Rules of Success. #1: Sweat Equity is the best equity!

The Rules of Success

As MicroSolutions became more and more successful, and as I paid attention to the common traits of businesses that
I saw succeed and those I saw fail, I came to realize that there are “Rules of Success” that I saw in companies that
excelled. Where companies failed to follow those rules, inevitably, they failed. I found myself checking with “My
Rules” before I made decisions. When I traded stocks or considered investments in companies, I applied The Rules to
their business before I made a decision.

The Rules are not infallible. They have their limits. I’m an entrepreneur. My businesses have had hundreds and now
more than a thousand employees. My world has been limited to starting, building, growing and running businesses that
are never going to make the Fortune 500. My dreams were never to build the biggest corporation in the world. So, if
you are a middle level manager in a Fortune 500 company, these rules may not help you manage your department. If you
are the CEO of a Fortune 500 company with tens of thousands of employees, some rules will apply, some won’t, but
where they will help you is to know how little guys coming out of nowhere are going to disrupt your business.

Where The Rules will help you is if you are considering starting, or currently run your own business. There are
always exceptions to any rules, but I can assure you that those exceptions will be rare. Entrepreneurs that don’t
follow the rules are far more likely to fail. There is no doubt about it.

So let’s start at the beginning.

Rule #1: Sweat Equity is the best start up capital.

The best businesses in recent entrepreneurial history are those that have been started with little or no money.
Dell Computer, MicroSoft, Apple, HP and tens of thousands of others started in dorm rooms, tiny offices or garages.
There weren’t 100 page long business plans. In all of my businesses, I started by putting together spreadsheets of my
expenses, which allowed me to calculate how much revenue I needed to break even and keep the lights on in my
office and my apartment. I wrote overviews of what I was selling, why I thought the business made sense, an overview
of my competition and why my product and/or service would be important to my customers, and why they should buy or
use it. All of it on a piece of yellow paper or in a word processing file, and none of it cost me more than the diet
soda I was drinking while I was writing it up.

I remember the foundation for each of my businesses. MicroSolutions was very simple. To use microcomputers and
software to help our customers become more productive, profitable and gain a competitive advantage. AudioNet, which
became broadcast.com was simple as well: use the internet to enable real-time, worldwide communications of
entertainment and business applications. HDNet is to create great entertainment, originated in High Definition format
to allow our distributors to compete for the highest margin customers.

Once I could put the idea on paper, I gave the company a name. From there, I took the most important steps: I
tried to find people to shoot holes in it. When we started AudioNet, I remember getting an appointment with Drew
Marcus of Alex Brown (it could have been Larry, but I think it was drew🙂, an investment banking company. Drew
followed the radio industry and I wanted to see if there was anything he saw from his experience that would blow up
the concept. He loved the idea. We took it to Dan Halliburton of Susquehanna Radio. He was an executive in charge of
several Dallas area radio stations. We discussed how he could broadcast his stations over the Internet using AudioNet
and reach the in office market where there weren’t many radios on desks, and few of those could pick up the AM signal
of his stations. He loved it. I took it to Tim and Eric Crown, who ran a newly public company called Insight
Enterprises. I asked them if it made sense to broadcast their quarterly earning conference calls over the internet so
their investors and the research analysts who followed them could easily listen to the calls and get up to date
information, or listen to an archive of the call if they missed it. They thought it would help them reach their
Investor Relation goals less expensively.

Each step cost me next to nothing to get great feedback. Each enabled me to check the foundation of my business
idea to see if it was easy to shoot holes in it, and most importantly, they all served as sales calls. Each company
eventually became a customer of ours.

I went through this in each of my businesses. The step gave me confidence that my business idea was valid. That
there was a chance of success. At this point, many entrepreneurs think the next step is to take all this feedback,
update their 100 page business plans and go out and raise money. It’s as if the missing link for success in a
business is cash to get started. It’s not. Far more often than not, raising cash is the biggest mistake you can
make.

