Dave Concannon

I’ve been eagerly awaiting the arrival of “Rework” since I preordered it back in January. I’m a big fan of 37signal’s work, their blog, and loved David Heinemeier Hansson’s talk at FOWA Dublin in ‘09. I’m not a huge fan of “Rework”.

Testimonials

Before getting to the actual content of the book, the reader will be confronted by some of the most overly-enthusiastic praise from recognized industry figures that I can ever recall seeing in a publication. This almost stopped me from buying the book in the first place. Mark Cuban is someone I’d gladly sacrifice a major appendage to work for, but check out this effusive gibberish:

If given a choice between investing in someone who has read Rework or has an MBA, I’m investing in Rework every time… a must-read.

Or this mental breakdown from Tom Peters:

The clarity, even genius, of this book actually brought me to near tears on several occasions. Just bloody brilliant, that’s what.

Content

37signals typically write in a blunt, straight-shooting style, and they pull no punches in “Rework”. Don’t get me wrong – there are a few gems, but also several essays which really don’t make any logical sense. One or two of the essays remind me of “The Sphinx” from the movie “Mystery Men” – amusing upon first read, but logically empty. In particular, the introduction sets up some weak straw-man arguments about what ‘conventional critics’ say is not possible that comes across sounding like teenage rebellion.

“Getting Real” was a breath of fresh air in an industry that seemed to have learned little from the Dot Com crash. It was absolutely original and controversial when released, and inspired people around the world. At least part of the reason for the success of “Getting Real” was it’s contrarian stance on what was then normal industry practice – their advice to do less, avoid feature bloat, have passion for what you do, and their simple functional design theories were revolutionary.

The problems with success

It may be that they’ve actually been too successful at promoting their philosophy because for the most part “rework” doesn’t feel like it’s saying anything very unconventional. Here’s an (admittedly out of context) quote from the book that I found ironic:

When you’re a success, the pressure to maintain predictability and consistency builds. You get more conservative. It’s harder to take risks. That’s when things start to fossilize and change becomes difficult.

If you’ve been following resources like Andrew Warner’s interviews with entrepreneurs, or the surge of interest in concepts like the Lean Startups philosophy, a lot of the advice in this book just feels like common sense. Maybe I’m just not in the target demographic? It is to 37signals’ credit that they have inspired so many with their work and there is a lot of good advice for those who are not familiar with what they’ve already done, but some of “Rework” just doesn’t hold up to the light. It’s Seth Godin’s easy conversational writing style but missing some essential nugget of truth.

To make sure I’m not just whinging in this post I’ll clarify that there are the occasional diamonds in the rough. I particularly enjoyed:

• Meetings are toxic – Good advice on how to run a meeting if it’s really necessary
• Let your customer outgrow you - Don’t pander to every change request
• Scratch your own itch – Solve one of your own problems and you’ll find a market
• The myth of the overnight sensation – The only path to success is hard work
• Marketing is not a department - Everyone is responsible for the public face of your company

Buy it?

My critical process for reading any article, blog post, or book is to ignore who the author is and concentrate on the actual content. In this instance I wasn’t overly impressed.  Let’s be honest though – this book is going to be a resounding success whether I praise it or slate it. 37signals have a very large audience among whom they’ve reached a certain level of rockstar infamy. If I can riff on this tenuous rockstar analogy – “Getting Real” is to the Red Hot Chili Peppers’ “Blood Sugar Sex Magik” as “Rework” is to whatever that last album was called.

With all the points above in mind, there is still enough good advice in this book that I would recommend getting a copy if you haven’t already read “Getting Real”, and don’t subscribe to their blog.  There are four of the better essays from the book on Tim Ferriss’s blog if you want a sampler to make up your mind.

This great article by Sachin Rekhi got me thinking. Sachin broadly divides entrepreneurial tactics between those that are trying to create “Fundamental” value:

An entrepreneur that focuses on building fundamental value is optimizing for creating a standalone business that generates meaningful cash flow and profit as an independent entity.

and those that are going for “Strategic” value:

An entrepreneur optimizing for strategic value is one that is building their organization in such a way to maximize potential value to a larger organization that will ultimately benefit from an acquisition.

