On Having a Plan B

It is quintessential to western culture, that we admire entrepreneurs and innovators. Luckily, this is the case, as these individuals are the engines that “makes our world go round”.

It is no secret either, that starting a business adventure does come with a great amount of risk. As the Nobel-prize winning scientist Daniel Kahneman once pointed out, if it wasn’t for our inherent tendency to be biased towards optimismour economy would crash, since the chances of failing as an entrepreneur in general, are staggeringly high.

So what? Are all entrepreneurs fools for taking the chance?

Of course not. But very few ever constructs a plan B, in case their plan A ends up failing.

You see, I think because we congratulate risk takers so much in our society, having a plan B is looked down upon to a very great extent.

Having a plan B, is indicative to many, that you are not truly serious about your business idea, or that you don’t really believe in it. This is absurd, considering half of all businesses fails within the first 5 years (1). In my opinion, any reasonable person should, at least, think about how to move on with life, in case his business doesn’t survive.

I think it is ultra important that we get passed this notion, that having a plan B equals a lack of will/belief/motivation, and I’ll explain why.

 

 

Why a plan B is important

For how long can you stick to plan A?

Here is another fallacy, that we often fall prey to; “perseverance is the main driver for success”. We have all heard the story about the gritty entrepreneur who faced a mountain of challenges, stuck to his business plan, persevered and succeeded in the end. Then we conclude that perseverance was the ultimate key to his fortune.

Why is this a cognitive bias? Because OF COURSE you must stick to a plan for some time for it to work, but you will never read any inspirational articles or books about stubborn entrepreneurs who stuck to their plans for way too long and crashed, and so you are only presented with one side of the coin – the bright side.

It surely does require some amount of perseverance to become a successful entrepreneur, but once you’ve got a plan B, you’ll know exactly how much you have to give.

Once you have formulated your optimal plan A, and come up with a suitable plan B, it becomes obvious that you should keep chipping away at plan A, for as long as you want to, as long as you can keep plan B open as a viable option.

Imagine you want to open your own bank (plan A), and have a backup job at your local supermarket set up in case it fails (plan B). That means, you may put yourself into as much debt, and financial risk as you want to, as long as the supermarket job can still sustain you afterward, in case everything fails.

Said in more succinct terms: a plan B allows you to know, how far you are able to go with plan A.

 

More people could become entrepreneurs.

One of the more sad side effects of our aversion to having a plan B, is that it may prevent cautiously inclined people from becoming business owners.

If we trick people into believing, that failure is certain for those who contemplate formulating a backup plan, many will convince themselves that the entrepreneurial world isn’t for them, and they will instead stay put in their more comfortable position.

The takeaway message: congratulate people for having a plan B. Even formulate one yourself to learn about the durability of your plan A.

To get a first class life, you need to start living a first class life… Or what?

The headline above is aimed to describe an ideology that sometimes is able to threaten the confidence I have in the frugal lifestyle that I lead.

I recently heard the world-renowned strength coach Charles Poliquin say something to this effect, on the Tim Ferriss podcast, and he gave the example of his airplane travelling between the seminars he gives all over the world. He explained, that he always makes it a point to fly first class, to ensure that he gets a good night’s sleep on the plane, so he can show up refreshed for the seminars and give a first class performance, which ultimately results in repeat business with the customer. And it makes total sense, right?

To my ears though, what he was actually saying, was that the first class tickets were an investment that generated a long term positive return – and that you can’t really argue with.

But I think we should be careful not to oversimplify this idea, unless we want some impressionable people to get hurt from the advice.

Say I, as a young man, who is just getting started with life, goes out and takes an expensive loan to buy a Lamborghini, with the thought in mind that it will raise my overall standard of living. Maybe this expensive sports car can enhance my social status, which will allow me to establish relationships to rich people, who has business opportunities that I can capitalize on, and thereby be able to pay back the car. Is this a possibility? Probably! But what you may also call this, is “betting on dumb luck”, and I think that it may even slightly resemble some other popular self-help concepts such as The Law of Attraction and The Secret.

But I know a guy, who one day decided to start living the good life, had no basis for it, and suddenly had all the best things in the world flowing towards him”. This is called the survivorship bias. You probably also know a lot of other people who went bankrupt because they tried to jump 10 steps ahead in the game, without being particularly calculated about it – those examples we tend to forget.