Most entrepreneurs tend to think in terms of what raising money means to them. How it can get them started? How
many people they can hire? How much they can spend on office space? How much they can pay themselves? They forget to
put themselves in the position of the person or company they are asking for money from. They think they are
considering that person’s position by making up numbers and calling them expected returns for the investor. If you
only give me X dollars, you will get X pct back in X years. You will double or triple your money in X years. Any
investor worth anything knows you are just making these numbers up. They are meaningless. Worse, if you tell a savvy
investor that the market is X billions of dollars and you just need one or some low percent to make zillions, you are
immediately kicked to the curb.

These investors, including myself, know what you don’t, and they are not telling you. The minute you ask for
money, you are playing in their game, they aren’t playing in yours. You are at a huge disadvantage, and it’s only
going to get worse if you take their money. The minute you take money, the leverage completely flips to the investor.
They control the destiny of your dreams, not you.

Investors don’t care about your dreams and goals. They love that you have them. They love that they motivate you.
Investors care about how they are going to get their money back and then some. Family cares about your dreams.
Investors care about money. There is a reason why venture capitalists are often referred to as Vulture Capitalists.
The minute you slide off course from the promises you made to get the money, your dreams fall in jeopardy. You will
find yourself making promises to keep investors at bay. You will find yourself avoiding your investors. Then you will
find yourself on the outside looking in. The reality of taking money from non family members is that they are doing
it for only one reason, to make more money. If you can’t deliver on that promise, you are out. You will be removed
from the company you started. You will find someone else running your dream company. If this sounds like a scene out
of the Sopranos or an episode you would watch on TV about a loan shark, you are right. The only difference is that
it’s all legal.

There are only two reasonable sources of capital for startup entrepreneurs, your own pocket and your customers
pockets. I personally would never even take money from a family member. Could you imagine the eternal grief and guilt
from your mom, dad, uncle or aunt because you blew your nephews college money or the money for grandmas last
vacation… I cant.

You shouldn’t have to take money from anyone. Businesses don’t have to start big. The best ones start small enough
to suit the circumstances of their founders. I started MicroSolutions by getting an advance from my first customer of
$500. The business didn’t grow quickly in the first couple years. We didn’t grow past 4 people in the first couple
years, and we all worked dirt cheap.

So what’s wrong with that? It’s OK to start slow. It’s ok to grow slow. As much as you want to think that all
things would change if you only had more cash available, they probably won’t.

The reality is that for most businesses, they don’t need more cash, they need more brains.

Stay tuned for more rules…

64 thoughts on “Rules of Success. #1: Sweat Equity is the best equity!

  1. When i read Mark\’s entry i jumped up at my desk and clapped wildly. I was on my own. That is what a very useful and well articulated piece like this did to somebody like me. I am sure the world needs more of your type. Please set up an online business school and i will be the first to register. I mean a business school to deliver the practical stuff to guide people to succeed in business without wasting time pursuing what is not going to influence the level of their success.

    Thank God for your life.

    Kola Owolabi
    CEO David Richard Associates and Publisher MY BUSINESS magazine, Lagos, Nigeria 2348023203198

    Comment by Kola Owolabi -

  2. I\’m getting ready to start a business I\’ve been in business for 7 yrs before.This time I want to do a franchise but I don\’t have the resources.A childhood freind of mine which is still my freind to this day offerd to invest with me to start this new bussines he has never had his on bussines before.We will use all of my experience,knowledge and sweat equity;but his money.In our agreements for partnership should I owe him the money he puts up back?

    Comment by DARRICK FULLWOOD -

  3. In order to set up a supplier network, we just spoke with companies that had buildings and equipment that bring additional value that we could not offer our customers on our own. With these “partners” we are able to double, triple, quadruple the value we bring to our customers.

    Comment by wow powerleveling -

  4. Take the advice. These are the type of people whom I’m sure you’ll discuss later who always have a sort of negative energy that they try to use to infect successful people. You’re a hugely succesful person yet they try to nitpick and say you are hypocritical. Unbelievable. The “gift horse” phrase comes to mind…

    Comment by runescape money -

  5. Hello

    This rule applies to all businesses

    In response to the question “can any business be stated this way?”, the answer seems to be yes. If you have relatively little money, then you need to scale your operations back to the resources you have. You do need to consider non-cash resources carefully, but you likely can make it happen without substantial debt.