The argument is that in order to create Strategic value, you may need to sacrifice profitability for several years while you grow your user base, capture advantage with industry partnerships or create some hard-to-replicate value.  Those companies looking to acquire the business will need some essential market position or value-add that it would be impractical to try to create themselves.

Mint’s Fundamental Value

For a company such as Mint.com we have an example of a business that was creating fundamental value with a product that gave users insights into their finance while earning the company immediate revenue via affiliate sales deals. This was a profitable business that could quite happily have continued under it’s own steam before it was bought by Inuit. It’s quite probable that the founders thought of Inuit as a potential acquirer, but wisely stuck to their original plan to create fundamental value (and revenue along with it).  Despite some industry whinging, it seems to me that it was a good opportunity for the founders to get a return on their hard work.

Why take VC money?

While 37Signals seem to dismiss the entire concept of raising VC money on principle alone, I’m going to play devil’s advocate. The obvious addition of a good chunk of cash to act as a runway can’t hurt.  To build up the basis of a strategic value company may take years to create a platform, collect data, or build up a critical mass of users.  A venture capitalist may carry the sort of clout that legitimizes your company in the marketplace.  A well-chosen VC can also have the sort of contacts that is worth far more than the cash they invest, opening doors in your industry that might be completely inaccessible otherwise. Coincidentally as I finish writing this, Dave McClure announced that he’s part of a panel on this very topic at SxSW.

Amazon

According to this article from August 2000, Amazon had at least $530 million invested in it. In order to create the strategic value that currently dominates online retailing they burned through huge amounts of capital to build distribution systems, expensive scalable online platforms, huge amounts of content and data entry etc. It seems to be a far riskier play, but if you pick the market, get the formula right, and have a little luck you can fundamentally change how people interact. I can’t envisage a way that Amazon could have done it differently.

Why run away from VC money?

While all clichés may not be true, they surely have some grain of truth in them. The stereotype that a VC will boot out the founders if things don’t go to plan certainly doesn’t happen all the time, but the story doesn’t come from nowhere. The main anti-VC argument that 37signals seem to have is that if you have more money then you’re inclined to spend it less wisely – this is probably valid from simple economics alone. The discipline to ensure the money is used on the important things (or that your VC will be prepared to keep the cash coming) may be the key for companies aiming to create Strategic value.

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Summary: A selection of industry leaders answer the question – Should I do an MBA, or should I start a business?

Photo courtesy of JustVodka@Flickr

Every once in a while I get the notion into my head that I’d like to do an MBA. I have a stack of GMAT study guides that I skim through, firing dusty synapses in the long-forgotten test-taking portions of my brain. I read through the theories, the course content lists, the testimonials from happy-looking people in suits and wonder if it’s really something for me. I left large companies for startups years ago and even in the toughest times have rarely looked back with regret. Is an MBA really something I want to devote my energy, money, and sanity to?

Then there’s the alternative: could I gain similar or better experience by jumping straight in and just starting something? An MBA is going to run upwards of €10,000 per year, what if I could take that money and start a software business, or try to take a product idea to market? One question remains – considering I have a list of potentially good ideas and the desire to work for myself “at some point” why haven’t I done it already? I’ve taken halfway-steps towards this sort of freedom by investing in a few Irish startups, but I still wonder why I haven’t fully immersed myself.

So which of these two paths is a recipe for success? I reckoned I could do worse than asking smart, experienced people that I admire what they thought, so I drafted an email and thought of some smart people who have inspired me recently.  Here’s the list (In alphabetical order…):

• David Heinemeier Hansson

  Creator of Ruby on Rails, and partner at 37signals. One of the most outspoken programmers you’re likely to find.

  It really depends on what you want to do. If you’re thinking about doing it on your own, I think an MBA is probably a waste of time. But if you want to work in a big corporation, then I’m sure that’ll look good on the resume. Only you will know whether you have that fire in the belly to chart your own waters. It’ll require more of you, but will probably be a lot more rewarding.

  Also, you don’t have to spend that much money starting a new business these days. You could try the “My Own Business” for a year and see if there was any traction. If not, you can always fall back on the MBA backup plan.

  Good luck.

• Sean Gallagher

  CEO of smarthomes, panel investor on the Irish series of Dragon’s Den, and MBA graduate.

  The first question must be – why do you want to do either?

