Disclaimer: When I first heard of The E-Myth Revisited: Why Most Small Businesses Don’t Work and What to Do About It by Michael Gerber, I was extremely skeptical. I was catching up with my friend Spencer Whitman, who is the General Manager of Rent Jungle, and asked him if there’s anything he recommend I read as I embark on my journey of growing and scaling Unlimited Brewing Company. He immediately mentioned The E-Myth Revisited, whose title made me recoil in horror. My first thought was that this was some weird book about how the dot-com era was a fluke and that technology is overrated. Luckily, Spencer went on to explain that The E-Myth Revisited title stands for “The Entrepreneur Myth Revisited”, not the electronic myth. I immediately bought the book because I knew if I thought too much about the decision, I wouldn’t read it.
The E-Myth Revisited turned out to be one of the better business books I’ve ever read. Part philosophical treatise, part business advice, and part psychology manifesto, this book provides a whole new way to think about the personal development of an entrepreneur. Key takeaways are below.
The Best Entrepreneurs Have an Insatiable Thirst For Knowledge
Contrary to popular belief, my experience has shown me that the people who are exceptionally good in business aren’t so because of what they know but because of their insatiable need to know more.
The quote above could be applied to exceptional individuals in any field. Academy Award winners Viola Davis and Denzel Washington still take acting lessons, tennis legend Roger Federer has a coach, and Aaron Rodgers has a QB coach. The best are always looking to get better.
And on the flip side, when things don’t go well, it’s often because individuals become so sure of what they know:
The problem with most failing businesses I’ve encountered is not that their owners don’t know enough about finance, marketing, management, and operations – they don’t, but those things are easy enough to learn – but that they spend their time and energy defending what they think they know. The greatest businesspeople I’ve met are determined to get it right no matter what the cost.
This goes back to the map vs terrain concept I wrote about recently. The terrain is reality – that’s what skilled individuals are constantly seeking on their never-ending quest for knowledge. The reason that quest is never-ending is because reality is never static. On the other hand, the failing business owners Gerber refers to in the quote above may have, at one point in time, had a strong sense of reality. But the critical error they made is that they assumed that what was true at a single point in time would hold true indefinitely. And this error is fatal.
ABL: Always Be Learning.
We Are Made Up of Multiple Personalities
I recently read The Red Book by Carl Jung, so the concept of our individuality being made up of multiple personalities wasn’t completely new to me. While Jung makes his argument in a beautifully artistic but opaque manner, Gerber conveyed the concept in a way that anyone can understand. For example, here’s an example he uses to describe a feeling that frequently comes over those of us without bodies like Greek gods:
It has happened to us all. Somebody wakes up inside us with a totally different picture of who we should be and what we should be doing. In this case, let’s call him The Skinny Guy. Who’s The Skinny Guy? He’s the one who uses words like discipline, exercise, organization. The Skinny Guy is intolerant, self-righteous, a stickler for detail, a compulsive tyrant.
In other words, your inner Jocko. But in all seriousness, recognizing the truth about the multiple personalities inside you is so empowering. I’ve found this concept to be useful for all aspects of life, not just business. Something I’ve often been self-critical about is when I make promises to myself (working out, reading, writing, the list could go on forever) that I ultimately don’t uphold. Gerber has an illuminating passage about this:
It’s not that we’re indecisive or unreliable; it’s that each and every one of us is a whole set of different personalities, each with his own interests and way of doing things. Asking any one of them to defer to any of the other is inviting a battle or even a full-scale war.
But as we’ll see, your multiple personalities are crucial to your development as an entrepreneur.
The Entrepreneur, The Manager, and The Technician
Gerber’s framework for every founder’s multiple personalities can be summed up as the Entrepreneur, the Manager, and the Technician. Each of us has a natural inclination to more or less of each of these personalities.
The Entrepreneur is the part of your brain that thinks in terms of “What If?”. It lives for the future and for dreams. In other words, The Entrepreneur is the visionary inside of us who comes up with our brilliant ideas and insights. The Entrepreneur is a wild child – you never know what it will come with, when it’ll decide to make an appearance, and how badly it will destroy the stability and structure in your life, if you let it. At the same time, it’s an incredibly fragile part of your personality that can be eclipsed and beaten into submission if you don’t encourage it.
The Manager is the planner inside of you, the one who craves structure, systems, and order. The best way to think of The Manager is in contrast to The Entrepreneur. From the book:
Where The Entrepreneur thrives on change, The Manager compulsively clings to the status quo.
Where The Entrepreneur invariably sees the opportunity in events, The Manager invariably sees the problems.