    For example, if you have construction skills, you can build houses out of raw materials. This cuts the cost substantially. Oftentimes, you can improve your current dwelling for cost of materials, sell, and then buy a new, higher quality dwelling. Rinse, lather, repeat. Once you have enough money in the bank to hire a few workers, the process can be done more quickly.

    This is not going to make you Donald Trump by the time you are thirty, but it can make you quite wealthy and debt free. This is sweat equity at its best.

    Comment by buy tadalafil -

  6. I often hear the statement, money doesn’t solve problems, people solve problems. I think that is part of the point you are making. The other exciting thing happening in our inter-connected world is just how easy it is to start a business with a computer and a connection to the Internet. Of course, you need some cash to pay bills etc. A trend that is happening is a lot of folks starting side gigs in the hope that they take off. Their full time jobs become their financers. Nothing ventured, nothing gained.

    Comment by Doug Lindsay -

  7. Outstanding article and right on the mark, Mark. For a while I thought I was the only one who was insane. It seems that a lot of so-called entrepreneurs just don’t get it because it’s just too simple!

    Comment by Pierre Coupet -

  8. Rules of Success. #1: buy cialis

    Comment by cialis -

  9. Amazing resource! It’s awesome that you take the time to post information like this. Go Spurs! (sorry😉 )

    Comment by Kirk -

  10. I’ve pretty much been doing nothing. My mind is like an empty room, but pfft. I’ve just been hanging out doing nothing.
    http://www.phonebell.net/

    Comment by calling card -

  11. Have you ever noticed how a sincere writing attracts a high quality group of readers?

    Very few blogs postings survive more than a day. Here you have readers posting comments year and a half later.

    I think that you are acquiring a group of followers. You posts are words of wisdom and they deserve to be spread.

    Your future book attracts big interest even before it is written. Most of the financing books can’t do it even after they are published.

    Keep up the good work.

    Comment by Simon -

  12. Somewhere mentioned in the above blogs is Virologic, Inc. VLGC happens to be a stock pick at Global Penny Stocks.

    Comment by George Schlieben -

  13. Marc,

    Just read this first chapter of your blog. I have to admit that many individuals will probably disagree with the blog, but not me. I think you hit it right on the nose.

    We are not a huge company by any means. But we have been profitable every year since start up and continue to increase sales and margins. We don’t own a building or equipment. In fact we have never taken out a loan and are a debt free company. We simply purchased some technology that sets us apart from the mainstream of our industry.

    Our customers pay attention to what we say because it makes logical sense and they see what kind of profits and savings they can get by using our solutions. We never had to invest in machinery, or a building.

    In order to set up a supplier network, we just spoke with companies that had buildings and equipment that bring additional value that we could not offer our customers on our own. With these “partners” we are able to double, triple, quadruple the value we bring to our customers. Our “partners” end up seeing the benefits of us acting as their sales force and want to hook up. It is a great back-end supplier infastructure blended with our already valuable front end sales force and technology solution provided by our company.

    Although it has been a slow process, we are seeing very positive things happening right now. It floors me to think where it will be five years from now.

    Anyway- I am seeing more and more that knowledge and the ability to communicate that knowledge is the most important thing a business can leverage for itself.

    In regards to raising capital. We started with just our personal savings of about $5000.00. It is really more about spending very very little and saving as much as you can. Then setting up a network of companies that will work with you. If you need to you can outsource the services you can’t afford to do on your own by sending business to companies that have already made capital investments. That way you don’t have to.

    We have gotten to the point that we don’t like to do much more than the one thing that we do really well. We let our suppliers work hard at producing the work and we just work hard at being smart and educating customers on how to be more efficient!

    Best wishes to you start ups. It takes guts to do a business on your own. But if you stick with it and if you have a good product/sevice, I believe the sky is the limit. Really. Just don’t forget to keep yourself grounded. What I mean by this is that you should have a higher goal than just business. Make sure you remeber your God. Never neglect your family either. Cleaving to your God and family is what really makes you successful. Don’t believe me? Just ask someone who has a lot of money, but no life. There are a lot of them out there. Just look at Hollywood.