You see, there is no luck involved in the case of the strength coach I mentioned before. He will hop on an air plane, check in to a hotel, give his lecture and go home again. All steps throughout the process are already known from the beginning. The first class tickets are just a way of optimizing this process (you may even define it as improving upon the value chain that is the product he delivers).

In the case of the Lamborghini, we are just optimizing or even amplifying uncertainty, instead of a known process, and that can only result in extreme outcomes – most likely a negative one.

I think the key lesson here, is that we should learn to be more calculated than just taking mindless head-dives into economic uncertainty. We should even be aware, that a luxurious lifestyle can hurt us sometimes. For example: the marketing genius Seth Godin talks about how he had to stop wearing expensive suits early in his carrier, because it resonated badly with the type of people he was trying to establish partnerships with.

In short, the better we are at anticipating the future, the more success we can expect. But hoping is never a strategy.

If you carefully estimate that a 1000-dollar suit is going to a give you a great return on the investment within the near future, then by all means, go ahead and buy it. But if reality says, that a 200-dollar model will get the same job done, I think only a fool would count on the law of attraction to do any other magic than just hollowing out one’s bank account.

The examples of the strength coach and the Lamborghini are opposite extremes of a spectrum, but we should always be careful not to lean too much towards the latter.

 

Thank you for reading

Max

How People Spend Their Sundays

Recently, I was taking a walk in the parking lot, in front of the office that I work in (like I do several times a day) when I saw something brilliant. 

Our parking lot was being visited by a mobile car wash company because they had received an order for washing some of the cars, that belonged to the employees working inside the building.

The car wash company was doing a great job of washing both the insides and outsides of the cars, while the owners were being productive at their desks.

Now firstly, what was so smart about this, was that a task that all car owners are obligated to do, was being outsourced to other professionals, which made everyone more productive, right in that instance. What further struck me about this concept, was that the task being outsourced was something that all cars owners normally must perform during their weekends because they don’t usually have time otherwise.

What the mobile car wash company was essentially doing, was giving back the Sundays to these full-time employees, and allow them to do something that they enjoy on the weekends instead.

This should open up an array of inspiration for everybody who dreams of being an entrepreneur, but is in need of a business idea.

All you need to do is to notice what tedious tasks people perform on their Sundays, instead of relaxing, and figure out how you can help them get it done during the week. Here, you should be able to spot the kind of task, that many people will be willing to spend their money on outsourcing, as the average employee would like nothing more than being able to relax on weekends.

To all want-to-be entrepreneurs: begin noticing how people spend their Sundays!

Living the Dream – Now

Like me, you probably have a lot of ideas about certain parts of your life that needs to change, before you can start living your dream.

I have personally been struggling with this for quite some time now and have always thought that I wouldn’t be able to start my business, and start my life before I was 100 percent economically ready for it.

Læs mere Living the Dream – Now

Get Great New Ideas with the “Passion Diagram”

If you have been following me here on the blog recently, you know that my latest man crush is on guy called James Altucher.

He is a great inspiration to entrepreneurs, innovators and people in general, that wants to live a “free” life. All things I aspire to.

I heard him mention a technique for coming up with new ideas a few days ago, which I later on ended up trying myself. It worked out great, and I will therefore tell you, what it is and works.

As far as I know, the method doesn’t have a name, so I have given it one myself: “The Passion Diagram”.

 

What it is

The Passion Diagram is a tool you can use, to come up with new ideas, within areas you are passionate about. Maybe you are thinking about starting your own business, and you need a good idea to start with. Everyone knows it’s optimal if you start a new business in an area you already feel passionate about.

According to James Altucher, the best new innovations are made, when already existing concepts are combined in new ways.

Like for instance, when movie rental is combined with the internet and you get Netflix.

Or when an iPod is combined with a phone and you get the iPhone.

The Passion Diagram is a way, to force you to combine concepts you already like, so you know with certainty, you will create something you will be passionate about.

 

How to

– Sit down with a piece of paper and a pen.

– Start brain storming out things you like/are passionate about/enjoy to do/find interesting and want to learn more about.

– Write a single word for every thing you can think of. Try to write as many as possible.

– Now, when you feel like you begin to slow down, take a pause and breath.

– Put the paper away.

