Why Staying Small is the Next Big Thing Goodreads link
This book offers many small business examples and entrepreneurs building profitable and sustainable companies.
I heard Paul Jarvis on the Hurry Slowly in 2018 and even subscribed to his newsletter for a few months. I think it was an endorsement from Shreyas Doshi who tweets about product management that pushed me to actually read the book.
The focus for your business can be getting better, not growing bigger. That way you still can make a profit and still have time to do the things you love outside of work. To succeed with a company of one focus on satisfying customers so they will return for more business and tell others about you.
Who should read / watch / listen to it
For people that want to disrupt the excessive growth mindset and take a more sustainable business path.
How it changed me
This book filled in the blanks in my thinking about building businesses that can endure and last. The stories gave me real world examples to help illustrate a business idea that I have considered valuable for a long time – growing just as much as needed to keep a business going.
💬 Top 3 Quotes
Just as Michael Pollan’s food ideology is summarized in three simple rules—“eat food, not too much, mostly plants”—the “company of one” model can be laid out in a similar fashion: “start small, define growth, and keep learning.”
Employees, executive leaders, board members, and corporate leaders who want to work with more autonomy and self-sufficiency can adopt the principles of a company of one as well. In fact, if big businesses want to keep their brightest minds in their employ, they should look to adopt some of the principles of companies of one.
Companies of one instead focus on stability, simplicity, independence, and long-term resilience and rely on starting small and becoming as profitable as possible, without the need for outside investment. Companies of one, with their focus on what can be done in the here and now, not what can be done with investment, can also be started without an injection of capital.
✏️ Highlights + Notes
Inside of corporations
Businesses can also allow smaller teams to operate as companies of one. It opens up opportunities for entrepreneurship, self-sufficiency and sustained growth in small divisions of the company.
Inventions such as the Post-it notes and Sony’s Playstation came out of small groups or individuals innovating or coming up with new products.
Also at GoreTex – employees are allowed to dabble, which is how Dave Myers adapted a coating used on guitar strings to make Elixir, the best-selling acoustic guitar strings.
Traits of Resilient People
Instead of engaging in wishful thinking, resilient people can accept reality as it is. Understanding what is and what is not inside of our control helps us choose the right battles and best navigate the challenges that we face.
Another trait is adaptability. Things will most certainly change, perhaps right when you need them to stay still, but being able to adapt will help to keep moving forward.
Slow growth wins the long game
Example of Delicious, a company that grew at a much higher rate than its competitor Pinboard. It was eventually bought by a larger company, and it lost steam and became unprofitable. Pinboard continued growing slowly and in 2017 was able to buy Delicious for $35,000. It then offered existing users the chance to migrate to Pinboard and eventually won over the entire market.
Remarkable Small Biz
Sean, a small business owner, has grown his business to over $500k per year in profit, through word of mouth marketing. He sends a handwritten note plus a box of chocolates to his customers, which costs roughly $20, but it gets customers talking about him. Then they tell a friend who will go and buy a $2,000 training program.
Investors vs Buffer CEO
Investors were pushing Buffer to hire quickly and capture a greater share of the market to hit ambitious revenue goals. The CEO at Buffer wanted to stick to a slow-growth plan, despite the COO and CTO’s ambitions to grow quickly with high stakes, or the strategy of “the typical startup game.” In the end, they left the company, but no other employees were let go, as the company grew at a reasonable rate.
Starbucks’ sandwich fail
After Starbucks expanded to sell fancier drinks, sandwiches and CDs, they discovered that they could not scale up so quickly and ended up closing 900 stores. So they returned to their focus on making coffee better and emphasized their in-store experience and coffee expertise. “Starbucks learned the hard way that better isn’t always bigger.”
The Disease of More
The NBA championship-winning coach Pat Riley observed that winning players let their ego push out their focus on practice and training. He called it “the disease of more” and worked hard to keep his players focused on doing the things that kept them improving instead of focusing on media attention and getting more endorsements.
Southwest Airlines Example
In 1996, Southwest had started to establish a national presence. Even while 100 cities were asking Southwest to add service to their airports, they turned down 95% of them to focus on only four new locations. The leadership team had set an upper limit for growth, which enabled the company to say no to opportunities for exponential growth. (reference attributed to James Clear)
Carrying Ugmonk’s audience to Gather
The founder of Ugmonk, a highly respected clothing brand, launched a Kickstarter for Gather, leveraging his audience. He built the capital needed to get Gather into production by relying upon the network he built up through years of delivering good products, and raised <$400k.
To sell an online course, start with one-on-one consulting
And instead of waiting to film all the videos or develop the platform, you can make a profit as soon as you find one single paying customer.
Launch the first version
Reid Hoffman, co-founder of LinkedIn, is famous for saying “if you aren’t embarrassed by the first version of your product, you’ve launched too late.” (paraphrased?) Launching happens over and over, with lessons from each exercise and feedback from the users.
Good to Great
The example from Jim Collins, author of Good to Great, is the fox versus the hedgehog. The fox has many tricks for catching prey but the hedgehog has only one trick to stay alive. It curls up into a ball with spikes pointing out. It can survive based solely on this one trick. Likewise, small companies start with a focus on that one thing that can keep them alive and profitable.
Focus on Relationships
If your key metric is growth, you may add unsustainable customers or features. Focusing on customer retention or profit leads to long-term customers and sales, which help a company endure and last over time.
The Power of Personalized Videos
A Customer Relationship Management company has a unique way of welcoming a new customer of their software. They record a personalized video, mentioning the customer by name and answering any questions related to their specific needs. The video is often recorded on a shaky camera phone, but people love them and even share them on social media. Perfect word-of-mouth marketing!
Building an Online Course
Paul built his first online course, Creative Class, by starting with seven lessons (instead of his initial plan for 30) and launched in one month. After releasing the course he observed his audience to see what worked and what didn’t, and then kept adding lessons based on that feedback.
On Calculating Your Salary
Once your company is set up as an LLC you can take out a base salary every month based on profit from the last 12 months. Paul uses the following calculation
(Avg Monthly Profit over 12 months) – 25% (for taxes) = Base Salary
❇️ More Resources
🎙 Podcast Interviews
Paul Jarvis: Small Is Beautiful – Hurry Slowly Podcast (Feb 2019)
SPI 365: Why Staying Small Is the Next Big Thing with Paul Jarvis – Smart Passive Income with Pat Flynn (Apr 2019)
Recognize Intrapreneurs Before They Leave (PDF) — Vijay Govindarajan and Jatin Desai, Harvard Business Review (September 20, 2013)
Nomad List Story (at IndieHackers.com)— Pieter Levels interviewed by Courtland Allen (Jul 2016)
The Hidden Advantages of Quiet Bosses (Harvard Business Review) — Adam Grant, Francesca Gino, and David A. Hofmann (Dec 2010)
The Social Brain and Its Superpower – Matthew Lieberman, PhD, TEDxStLouis Talk (October 7, 2013)