In November, Steve Wozniak, famous Apple co-founder and sidekick of Steve Jobs, had a fireside chat with Nextiva co-founder and CEO Tomas Gorny at the final session of NextCon in Scottsdale, Arizona.
During that conversation, Wozniak shared some impactful tips for business owners from all industries, tech and otherwise.
Here are four key lessons every entrepreneur can take away from his speech.
1You can make a difference without the spotlight
Jobs has often been portrayed by the media as a god-like visionary. Yet while Jobs was usually the one in the spotlight, Wozniak was busy working behind the scenes. He built the foundation in the background while Jobs sold the vision to the public.
Wozniak portrayed himself as completely okay with this, a position that highlights his first lesson: Success doesn’t always happen in the spotlight. If both Apple co-founders had striven for the fame Jobs attained, neither would have gotten it. In fact, it was their differing skill sets that allowed the entire vision to unfold.
Takeaway: This is not an easy lesson to learn. Founders are encouraged to dream of being on the cover of Entrepreneur or having a Social Network–like movie made chronicling their story. But when you really think about why you’re building your business, fame shouldn’t be the main driving factor. Instead, avoid leading with your ego and risking making the wrong decisions for the business.
Wozniak always put Apple before his ego. As a result, he helped create some of the best products in the world.
2You must have passion for your work
Wozniak conveyed passion and happiness throughout his entire NextCon presentation. His ever-present smile was especially sunny when he talked about technology. There was no doubt that his passion was what helped build such disruptive and impressive products.
Wozniak didn’t co-found Apple for the money and he didn’t have a grand vision for Apple at the outset. He just got involved for the love of the craft. He wanted to build products he loved.
Takeaway: When starting a new business, it is important to focus on what you enjoy. Then find a customer to buy your product. Don’t worry about the size of the market. As you test your business and refine your strategy, you’ll find a way to expand.
Said Wozniak: “My goal wasn’t to make a ton of money. It was to build good computers.” The greatest companies in the world start with just that simple a vision.
3Find somebody willing to build in his garage
Listening to Wozniak speak at NexCon gave audience members the sense that he is the epitome of someone who does what he loves, regardless of the limitations involved.
Too many aspiring entrepreneurs get into business for the wrong reasons. A would-be entrepreneur would rather be seen as an expert or a thought leader than devote hours to studying his craft and letting his reputation blossom organically.
As Wozniak put it: “Find somebody who has been building things in their garage. That’s the person you’ll want to work with.”
The reason: Such people are problem-solvers, Wozniak said. They do what they do regardless of the incentive, regardless of the title, regardless of the acclaim or the attention.
Takeaway: Garage builders do what they do even when no one is watching. And, as Wozniak explained, they are usually much more capable of figuring things out than someone with a fancy degree.
4Build a team that wants to use your product
“Create solutions to your own problems,” Wozniak said clearly and simply. There is a clear difference between people who set out to become trendy tech innovators with no clear problem to solve and whose who are extremely aware of a particular pain point and do everything in their power to fix it.
You always want to be the latter, Wozniak said. You want to be building something you and your entire team will actually use. Something that you all believe in and would be excited to have in the world.
Takeaway: That something you create as an entrepreneur should solve a personal issue, and deliver value to your life first. Because, if you and your team want to use it, then chances are others will, as well.
All first-time entrepreneurs should take a page from Wozniak and his lessons. After all, he was a key player in creating one of the greatest companies in the world and some of the most innovative products of his generation.
This article was originally posted here on Entrepreneur.com.
Alan Knott-Craig Answers Your Questions On Money And Partners
From starting the right business, to managing business partners and finding your magic number, there is a secret to happiness.
If I get rich will I be happy? — JC Lately
Does money equal happiness? Mostly, yes. Research in the US shows that your happiness is proportionate to your earnings up until you earn $80 000 per annum. Thereafter, incremental income gains have a negligible effect on your happiness.
In other words: More money will make you happy as long as you’re poor. Once you break out of poverty and enter a comfortable middle-class existence, more money will not make you happier.
These are the top three for old folks:
- I wish I’d spent more time with family.
- I wish I’d taken more risks.
- I wish I’d travelled more.
Therein lies the secret to happiness. Spend time with your family. Take risks. Travel.
But first, make money. Don’t do any of the above until you’re making enough money not be stressed about money.
What is the magic number? — Mushti
The magic number is the amount of money you need to not worry about money ever again. If you don’t need toys like Ferraris, yachts and jets, the magic number is R130 million. Here’s the math: R130 million will earn R9,1 million in interest annually (assuming 7% interest). After tax that is R5,46 million.
Assuming you need 50% to maintain a good lifestyle, that leaves approximately R2,7 million for reinvestment, which is enough to keep your capital amount in touch with inflation for 50 years. The balance of R2,7 million (after tax) is for your living costs. In South Africa, R2,7 million will afford you a lifestyle that allows you to send your kids to a great school and university, to travel overseas a couple of times a year, and to live in a comfortable house.
Over time your living costs (and inflation) will eat into your capital amount. After 50 years you should be down to nil, assuming you earn zero other income in that time.
In 50 years, you will probably be dead. If you’re not dead, your kids will be able to support you (because they love you and they have a great university education).