– Come back to it again later with a fresh mind, take a good look.

– Start drawing a line between two random concepts, and think about what it means. Is it a new business idea? Is it a new blog post? Or does it not make any sense at all?

Maybe you have written down a particular hobby of yours, but you have also stated that you like podcasts. Maybe you should start a podcast about that hobby!

Maybe you can add a completely new flavor to something you are already doing.

Maybe you come up with a revolutionary business idea.

MANY things can happen, and since it can only be within fields you already enjoy, you know it’s going to be interesting.

 

My first ideas, using the passion diagram

A tool for coming up with new ideas

Picture of my first diagram. I know – beautiful hand writing, right……

Here are some of the mildly interesting things, I thought of the first time I tried the diagram:

 

A productivity cafe

I like going out to cafes, hangout and drink coffee. And you know from the blog, I also like productivity.

So I wish there was a café, in the city where I live (Copenhagen), that was completely engineered towards stimulating productivity in it’s guest. It should differentiate itself from all the other cafes, that just attracts young mothers who likes brunch a lot.

It should have low ambient music, noise canceling ceilings, maybe a meeting room, that would be free for the guests to use, smart drugs should be sold in the bar and many other productivity stimulating things!

Maybe I should make such a place……

 

ICONOSQUARE meets Goodreads

I combined 2 other things I liked: Quantified self and books.

I read a lot of books, and register them all in Goodreads, so I can keep track of everything I read. I wish I could get nice graphic representation of how I read – how much, what kind of books and so on. Like you can with ICONOSQUARE  for Instagram.

This would just be with books – and I know Goodreads has all the necessary data, to make something like that.

 

As I wrote in a earlier blogpost: You should never let a good idea go to waste. So I contacted Goodreads, and told them about the idea, because I knew this was a business idea I would never end up starting myself.

A nice lady from their customer service, wrote me back and told me, they already have a service like that!!

It is not very easy to find on the website, and it is not very good yet. So I hope they will develop it in the future.

At least – now I know it exists.

 

Hiphop meets BJJ

I like to do Brazillian Jiu Jitsu (BJJ). I practice it about 2 times a week. It is a great way to exercise, have fun and get into a state of flow.

I also like hip hop, that is my kind of music. I even have a small Wu Tang Clan logo tattooed on my arm to prove my passion for it.

So I wish, I sometimes could do BJJ, while listening to hiphop! I think that could create a pretty cool atmosphere.

Maybe I should make an event like that, or even start a BJJ/hiphop dojo one day……

Anyway, this was some of the initial ideas I got from using The Passion Diagram, and I only think I will get better at using it over time.

I cannot see why I would only use it once.

Next time, I will maybe be reminded of something else I like, make other connections or have gotten entirely new interests since.

Let me know what you think underneath, and feel free to post some of the new great ideas you get.

Talk to you soon!

Get Lots of Ideas. Don’t Let Them Go to Waste

I recently read a great book by James Altucher called Choose Yourself. In the book, he teaches you how to become an idea machine – by coming up with 10, at least, bad ideas every day.

You can read about the most important parts of his concept in this blogpost.

I already love getting a lot of ideas. I also just wrote an article about, how I personally like to capture my ideas in an old school paper notebook.

But today, I would like to encourage you to think about, how you can and should avoid, any of your semi-good to good ideas going to waste.

What do I mean by that?

Ideas come in many forms. Sometimes you get very good and actionable ideas, and it is obvious, that you should act upon them. If you don’t act because of fear or something else, we should discuss how to avoid that in another blog post.

Other times, you get ideas that are fairly good, but you don’t feel like they are right for you to act on. Maybe you are busy with something else, or you just don’t feel like you would be sufficiently passionate about pursuing them.

Maybe, it would be better to pass on these kind of ideas to someone else.

What I like to do these days, is passing on some of the ideas I think of to someone, that better than me could act on them.

Sometimes, I believe some of my ideas are good enough, that it would actually enhance my life directly if somebody where to bring them in to reality.

Other times, I hope I can gain something financially by passing my ideas on to people, who might be able to make real money on them. If I am lucky, I pass on my ideas to generous people, who will remember where it all came from.