We’ve all felt this. We have some brilliant insight or come up with a new business idea and invariably, there will be some part of our brain that starts thinking of the complications. And that isn’t a bad thing. If the inner Entrepreneur ran the show, we’d have a million ideas, almost all impractical, and zero execution, since The Entrepreneur can’t think of the details. But the tension-filled combination of the innovative Entrepreneur personality with the pragmatic Manager is what leads to all great concepts.
Your inner Technician is the part of you that gets things done. It’s your inner workaholic. It’s the part of you that avoids ideas, thinking, strategy, or anything else that isn’t “actual work”. It just likes to work. The Technician in you can get really annoyed with new ideas – especially since most of your ideas aren’t going to work out.
Over the course of our lives, we develop these personalities at different rates. For those of us who have worked in traditional environments, it’s most likely that our inner Technician has been developed at the expense of the others. This is because most work environments actively discourage our inner Entrepreneurs and have little use for our inner Managers when a system is already in place. That just leaves your Technician to do the work. This personality and skill imbalance is a major problem when going into business for yourself.
Working ON Your Business, Not IN Your Business
When many of us go into business for ourselves, whether we are tech founders, consultants, or freelancers, it’s so easy to get caught up in the day to day list of tasks. Meetings, emails, putting out fires…it’s impossible to avoid these things. And they’re necessary to operate a company. But here’s the key distinction: while you’re doing those things, you aren’t BUILDING your company. Operating and building are fundamentally different things. This concept brings to mind many stories from The Four Hour Work Week by Tim Ferriss, where Tim describes his journey from an overworked and overstressed business owner to a mostly hands-off owner of an automated cash machine.
By just focusing on tasks, you become the essential thing that makes your business work. While that might satisfy your inner martyr, it’s no way to build a company. It’s a way to build a job. And you’ll soon find that you’ve simply traded a regular job for a job where, though you technically work for yourself, you have no vacation days, no sick leave, and no retirement benefits. And that’s a pretty crappy job if you ask me. On top of that, because you are the key ingredient to your company’s operations, there’s no real value to the company itself. You haven’t built an asset, you’ve built a job.
The way around this is to think of your company as a system. One that can operate without you. And though that can be terrifying at first (it was to me), it’s the only way to build something that can grow. To do that, you need your inner Entrepreneur to imagine what your company can be in the future, your inner Manager to develop systems that allow your company to operate outside of you, and your inner Technician to actually do the work of building that system. In other words, all three personalities need to work together. Like many things, this is easier said than done but it’s the only path forward to building a business.
Build A Franchise Business
I was initially very skeptical of the focus on franchise businesses in this book. But after reading and thinking more, it makes much more sense. Essentially, The E-Myth Revisited makes the point that whether or not you plan to create a franchise business, the elements that make a franchise business model work properly are essential to any business:
- The model will provide consistent value to your customers, employees, suppliers, and lenders, beyond what they expect.
- The model will be operated with the lowest possible level of skill.
- The model will stand out as a place of impeccable order.
- All work in the model will be documented in Operations Manuals.
- The model will provide a uniformly predictable service to the customer.
- The model will utilize a uniform color, dress, and facilities code.
Creating processes and standardization like this does not come naturally to me, which is yet another reason why I found The E-Myth Revisited to be so enlightening. It also probably means my inner Manager needs some development.
Another powerful quote:
If you haven’t orchestrated it, you don’t own it! And if you don’t own it, you can’t depend on it. And if you can’t depend on it, you haven’t got a franchise. And without a franchise, no business can hope to succeed.
In other words, you need a process.
Other Favorite Quotes From The E-Myth Revisited
There are too many insightful passages in this book to quote them all (you’ll have to read the book for that) but here are some of my other favorite quotes:
Your business is far more fragile than a big business.
You have to become a student of the art of business and the science of business.
And that’s why I keep on going back to the true work of the small business owner – the strategic work rather than the tactical work. Because if you’re doing tactical work all the time, if you’re working all the time devoting all your energy in your business, you won’t have any time or energy left to ask, let alone answer, all of the absolutely critical questions you need to ask. You’ll simply have no time or energy left to work on it.
The commodity is the thing your customer actually walks out with in his hand. The product is what your customer feels as he walks out of your business.
The truth is, nobody’s interested in the commodity. People buy feelings.
Hopefully the past 2000ish words have convinced you that The E-Myth Revisited is worth a read, especially for those interested in starting and/or growing their own businesses. Pick up your copy of The E-Myth Revisited on Amazon or wherever you buy books and let me know what you think on Twitter or in the comments.