    Until next time. ( this is my first blog ever.)

    Respects,

    Dave Kuhn
    http://www.nustagroup.com
    http://www.variabledataonline.com

    Comment by Dave Kuhn -

  14. love you all

    Comment by lyrics -

  15. Sweat equity is very important. It says to road to success starts right where you are.You will never know if you are enough if you don’t try!

    Comment by Greatest Vitamin in the World user -

  16. with reference to your talk on sweat equity , i would like to add further you have painted a picture of with a tinge of moron . See failures happen in each and every persons life . And yes one should take lessson from them ,but here agin we commit the same mistake as one which caused failure oversightedness . The reason for the same is human pshycology works on newtons third law , when we are down ,we accept unquestionably remedy to our pain , just what has caused the pain . for eg one burns his relatives money ,then is in pain as a solution he desires of not havib borrowed money from them . But the lesson which he should look for is what caused that failure to happen . the best way is introspection . you should always remember that ” you are great and born to do great things ” this is an eternal truth and doesnot depend on any external factors .
    So you , entrepreneurs keep going , keep fighting . best regards

    Comment by pravin Upadhyay -

  17. It is always a good thing to encourage the positive results in others.
    The fact that your time is so highly valued and you continue to try to by humble is a definition of character most cannot ever claim as a credit.
    You have now beat the odds in more than one category.

    The TV show you are doing I hope resembles the same value system as Hollywood tends to corrupt.

    All in life is risk versus gain. You cannot do unless you try. Like a poker tourney you are required to enter inorder to have a chance to win.

    The secret to success is consistency, patience and the ability not to be false to yourself regardless of what others may say.

    guys like you give us average joes hope..

    Keep it up.

    Sincerely
    Impressed

    Comment by Laser Haas -

  18. You have some great ideas Mark. I spend hours reading about people who run business and have become very rich. You all have such a strong drive and desire to succeed.
    You put your thoughts into words that are easy to read to put those thoughts into practice is what makes you the success you are.

    Comment by Kevin Purfield -

  19. I found your blog today in sort of a round about way, and was very happy I did. Your assessment of the value of sweat equity in building successful new businesses really hit the mark.

    Hearing about experiences like your taking AudioNet from an idea you had for a way to hear out of town radio sports over the Internet to what became RealAudio, and Tim and Eric’s $2000 credit card charge that became a multi-billion dollar company are proof.

    It amazes me what can be done with the right idea, the right execution and hard work!

    Comment by Susan F. Heywood -

  20. Are we going to see a second part?
    I’m anxiously awaiting to learn more!

    Comment by Trent Pattison -

  21. mark, at some point broadcast.com raised external financing, went public (taking the public’s money), and then sold to yahoo (taking more public people’s money).

    so re-casting broadcast.com as a pure bootstrap from start to finish isn’t accurate. broadcast.com took advantage of the public market appetite for all things internet and you got lucky selling to an over-inflated market when yahoo bought it.

    so the question is when did you decide to accept outside financing for broadcast.com and why?

    Comment by The Internet Industry Veteran -

  22. Mark, I was a friend from the 1980’s in the Village (Dallas). When you were just another guy in our group, but one who was (even then) operating on a much higher level than the rest of us. The things you were doing with your businesses were such mysteries to us. So I really appreciate this insight into your struggles and metholodogies. Though I am not one of your new young fans, I remain a thoroughly enthusiastic fan!
    Thanks for meing a mentor to the masses!

    Comment by Jhonnye (Genet) Sainte-Angelle -

  23. Mark, thanks for sprinkling fertilizer on all of our entrepreneurial dreams. Reading this site, especially about your early days, is encouraging as hell. I’m a die-hard Spurs fan and always will be, but at least now I don’t hate the Mavs. Good luck next season.

    nevin, san antonio

    Comment by Nevin -

  24. Mark,

    Its just great of you to share your experiences. Waiting for more rules from you, especially on your take, on making alliances quickly to put the company ahead of the competitors.

    Thanks,
    SJ
    India

    Comment by SJ -

  25. So great!. As I started with real nothing and now own 4 Companies, I agree 100%. After doing an MBA I felt dissapointed because all the strees they made in money, in 100 pages businessplans, all my mates lending and borrowing, allways so big and I always so small, in business angels (I think better said: devils), and so on… Today I feel relief thinking I´m not the mistaken.

