makes more sense. Change engines and mid-flight, build your engine. I don’t know there’s some sort of aeronautics metaphor also. Amy, queen of the metaphors!!
Alex Hillman: Not today!
Amy Hoy: Nope, never. You guys know what I’m saying though? Right. When you say I’m going to start a business, I’m going to run a conference. There are all these assumptions that you are freighted with, that are full of risk that you can eliminate. If you want to, if you sit down and you make a plan and you choose which parts really mattered to you and how can I work up to those incrementally while reducing my actual risk exposure?
Alex Hillman: I think this all really just ties back to that original tweet, which is this notion of having a thousand customers is riskier than having one employer. I think we’ve done a good job of – in far greater than 140 characters, debunking that, but the question then becomes, what do you with that? How can you start proving it to yourself?
I think that’s the key, you can sit and listen to us talking all day long, but I think the reason that people react to that tweet is because they don’t trust themselves to go get the first customer or the second customer, let alone a thousand of them. They don’t trust themselves to even get to a thousand.
Amy Hoy: The key is to start incrementally because when you design your business or your life, you can choose something that lets you start incrementally and you can build on that and every additional blog reader or mailing list subscriber or sale that you make, you get closer to your goal.
Alex Hillman: I think confidence also comes from small wins. So choosing your first step is something that you actually do have some proof that you can do, like choose something that you do in your job and do it on the side. Talk about something that you’ve already talked about and people understood it after you said it and turn into a blog post and hit publish, or take an email or tutorial or something you put together and put it out under your own name. When you press the publish button and you realize that the skies don’t come crashing down on you and that people don’t break into your house and murder you in your sleep you learn that, “Maybe I can do that again”.
Amy Hoy: Absolutely!
Alex Hillman: It’s gonna feel weird the first time you do it, that hesitation, totally natural, totally normal. I think it’s Simon Sinek in his second book Leaders Eat Last talks about sort of the chemical releases in our body when good things are happening and when bad things are happening. The chemical reactions in our body that make us feel like that, knot in our stomach when someone think bad is about to happen, evolved as a protective measure, when we heard actual threats like a saber tooth tiger or a bear. So our bodies evolve to react to these potentially risky situations and if it feels bad, we would run away. The issue is is our body doesn’t know the difference between hitting publish on a blog post and a saber tooth tiger.
So we react as if it’s the same amount of danger. We can’t tell the difference. Recognizing that that feeling in your body is a totally natural reaction, but then saying, “I don’t care. I’m going to do it anyway”. And then earning the trust in yourself by doing it and realizing that a saber tooth tiger, doesn’t jump out of your computer screen, eat your face off that you could do it again and again and again and again and again and again, because those thousand customers aren’t going to show up to on day one, it’s one, then two, then three, then five and so on and so on and so on. You’re going to have to be able to do it lots of times, so the best place to start is now.
Amy Hoy: The biggest risk is to do nothing, but I’d also like to add that feeling of fear does go away. It gets less and less. Maybe not ever entirely, occasionally when I launch something, I think, “Hmm, maybe people won’t like this this time” and you know what, sometimes they don’t.
That’s okay. I’m not actually scared of it. It’s just I don’t actually know the future – kind of feeling.
Alex Hillman: You don’t lose when they don’t like it.
Amy Hoy: Correct, just the time I had spent to create it, that’s it. And then I learn something valuable about my market every time. So, I’m going to say it again. The biggest risk is to do nothing.
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