 

Here are two examples of Ideas, I thought of recently, and how I chose to pass them on to people who could take better action than me:

 

1. I like to do grocery shopping on the internet from time to time. I am from Denmark, so I use a danish website called nemlig.com, that sells almost anything, you can buy in a supermarket.

I came up with an idea for a toothbrush subscription service, which would make it easy for people to get a new toothbrush sent via mail every 3 months. In Denmark, everybody agrees you should change your toothbrush every 3 months, but nobody remembers to do it regularly.

I therefore wrote an email to the CEO of nemlig.com, explaining the idea and I also let him know, how I think it could be set up on his website.

He hasn’t answered me yet, but the worst thing that can happen is nothing, or that he “steals my idea”, and that a service I really wish existed suddenly exists.

 

2. I also use the service BrainScape a lot. An internet-based flashcard program, you can use to learn anything – for example a new language.

I wanted to give them an idea as well, so I got a Fancy Hands assistant to find me the email address for the owner of the company.

I wrote him, and told him, I wish there was a way I could download all my flash cards as individual picture files, so I for example could use them as rotating background images on my smartphone, which would allow me to learn something, every time I looked at my smartphone. He hasn’t got back to me yet either, but whatever! Some day, someone will.

 

 

I don’t feel like I am wealthy enough yet, to give considerable amounts away to charity, so this is my way of making the world a better place right now. By diarrhea-ing all good ideas I can think of out on the whole world. I am sure, that if everybody did the same, we would be colonizing space in no time.

I think many have a proprietary attitude towards their own ideas, which is very unfortunate, if they are not intending to act on them anyway. Instead, by giving them to others, they could be compensated with good relations, financially or just with good karma.

Hope you liked the article! thanks for reading.

Golden nuggets on entrepreneurship from Peter Thiel

If nothing about our society changes for the next hundred years, then the future is more than a hundred years away

Peter Thiel is one of the original members of the so called Paypal Mafia, who’s advice on start-ups everyone must take seriously.

He has written this great book called Zero to One, which is a quick and easy read, yet still jam packed with useful advice.

The main message is, you should never bother starting a company that isn’t truly unique.
Starting an unoriginal company, is only going to let you participate in fierce competition, and still only see very small profits.
Creating something that didn’t exist before, is going from 0 to 1. Making more of what already exists is going from 1 to n, and that is not the way to change the world.

Thinking in these terms, is how Peter Thiel believe we should continue making the world a better place, as there are still many great inventions left out there to be discovered.
You should never believe all secrets about the world has been uncovered yet.

Basically, you can discover secrets in two realms of reality.
You can discover secrets about nature and people.
Discovering secrets about nature is mostly left up to specialist and scientist, who should uncover secrets, and capitalize on them, in their own particular field.
Discovering secrets about people, is something everybody can do, like finding out people also want a social network, just for sharing pictures (Instagram). I remember thinking myself, that we already have facebook for pictures?

It all comes down to articulating a universal truth, that you are able to see, that nobody else is.
This mindset is summed up nicely in one question, that Peter Thiel lets you know, he uses in the beginning of all his job interviews:

What important truth do very few people agree with you on?

When you have discovered a certain truth, you start your company out by dominating a small niche of the market, whereafter you expand to the broader population. Like Amazon started out by focusing on selling books, and Paypal initially focused on facilitating money transfers related to auctions on Ebay. Both of them ended up expanding heavily to broader markets later on.

In the end, the author gives you his well educated guess on, what the future is going to bring us all.
He says that everything is possible; also that a positive outcome is a possibility. As long as we plan for it, and make smart choices along the way, which is true for both ourselves on a micro level and countries at a macro.

If you can identify a delusional popular belief, you find what lies hidden it: the contrarian truth

How to come up with new business ideas (be lazy)

In this post, I will try and describe a paradox – a frame of mind, that I use often to come up with new ideas for businesses/services.

One of the things that I love and enjoy the most about life, is learning and expanding my horizon. Among other ways, I do that by reading books. Lots of books.

Læs mere How to come up with new business ideas (be lazy)

5 tips for starting a business while working full time

Do you also walk around with a dream of being an entrepreneur, so you one day finally can work for just yourself?
A lot of people do, but they feel the task is too overwhelming to do while working full time.
It is hard! But here comes a list of 5 tips and tools that will make it easier for you to take on the challenge.

Læs mere 5 tips for starting a business while working full time