    Comment by Loic Colodrón -

  26. and I still dont have rule number 2. I know its crazy around the office latley so I just wanted to make sure you dont forget the second rule. Let me know when the book of billionares hits the market.😛

    ~Get SHAQ!~

    Comment by David -

  27. The concept of investing in the company that you work for in order to increase your financial position is faulty logic. Can you say “ENRON”.

    Comment by Secure Craig -

  28. Excellent Advice! Speaking of Excellent advice,

    I would think that one could increase thier financial position as an employee, if they invested in the company they worked for.
    If you worked for, say, Virologic Inc, (VLGC) (a leader in the cutting-edge field of personalized medicine, which built its expertise in the highly complex area of HIV and AIDS.)

    And you knew that revenues increased 29% to $9 million. and that your company also expanded its distribution agreement with Quest Diagnostics and would merge with Aclara BioSciences in the near future, you would probably do well investing in the company you work for.

    As you will most likely believe in the company, want to help it grow, and this will help you out, help your boss out, help the company out, and help the community out.
    Companies that have investment plans seem to have happier employees and a happier balence sheet. Investing for your future, be it in the company that you work for, or one that you have faith in, is always a wise choice.

    Comment by TS -

  29. Excellent Advice! Speaking of Excellent advice,

    I would think that one could increase thier financial position as an employee, if they invested in the company they worked for.
    If you worked for, say, Virologic Inc, (VLGC) (a leader in the cutting-edge field of personalized medicine, which built its expertise in the highly complex area of HIV and AIDS.)

    And you knew that revenues increased 29% to $9 million. and that your company also expanded its distribution agreement with Quest Diagnostics and would merge with Aclara BioSciences in the near future, you would probably do well investing in the company you work for.

    As you will most likely believe in the company, want to help it grow, and this will help you out, help your boss out, help the company out, and help the community out.
    Companies that have investment plans seem to have happier employees and a happier balence sheet. Investing for your future, be it in the company that you work for, or one that you have faith in, is always a wise choice.

    Comment by TS -

  30. Excellent Advice! Speaking of Excellent advice,

    I would think that one could increase thier financial position as an employee, if they invested in the company they worked for.
    If you worked for, say, Virologic Inc, (VLGC) (a leader in the cutting-edge field of personalized medicine, which built its expertise in the highly complex area of HIV and AIDS.)

    And you knew that revenues increased 29% to $9 million. and that your company also expanded its distribution agreement with Quest Diagnostics and would merge with Aclara BioSciences in the near future, you would probably do well investing in the company you work for.

    As you will most likely believe in the company, want to help it grow, and this will help you out, help your boss out, help the company out, and help the community out.
    Companies that have investment plans seem to have happier employees and a happier balence sheet. Investing for your future, be it in the company that you work for, or one that you have faith in, is always a wise choice.

    Comment by TS -

  31. Excellent Advice! Speaking of Excellent advice,

    I would think that one could increase thier financial position as an employee, if they invested in the company they worked for.
    If you worked for, say, Virologic Inc, (VLGC) (a leader in the cutting-edge field of personalized medicine, which built its expertise in the highly complex area of HIV and AIDS.)

    And you knew that revenues increased 29% to $9 million. and that your company also expanded its distribution agreement with Quest Diagnostics and would merge with Aclara BioSciences in the near future, you would probably do well investing in the company you work for.

    As you will most likely believe in the company, want to help it grow, and this will help you out, help your boss out, help the company out, and help the community out.
    Companies that have investment plans seem to have happier employees and a happier balence sheet. Investing for your future, be it in the company that you work for, or one that you have faith in, is always a wise choice.

    Comment by TS -

  32. been looking for someone who made it and ain’t trying to make more money by ripping others who are trying to get there—

    I might sound cheap, but oh well, a penny save is .01 dollars earned

    This would be stellar–headline on the front page of the NY Times-

    A CUBAN runs for PRESIDENT of USA

    YOU DA MAN!

