Friday, June 24, 2011

How a hobby grew into a $100M business

I am reading a new book by CD Baby creator Derek Sivers entitled Anything You Want. The book boasts "40 lessons for a new kind of entrepreneur." And indeed, Sivers is one of a new breed. He chronicles his own experience going from starting up CD Baby to help his friends sell their CDs online to turning it into the largest seller of independent music on the web.

Sivers has some rather unorthodox advice that frankly, looks refreshing. When his company grew to fifty employees, business-to business services told him he needed an "official review plan, sensitivity training, Terms and Conditions postings, and all this corporate crap." He said "no" to all of it. His advice? "As your business grows, never let the leeches sucker you into all that stuff they pretend you need."

He talks about the strength of many little customers and suggests you design your business to have "NO big clients, just lots of little ones. When you build your business on serving thousands of customers, not dozens, you don't have to worry about any one customer leaving or making special demands."

Overall, this seems to be a great little book if you are an entrepreneur with your own business or aspiring to be one.

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17 Comments:

Blogger dr.alistair said...

i had that same thought during a crisis in my general contracting work. i was building basketball court for a cleint in a new building he was constructing for his software company. one day i came to work to find a lawyer walking across my half-laid maple floor and my client and his manager pacing around talking and pointing.

their point was that i had said i was going to lay 1 7/8" maple and i was laying 2 1/8" instead. the mill had given us a discount for taking the dimension as it was a custom order that hadn`t been paid for, and i felt that the quarter inch width made about zero difference over the width of the court.

apparently one of the managers had measured the boards and whined that it wasn`t nba regulation.

my client had gone to the extent of getting his lawyer down to inspect the work and see if they had a position to have the work halted.

i argued that in real terms it meant very little and that the court would be delivered as agreed.

it took almost a week for them to agree to leaving the job as was.

i vowed then that i wasn`t going to expose myself to 10s of thousands of dollars of risk with a single client ever again.

now, if a client wants a refund i will gladly give them an hours session fee in return for peace of mind, though it`s never happened.

1:28 PM, June 24, 2011  
Blogger dr.alistair said...

http://www.forexstreet.net/video/crowd-behaviour-how-to-start

and here is sivers on crowd psychology...which ties in with what ann coulter was talking about.

1:31 PM, June 24, 2011  
Blogger Peregrine John said...

Perfect. I've been looking for exactly such a book.

3:08 PM, June 24, 2011  
Blogger Ern said...

When his company grew to fifty employees, business-to business services told him he needed an "official review plan, sensitivity training, Terms and Conditions postings, and all this corporate crap." He said "no" to all of it. His advice? "As your business grows, never let the leeches sucker you into all that stuff they pretend you need."

Amen to that. I watched one of my employers go from being a great company to having to be rescued from bankruptcy by employing ever-increasing numbers of program managers, human resources specialists, and outside consultants.

3:14 PM, June 24, 2011  
Blogger GawainsGhost said...

I know a woman, the step-mother of my best friend actually, who came up with an idea. Angel lapel pins.

So she set up a shop in her garage and started making angel lapel pins. Then she started a website and began selling angel lapel pins online.

Want to know how much money she made in an average year? $200,000.

Major corporations would order thousands at at a time for their conventions.

How many employees did she have? Just her, in the beginning, and later her daughter, who quit her job when she realized she could make more money selling angel lapel pins.

No human resources, no sensitivity training, no manager, no lawyers, no executives, just two women in a garage making angel lapel pins.

American ingenuity, there's nothing like it.

5:46 PM, June 24, 2011  
Blogger randian said...

Fifty employees is the tipping point for a lot of government regulatory BS. Obamacare's threshold is, I believe, 30. Keep your company small (in head count, not profit) and avoid the problems.

I imagine that's one of the reasons Obama so favors big business over small, like Europe does. Big businesses can't hide from the regulatory state like smaller businesses can.

8:08 PM, June 24, 2011  
Blogger kmg said...

Helen,

You really must keep an eye on the Thomas Ball story. The MSM is specifically trying to bury that story.

Fortunately, the ugly Amanda Marcotte let out her misandry, by stating that 'women suffer more' even though unfair divorce laws drove this man to suicide.

This story is noteworthy not just because a man drove himself to suicide due to the unfairness of alimony laws, but that feminists are working hard to say that 'women suffer more' even if the man died a fiery death.

9:52 PM, June 24, 2011  
Blogger ChrisA said...

Sounds like an interesting read.

Leeches, looters... it all sounds very familiar. ;-)

1:17 AM, June 25, 2011  
Blogger Suzanne Lucas said...

From a philosophical standpoint, I wholeheartedly agree with the sentiment.

As a human resources person, I cringe when someone thinks they don't "need" that stuff. You don't need it until you get audited or sued.

The reality is, the government is set up to destroy businesses--as if they are the enemy or something. With 50 employees you're subject to all sorts of rules and if you don't know about them, the results can be devastating.

It really, really, really stinks and is really ridiculous, but we have to face the reality that we live in.

1:39 AM, June 25, 2011  
Blogger Doom said...

The biggest client, absolutely to be avoided, is... the government... Unfortunately to include the military.

2:08 AM, June 25, 2011  
Blogger Helen said...

kmg,

Thanks for pointing out the Ball story. I just did a post on it with my thoughts.

9:34 AM, June 25, 2011  
Blogger TMink said...

Suzanne wrote: "The reality is, the government is set up to destroy businesses--as if they are the enemy or something."

Wow. I wish I could disagree with you. Well and devastatingly said.

Trey

10:03 AM, June 25, 2011  
Blogger The Captain said...

What Trey said. Razor-sharp, succinct analysis, Suzanne.

I used to hope the government wouldn't fall before I died. Now I wait for it as a small child anticipates Christmas.

7:26 AM, June 26, 2011  
Blogger DADvocate said...

NO big clients, just lots of little ones.

Bruce Williams says the same thing. Makes lots of sense. The larger your share of the market, the more secure your business.

I've heard stories of large corporations taking over small businesses by defeating this principle. The large corporations becomes the majority of the small business's business and then threatens to terminate business if the small business doesn't sell out or otherwise meet the demands of the large corporation.

11:05 AM, June 26, 2011  
Blogger tomcal said...

This comment has been removed by the author.

6:46 PM, June 26, 2011  
Blogger tomcal said...

Hi Helen:

I haven't been on Blogspot, or any other blogs for quite a long time. I've been too busy extricating myself from various business entanglements which resulted from working for just one or two big customers.

Having resolved to never fall into that situation again, I wondered to myself, "Self, is Dr. Smith is still blogging, or has she tired of it?"

I'm glad you are still at it. You have an amazing way of coming up with the right suggestions at various moments in history.

6:50 PM, June 26, 2011  
Blogger Helen said...

Hi tomcal,

I'm still at it. I've missed seeing you around here. Hope all is going well for you.

6:27 AM, June 27, 2011  

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