The title is perfectly descriptive of the book’s message and content. There is a certain power in being broke, and Daymond gets deep into why, using stories of fellow entrepreneurs and his own personal story. It might have hit closer to home because I grew up one of the poorest kids in a rich town, and spent my holidays and freshman year on the mission field in Mexico. You don’t know poor until your dad asks you to give up your prized Walkman (and only link to sanity while spending months in a van) to a kid who has never even owned a toy. What you learn is not to get too attached to things.
Daymond believes that almost all people are either moving away from fear or toward an expected pleasurable experience. He uses this belief to explain both successful entrepreneurs’ approach to fear, and how to understand your target market. Being broke changes what you fear. You know, some of the most memorable nights of my life came when I was lying on the roof of dad’s van in a village with no water or electricity, and I could see every single star. I could smell the salt from the ocean a mile away. I wouldn’t say being poor is pleasurable, but it’s not something I fear.
The biggest reason Daymond’s book hit home this week is because of a conversation with an entrepreneur that I had a few days ago. Basically, it was that his back was against a wall and he needed more investment dollars sooner in order to make his business work. He just couldn’t do it without more money. Important to understand, he’s already had a significant amount invested. I struggled to find the words to tell him that he was actually in the best position possible now. Finally. It’s do or die time. And only he can decide if he keeps following his passion or if he gives in and takes one of those high paying jobs. My giving him another month or two of breathing room won’t change anything. It’s his mindset that must change. Those early investment dollars made him lazy, and they made him take his mind off of what really matters.
I actually had that conversation a few times last week, in fact, a few times most weeks. Daymond has some interesting facts that back up all his pep talking and memeable quotes (not sure that’s a word yet), all based on the idea that innovation comes from scarcity and passion.
So, let’s get into his Power Broke Principles.
#1 “Use all of the resources available to you, but don’t expect to just flip a switch and get them all cranking on autopilot. No. You’ve got to learn how to best use those resources to your smartest advantage,…”
After investing in 72 companies, and planning to invest in at least 100 this year, one of my pet peeves is when someone tells me they need investment dollars to grow, but can’t articulate how. You don’t need money, you need resources. Money might make resource acquisition easier, but I’ve seen far more often that it makes people lazy and sloppy. Most people don’t really know how to spend it effectively. So I get them to break it down to exactly which resources they think they need to spend money on, then go out and presell the deals. Hire that programmer, contingent on funding. Know how much your component costs will be and who your suppliers are. Turns out, you might be able to negotiate a part-time equity only gig with that programmer until your product starts selling. Or the supplier might be willing to give you terms. Then the “need” for funding starts to go away.
You don’t know if you don’t ask. You don’t ask if you aren’t broke or operating with a resourceful mindset.
One other thing that disappoints me is when I see companies go through our programs and make no use of the vast amount of resources that are just sitting there at their disposal. It’s like they don’t understand the law of inertia. Don’t let them sit there being objects at rest. The resources are there to use, BUT you have to put them in motion. This goes for everyone. Are you a student? Guess what? Your university or college is a treasure trove of resources that you pay for with your student fees. What about the public library? Free wifi these days and a quiet place to work, plus computers if you can’t afford one right now. Free online education is available to anyone that can find a digital device and a connection. Check out these 25 great resources.
What are you waiting for? Your excuses can’t build your business, just like they can’t pay for groceries.
#2 “Keep it real. Strive for authenticity in everything you do. At the end of the day, the more humility and integrity you put out into the world, the more you’ll connect with others who’ll want to help you succeed.”
The most successful people I meet (and am lucky to call friends) always start with wanting to know a person’s story. Not their resume, but how they grew up, what were their successes and challenges. What do they do with their time. What I’ve found is that they are looking for your authentic self. They are looking to see if there is a connection. If they trust what you’ll do when your back is against a wall. So stand for something and don’t be ashamed of it. If you wobble like too many politicians when they get past New Hampshire, no one’s going to want to work with you in the business world.