    Comment by kawika -

  33. Mark

    I look forward to more of your crystalizing business advice. Its extremely hard to find valuable information especially from someone knowledgeable like yourself who has lived it!
    So could you please…please…please write faster…

    Many thanks for your advice

    Justin Russell
    Queenstown
    New Zealand

    Comment by Justin Russell -

  34. Great advice here Mark. I have been following your story for the last couple of years and really find you to be a huge inpsiration! A partner and myself have started a broadband services business and have been contemplating looking for investors even though our gut instinct tells us not to. We are starting with very little cash and as you said, sweat equity is the best equity!

    Great job and I look forward to reading more about your successes!

    David

    Comment by David Ward -

  35. Mark,

    This blog is great as everyone has said. I find it funny that people want to waste their energy pointing out that you said you wouldn’t right a book and yet you seem to be writing chapters. My response is “So?” Who cares. Take the advice. These are the type of people whom I’m sure you’ll discuss later who always have a sort of negative energy that they try to use to infect successful people. You’re a hugely succesful person yet they try to nitpick and say you are hypocritical. Unbelievable. The “gift horse” phrase comes to mind…

    Thanks for the advice Mark.

    Scott

    Comment by Scott -

  36. Fabulous!!

    Mark, thanks for reminding me of what’s important. My brother and I are starting off in the risky business of film production. Other than financial risks are the risks of too many stakeholders. That usually helps in making crappy flicks that leave people wondering how they ever got made.

    I love your blog! This stuff is golden!

    Comment by beetleisme -

  37. I believe the first paragraph deserves more attention than the rest of the story. And we can all agree, Mr. Cuban is a gem for shaping his definitions by sharing his thoughts. Cheers to that! -D

    Comment by typestereo -

  38. All well and good Mark..
    story mark.. But I could tell you another one.. that wasnt so pretty. of trying to start small and never getting anywhere.. spending thousands only to be left in debt.
    I happen to disagree, I think starting capital that will fund your venture till you get things “up and running” is a good idea.. We all arent 20.. Some of us have families to support etc.

    Comment by Mike Verinder -

  39. Mark,

    Just wanted to reiterate that these posts are terrific.

    D.Kanis
    Sydney, Aus

    Comment by Dimitri Kanis -

  40. I just had to comment on the idea that you have to have investors in order to commercialize IP. Yes, sometimes you do, but those investors don’t have to be venture capitalists. That’s where your customers come in. If your idea meets a core business need, then you should be able to find a customer or two who will help you develop it in return for the competitive advantage it gives them. If you can’t find a customer like that, then maybe the market opportunity isn’t as big as you think it is. If so, best to find out before you sell your soul to the VCs.

    Comment by Katherine -

  41. I just had to comment on the idea that you have to have investors in order to commercialize IP. Yes, sometimes you do, but those investors don’t have to be venture capitalists. That’s where your customers come in. If your idea meets a core business need, then you should be able to find a customer or two who will help you develop it in return for the competitive advantage it gives them. If you can’t find a customer like that, then maybe the market opportunity isn’t as big as you think it is. If so, best to find out before you sell your soul to the VCs.

    Comment by Katherine -

  42. Mark – I notice you write a lot about your success, which is indeed inspirational. But I was wondering, have you ever had any failed business atempts? What were they? What did you learn from the experience(s)?

    Comment by Drew -

  43. Mark — I adore reading your biz postings. It’s just the greatest stuff in the world. I was so disappointed earlier — months ago — at how hard it was to find your business POV on things — now I’m more than equally thankful that you’re providing it. You’re funny, too, which keeps the learning fun. Thank you!

    Comment by Lily -

  44. In response to the question “can any business be stated this way?”, the answer seems to be yes. If you have relatively little money, then you need to scale your operations back to the resources you have. You do need to consider non-cash resources carefully, but you likely can make it happen without substantial debt.

    For example, if you have construction skills, you can build houses out of raw materials. This cuts the cost substantially. Oftentimes, you can improve your current dwelling for cost of materials, sell, and then buy a new, higher quality dwelling. Rinse, lather, repeat. Once you have enough money in the bank to hire a few workers, the process can be done more quickly.