  An MBA is great for developing and enhancing your overall knowlegde of business and in my opinion hugely beneficial to most of us. If you have technical background then learning about finance, accounting or strategy can be really helpful.

  If you are thinking of starting a business then having an MBA might well help you in the longer term to grow the business.

  Sometimes people feel that education can kill your desire to be self employed by highlighting too many risks when often it is about having massive self-belief and belief in your idea and just jumping in (with some homework done first I might add).

  My view is why not do both? In essence the business will benefit if you have a broader understanding of the principles and your studies will benefit from having some real life experiences on which to hang your new learning.

  Life is more then having and getting it is really about being and becoming. The real question is;
  What, or more importantly, who do you want to be or become and will either or both help you get there?

• Josh Kaufman

  Creator of the “Personal MBA“.
  

  If you’re ultimately interested in doing your own thing / starting your own business, self-education and moving forward with your small business idea is your best bet. The only advantage MBAs provide is a bigger hiring network within ~3 years of graduation, so if you’re not looking to take advantage of that, the time and opportunity costs of MBA programs are way too high.

• Guy Kawasaki

  CEO of Alltop, managing director of Garage Technology Ventures, and author of “The Art of the Start”, “Rules for Revolutionaries, and “Reality Check”.. Guy is an MBA graduate from UCLA.

  This depends on what you want to do. If it’s to work for a established company, maybe the MBA is better. If you want to be an entrepreneur, be an entrepreneur.

  Guy also included some great resources on Alltop:
  http://innovation.alltop.com/
  http://smallbusiness.alltop.com/
  http://venturecapital.alltop.com/
  

• Pat Lynch

  Acting CEO of YouGetItback, finance director of Compliance and Risks Ltd,  and MBA graduate. Pat has founded successful businesses such as Microtech Cleanroom Services and TICN (The investment club network).

  Depending on your focus, this could be a very easy question to answer. An MBA won’t necessarially make you money.

• Pat Phelan

  CEO and founder of Cubic Telecom and “Telecoms disruptor”. A serial entrepreneur in the telecoms arena.

  It’s all about ambition. I would suggest that an MBA leads to an office and a start-up leads (eventually) to freedom.

• Penelope Trunk

  Writer of expert career advice, and founder of three startups; most recently BrazenCareerist, a web service to help companies find candidates.

  You can only evaluate the MBA when you evaluate what you will do with it when you’re done, and whether you needed the MBA to do that in the first place. Usually the answer is no to an MBA.

  You can only evaluate doing the startup by evaluating the chance that it will meet your goals.
  You don’t tell me about the startup or about your goals for doing a startup, bu you probalby know both and that’s what you should think about.

  My instinct tells me keep your day job; try the startup at night until you get enough revenue to be profitable and then quit day job. Forget the MBA.

• Bob Walsh

  Business consultant and author of Micro-ISV: From Vision to Reality and several excellent ebooks, and moderator of Joel Spolsky’s “Business of Software” forum.
  

  Definitely doing a startup. Here’s why: Business Schools are repositories of knowledge about what has worked in the past. If your life’s ambition is to manage a LOB (line of business) for a large company an MBA is relevant. But if you want to not spend your life working for someone else, that means starting your own business(es). Also, over the next few years it’s a safe bet that disruption and change are going to be the order of the day in the business world.

  For existing businesses, this this is not good news. For startups, it’s opportunity time! Between the growing role startups play in society, the economy these past few years and major economic disruptions ongoing, there’s never been a better time to start a business.

• Paul Walsh

  CEO of Segala, Chair of the British Interactive Media Association, an advisor and mentor to several companies, and a partner in one of my favourite restaurants, Jaipur.

  The fact you’re asking the question leads me to believe that you haven’t recognised a real problem that people need resolved and you have the answer. So, in short, study for an MBA whilst you continue to earn money in full time employment.

  It doesn’t take much to start a company if you do it whilst working for someone and getting others to help build a site in return for a contra deal.   In my personal opinion, qualifications are over-rated.

  I’d never hire someone based on a qualification – unless I was looking for someone to build me a semantic web based application and they had a degree in computer science *and* knew what the semantic web was AND were able to build it. That said, a good friend of mine is getting a lot out of his MBA. Hope that helps.

Thanks to all who responded, these are some fantastic answers that have given me a lot to think about. But what do you think?