#3 “Learn (and embrace!) the power of optimization. By that I mean make the very best use of your time, energy, actions, opportunity costs, and capital. One of the most precious resources available to you, at absolutely no cost, is time – don’t waste it.”
This one goes right back to #1. You have tons of resources if you open your eyes. Once you see them, learn to use them as effectively as possible.
#4 “Understand that you will be rewarded for solving other people’s problems or filling holes in the marketplace, just as you will be rewarded for helping others reach their desired objectives.”
I had lunch with this guy the other day who asked me to get in touch after I spoke a Harvard Business School alumni lunch (no I am not an alum). Turns out he does turnarounds, is an alum, and in case Daymond reads this, he’s why there’s still Miller Time (yes, I read the WHOLE book).
I bring him up because it was one of the most refreshing 2.5 hour conversations I’ve had in a long time. While you can tell he really gets business, financial statements, law, the economy, and all the other stuff that can be learned – he understands at a fundamental level that it all boils down to people. Without a basic understanding of how people think, and a deep desire to improve their lives in some small way, long-term business success is probably a pipe dream. So find a problem to solve or a way to make people look or feel just a little bit better. Simple.
#5 “Put all your passion and purpose behind whatever it is you’re doing. If you don’t believe in yourself, in your product, your service, or your business, you can’t expect anyone else to either. That said, you don’t want to come across as a nut, so don’t be fanatical or unreasonably optimistic. Remember that you’re selling people on the idea of trusting in you, because people invest in people, not just in a product or service.”
No need for elaboration here!
#6 “Take the time to understand and appreciate everyone you meet on your path to success. Investor, distributor, vendor, prospective buyer, or customer…whoever it is, show him or her that you get how things are from their perspective.
I have a lot of people that I feel responsible to in our ecosystem. I work to help our founders be as successful as possible, generate a great return for our investors, make mentoring time valuable to our mentors, show off our hand selected sponsors, support the global and local community of entrepreneurs, and of course, take care to make sure our team is learning and succeeding while serving all of our stakeholders. That’s a lot of people’s incentives to keep track of and keep aligned.
To me, this 6th principle is all about aligning incentives for as many people in your company’s ecosystem as possible. But it takes constant attention to understand where people are and how their incentives change with changes in situation. Pay attention and they’ll tell you exactly how to make them happy. And I know there’s this thing around FOMO out there, but that’s no reason to treat someone disrespectfully. There are certain tickets you need to buy to certain parties, but no one deserves to be treated like a second class citizen. Who knows? They might just use the Power of Broke to be YOUR boss one day.
#7 “Think beyond the moment. This can be tough to do, especially when you’re up against it. Find a way to support your vision with logic, data, and realistic projections.”
Stories are great. Stories backed up by plans are better. And it takes major discipline to get planning done at the same time as execution.
#8 “Make the probability of your success a natural part of your thinking. Expect it…will it so. Why? Because good things come to those who expect them.”
You’ll have to read the book to really understand where Daymond is coming from on this one.
This is where he asks what your Power of Broke Principles are. The one I stress with all of our founders and myself is:
G’s #1 Know Thyself - Take time to figure out what it is you want out of this life and what kind of a leader or person you want to be. If you operate out of that base, you’ll find many of these principles easier to follow.
Knowing thyself means understanding what fears drive you, what your strengths and weaknesses are, and being intellectually honest about everything. And man is it HARD! Looking in that mirror every time something goes wrong and knowing you’re responsible. It makes you want to be better. It makes you want to conquer yourself, while you conquer your market.
My recommended reading on this principle is “Big 5 for Life” by John Strelecky. There are lots of great books on getting to your why, but this one really hit home for me.
So to wrap it up, there are 5 basic SHARK points that should be at the heart of everything you do. I’ll tick all of them off, but to fully understand them, take a few days and read the book. Apply them to the above Principles and grind away.
1. Set a goal… (and write it down)
2. Do your homework…
3. Adore what you do…
4. Remember, you are the brand…
5. Keep swimming…
And to all of you new recruits in the Gauntlet, Power of Broke is highly recommended reading for the Discovery Level. See you all on the 29th!