I am the sole director of a company (the others still have full-time jobs and don’t want to be conflicted) and there is pro-rata shareholding based on our initial shareholder loans. However, I am putting in most of the hard work, together with one of the other actuaries. How best do I manage the director/shareholder dynamic? I obviously want to make as much progress as possible but there are times when I need the input from the others (and their responses aren’t always as quick as I would like). — Mike
If you have any perception of unfairness regarding effort/risk vs reward, deal with it NOW! You can’t do so later. The best approach is honesty. Call your partners together. Explain your thinking. Perhaps argue for 25% ‘sweat equity’ for yourself. Everyone dilutes accordingly. Ideally cut a deal whereby you have an option to pay back all their loans, plus interest, within six months, and you get 100% of equity (unless they quit their jobs and join full-time).
Equity dissent must be resolved long before the business makes money, otherwise it will never be resolved.
What do you think of WiFi in taxis?— Ntembeko
It’s a good idea, but not original. Before embarking on a start-up, you should survey the landscape for competitors. Just because there are none doesn’t mean no one has tried your idea.
It just means that everyone that tried has failed. You need to be 100% sure that you have some ‘edge’ that makes you different from everyone who came before you (and failed). Otherwise you will fail. What is your advantage that is different to everyone who came before?
Read ‘Be A Hero’ today
What You Need To Know About The Lean Start-up Model
The Lean Start-up philosophy was developed by Eric Ries, a Silicon Valley-based entrepreneur who also sat on venture capital advisory boards. He published The Lean Startup in 2011, igniting a movement around a new way of doing business.
The model follows key precepts that include:
Taking untested products to market
The fact that too many start-ups begin with an idea for a product that they think people want, spending months (or even years) perfecting that product without ever testing it in the market with prospective customers.
When they fail to reach broad uptake from customers, it’s often because they never spoke to prospective customers and determined whether or not the product was interesting. The earlier you can determine customer feedback, the quicker you can adjust your model to suit market needs.
The ‘build-measure-learn’ feedback loop is a core component of lean start-up methodology
The first step is figuring out the problem that needs to be solved and then developing a minimum viable product (MVP) to begin the process of learning as quickly as possible. Once the MVP is established, a start-up can work on tuning the engine. This will involve measurement and learning and must include actionable metrics that can demonstrate cause and effect.
Utilising an investigative development method called the ‘Five Whys’
This involves asking simple questions to study and solve problems across the business journey. When this process of measuring and learning is done correctly, it will be clear that a company is either moving the drivers of the business model or not. If not, it is a sign that it is time to pivot or make a structural course correction to test a new fundamental hypothesis about the product, strategy and engine of growth.
Lean isn’t only about spending less money
It’s also not only about failing fast and as cheaply as possible. It’s about putting a process in place, and following a methodology around product development that allows the business to course correct.
Progress in manufacturing is measured by the production of high quality goods
The unit of progress for lean start-ups is validated learning. This is a rigorous method for demonstrating progress when an entrepreneur is embedded in the soil of extreme uncertainty. Once entrepreneurs embrace validated learning, the development process can shrink substantially. When you focus on figuring the right thing to build — the thing customers want and will pay for, rather than an idea you think is good — you need not spend months waiting for a product beta launch to change the company’s direction. Instead, entrepreneurs can adapt their plans incrementally, inch by inch, minute by minute.
Start-Up Law: I’m A Start-up Founder. Can I Pay Employees With Shares?
Bulking up employee salaries with equity is a common method to attract, retain and incentivise top talent.
Every early stage start-up company battles with restricted cash flow and not being able to pay market related salaries to their employees. Bulking up employee salaries with equity is a common method to attract, retain and incentivise top talent.
Can I pay salaries with shares?
South African labour laws require that employees be paid certain minimum wages, and “remuneration”, as defined within the Basic Conditions of Employment Amendment Act, either means in ‘money or in kind’. ’In kind’ does not include shares or participation in share incentive schemes, as determined by the Minister of Labour. As such, there is no room for start-ups to completely substitute paying salaries with shares or share options. However, there is no restriction in topping up below market related salaries with equity via an employee share ownership plan (‘ESOP‘).
Employee Share Ownership Plans
There are a variety of ways in which employees can be incentivised, and it will always be important for the start-up founders to consider what goal they wish to achieve by incentivising their employees.
ESOPs can be structured in several ways, for example: employees may be offered direct shareholding in the company, options for the acquisition of shares in the future; or alternatively, a phantom / notional share scheme can be set up.
ESOPs permit employees to share in the company’s success without requiring a start-up business to spend precious cash. In fact, ESOPs can contribute capital to a company where employees need to pay an exercise price for their share options or shares.
The primary disadvantage of ESOPs is the possible dilution of the Founder’s equity. For employees, the main disadvantage of an ESOP compared to cash bonuses or bigger salaries, is the lack of liquidity. If the company does not grow bigger and its shares does not become more valuable, the shares may ultimately prove to be worthless.
Some key features to consider when setting up an ESOP are:
- ELIGIBILITY – who will be allowed to participate? Full time employees? Part-time employees? Advisors?
- POOL SIZE – what percentage of shares will be allocated to incentivise employees?
- RESTRICTIONS – will employees be able to sell their shares immediately?
- VESTING – will there be a minimum period that service employees will have to serve with the start-up to receive the economic benefit of his or her shares?
Employee share ownership plans are great corporate structuring mechanisms for attracting and retaining employees, as well as fostering an understanding of the company ethos and encouraging loyalty and productivity. It is essential when implementing an ESOP that all the tax implications are considered and that the correct structure and legal documentation are in place.
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