    This is not going to make you Donald Trump by the time you are thirty, but it can make you quite wealthy and debt free. This is sweat equity at its best.

    Comment by Scott Ellsworth -

  45. Many successful companies use or used this principle.

    Examples:
    – Bill Gates sold his idea for windows first to IBM, and then developed the software
    – Steve jobs, sold the first “apples” to a retailer, and then built the computers, back in the seventies
    – Palm first got an order from Walmart, and then looked for a manufacturer to manufacture the handhelds
    – here in germany samsung first showed a prototype for a mobilphone to Deutsche Telekom, got a contract, and then built the phones (more than 100.000)

    Rule: First sell, then build – and sometimes you need a prototype, to better sell your idea

    Comment by Michael -

  46. The whole series of articles you have written about your startups has been immensely valuable. Please keep them coming – they are gold.

    Comment by Mark -

  47. Mark,
    I hear you talking. I echo the appreciation expressed by others. I also agree with the observations expressed by John (“One BIG question though”).

    Are there inherent limitations as to the type of start-ups to which this concepts applies? Does it work better with some businesses than others? Are there not others to which it would be almost impossible to expect success without large sums up front? If there are businesses which are able to succeed with this approach and others not, what are the percentages of each? Is one greater than the other? You tossed about the term “tens of thousands” and I guess I wonder if that is more hyperbole or fact.

    As to those accusing hypocrisy, they overlook the fact that you are not authoring a book for publication and profit. Blog entry vs. hardcopy book publication–big difference. Not to mention overlooking your caveat at the end of that article: “Fortunately, I have BlogMaverick to present ideas and situations and get feedback from people on them. Of course you get exactly what you pay for. I get paid exactly what its worth…Which gives me carte blanche to write whatever I want….”

    Keep it coming Mark.

    David W.
    Spokane, WA

    Comment by David L. Weathers -

  48. Thank god for this entry. As a person who is trying to start up a business, it is important to hear that I don’t need to be raising X amount of dollars to get it underway.

    We will succeed or fail based on how hard we work, not based on if we get a lucky break from an investor.

    Also, the inspiration was needed as I waste another day at my 9-5 corporate gig.

    Comment by SC -

  49. Mark,
    I am a faithful reader of this blog and am extremely grateful for how candid and real you are in your entries. What you’re imparting here is more valuable than b-school and is incredibly helpful to us young entrepreneurs. This is truly one of the most valuable ways you, personally, can give back to society, and you’re doing an excellent job of it.

    Thank you

    Comment by Adam -

  50. Mark ,

    Every entry in this blog is entertaining , well-written , factual and definitely educative. However , Every entry titled ‘Rules of Success’ sounds very similar to a chapter in a book that you promised not to write in the foreseeable future…..a touch hypocritical , I think…

    But all said and done lots of wisdom in all that you write and I thank you for voicing it in such an erudite manner on this forum…

    Cheers

    Shyam

    Comment by Shyam -

  51. Hi Mark
    I just read your sweat equity is the best equity!
    What you say is true for start up, but what if you have a couple of IP patents and need to commercialize them. When you get to this point, you have to turn to investors who know what is a leading and cutting-edge technology. Would you look at the patent and give us some feed back

    Comment by Abdul Raheem Sami -

  52. Doesn’t it matter what kind of company or business you own. For example, I beleive every company you listed in you blog including your own are tech. companies. I think that is a major difference. Say somebody was getting into something like Trump( I know not a popular name around here) Wouldn’t that be impossible without somekind of loan? Can someone answer this?

    It seems as if you are starting a tech company, you can do it from your house because you only need a computer,if that to get going and the rest like you say is “sweat equity”.

    Comment by John -

  53. Thanks for validating some personal experience. I came to the same conclusion after reading “High Tech Start Up” by John Nesheim, a book that deals largely with acquiring venture financing. While it advises on how to go about it, all it did for me was confirm how little it suited my goals.

    Now, 4 years later, it’s still a daily struggle, but it’s a struggle over the right things: are we providing value to our customers, are we giving the best service we can, are we performing to the best of our abilities…not, did we hit an arbitrary earnings figure for the 1st qtr. We are able to focus much more on making the business work and improve as a result.

    Thx for the reminder.

    Comment by Lance Spellman -

  54. You said in your previous Blog entry you weren’t going to write a book on business. Instead you are going to post it one chapter at a time on this blog?

    Comment by Ben -

  55. “I tried to find people to shoot holes in it.”

    It’s easier said than done. I’ve been trying to expand my network and it doesn’t come easy for me. I still get nervous and say things I shouldn’t have: bad timing, wrong comments, not understanding who I was talking to, etc. I don’t know if this can be learned in a public speaking class because it wasn’t what/how I said it, it was about who was listening (me or them!)

    I believe in having mentors and being a mentor. I had them all through college and it gave me the courage to take my degree and do a 180 and dive into a completely unrelated field and succeed.

    I don’t need to start my own business as I’m in a position to take my current employer to bigger and better things.

    What I would need is a mentor. Someone I can talk to. Maybe someone can provide some good tips on finding these ellusive people who would rather spend time schmoozing or with their families than meeting others.

    My only rule is I refuse to do business in a bar or where alcohol is a major part of the activity. I will spend time to build a relationship, but not sell.

    How have people found their “people to shoot holes in it”?

    Comment by AK -

  56. This advice is great for a young company like Green Grass. We are constantly discussing investment as we deal with our fluctuating cash flow. I will take this blog entry to our next management meeting, Thanks for the advice Mark. Our company really appreciates what you do for the buisness community.

    -Ryan

    Comment by Ryan -

  57. ..I think I read HP was started with $538.. That’s the figure I am going to go with.. Mark, I think you are right..I thought about getting a bunch of investors in on a patent, but then I thought, this could get messy!.. I’m going to use my own money.. Patent price has dropped by one NY patent atty.. Maybe after, or if this idea is patentable, I’ll let you “Slam Dunk” this app. right up about 10 company’s rear ends..Har!..The River Kid..P.S. Brilliant stuff!! ..What brand was that beer in the beginning?….

    Comment by ShadNet -

  58. Great comments, especially for someone like me who is going through this issue right now. However, what happens if “sweat equity” isn’t enough and you need capital for equipment cost (in the millions, way more than friends and family can raise)?

    Does this post mean that you lose before you even get started?

    Justin
    Denver, Co

    Comment by Justin Allen -

  59. How is business school so easy?

    Comment by Chone -

  60. It’s always great to hear from someone who has started from scratch and made it! Your advice is priceless! Looking forward to reading Rule #2. Thanks Mark!

    Comment by Ron W -

  61. “The reality is that for most businesses, they don’t need more cash, they need more brains.” -M Cuban

    Ah!
    Then those brains will create cash, and that cash can purchase (rent?) other brains to specialize in what your brain doesn’t do as well…so you can focus on the mission…while those newly added brains haul in even more cash.

    Josh (above post), I agree with you about the business schools. Success leaves clues and all one really needs to do is study people like Dell, Cuban, Gates, etc… and the market that they are interested in.

    Business schools are for the people who want to work FOR the real entrepreneurs. That’s why I went and got a physics degree after my business computing degree. I Recognized the error of my ways when I realized how easy the business degree was and how many people out there also had one. Once I earned the physics degree….wow….doors started to fling open all over the place…and they keep flying open.

    Keep it up Mark! I appreciate how much you give to your community of people who also want to “make it” like you have, and have come to read your blog on a regular basis. You are certainly setting the example for us all…

    greg
    San Diego

    Comment by greg -

  62. Mark — really enjoying your blog entries about your early years in business. Keep ’em coming.

    Comment by Ben -

  63. It sounds so common and nothing funcy. But it does make the very important point, which many of us tend to forget.
    I have been happy knowing your “success blog”

    Comment by sohei -

  64. This is fantastic stuff…there are those that talk and then those that walk…I could have just read this stuff and bypassed b-school…and I’m definitely not joking about this. 🙂 —I’m curious to know why nobody has tried to get in touch with one another on this blog…to network, etc…especially since a lot of us have the same mentality…pedal to the metal entrepreneur….Any ideas/suggestions/interest???

    Comment by josh -

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