Previous: A Family Law Attorney On Virtual Court, The Impact Of Abuse, & How Quarantine Exposes Bad Marriages
Next: How To Start Building A Career From Scratch



View count:68,002
Last sync:2024-05-18 18:45
Hello, everyone.

It's Chelsea, and before we get into this week's video, I wanted to let you guys know about an exciting new thing we're doing at TFD. It's called "The Studio at TFD," and it is a series of digital workshops around all sorts of topics, from money management to mental health, to organization, to entrepreneurship, and everything in between.

We've got several amazing events coming up, and you can find out more about all of them at See you guys there. Hey, guys.

It's Chelsea from The Financial Diet. And this week, I wanted to talk about the myths and misconceptions that surround the entire idea of being an entrepreneur slash small business owner slash girl boss-- shudder-- that I'm very glad I never allowed to really become part of my thinking. As you guys are probably aware, I am technically an entrepreneur.

I'm also technically a CEO. I own a small business. I have employees.

I do all of the things that we sort of imagine in our minds when we think of what an entrepreneur is. But in many ways, my life as an entrepreneur and the way in which I got here are very, very different from the cultural narratives that we have around these people. Ultimately, I think that part of the reason why so many people feel that that entire pathway is closed off to them is because they've internalized a lot of, frankly, inaccurate perceptions about who can be an entrepreneur or what it means to be one.

So as someone who is an entrepreneur, who founded and runs her own business, I wanted to dispel some of those myths and sort of recalibrate our thinking to something not only more sustainable but also something that way more people can participate in. So without further ado, here are seven entrepreneur myths that I'm glad I never listened to. Number one, you need an MBA or business background in order for people to take you seriously.

Now, listen, spoiler alert, everyone-- I don't even have a bachelor's degree. I went to a community college. And actually, it's funny, because I feel like, in many ways, there are two narratives with regards to how entrepreneurs come to be.

And one is the very traditional business MBA background. And the other is like tech computer genius who dropped out of Stanford, because it was just not stimulating enough for them. I would like to say that I fall into neither.

I don't know how many entrepreneurs in our society came from community college, but I'm part of that elite group. The more important part of this, though, is to remember that, ultimately, when it comes to being an entrepreneur, part of what makes this pathway so wonderful is that you don't really have to have any specific credentials in order to do something. Yes, depending on the space that you're trying to get into, you should probably have some serious industry-specific knowledge-- i.e. what the hell was Elizabeth Holmes doing trying to test people's blood when she has, like, zero background in medicine?

That seems really shifty. But in general, a lot of options for self-employment or small business ownership don't really necessitate any particular degree. It's much less about the specific diploma that you have and much more about the skill set that you have.

And in many ways, going through something like an MBA program can actually narrow your window of thinking when it comes to conceiving of a job that's a little bit outside of the box. One 2018 report on MBA entrepreneurship by The Financial Times showed a drastic decline in the number of MBAs doing startups. New ventures founded by MBA alums in the past three years fell at 27 of 40 leading business schools.

Startup activity increased at only 10 of the 40 schools. Now, this is not to say that an MBA is not useful. In fact, in many industries, getting your MBA can actually have a pretty direct correlation with higher earning potential.

And if you happen to be in a job where your company might help you pay for getting your MBA, it can be a great choice. But not having a business background specifically in no way prevents you from starting your own business or going out on your own being self-employed. Ultimately, what it comes down to is having the right skill set and, above all, being able to sell.

Even if the industry you're looking to get into is not specifically, let's say, a retail or e-commerce business, selling is the most important quality when it comes to being self-employed or an entrepreneur-- selling yourself, selling your ideas, selling the value of what you do, making sure that you are able to communicate your ideas effectively and make other people confident in what you have to offer. And yes, sometimes specific school programs can help with that. But they, by no means, confer some sort of magic ability to be an entrepreneur.

Myth number two-- you need a ton of startup capital in order to succeed. One thing I've always been very candid about with TFD is that aside from a grant of $5,000 from John and Hank Green-- thanks, guys-- at the very, very beginning of TFD's existence, we've never raised any money or capital or anything like that. There are definitely costs associated with starting a business, but ultimately, a lot of them are much smaller than you might think they are.

And not having a ton of funding doesn't necessarily preclude you from getting started. When it comes to setting up the basics of a business like making sure that business is registered as an LLC or however else you intend to register it; that you have the basic infrastructure like your business email account, probably a website for your business; and a few other necessities, there's very little that you really need to get started, provided you're not buying a ton of inventory or something. And yes, people who receive a ton of funding at the outset of their business do have a lot of strategic advantages.

But at the same time, for us, having never raised any funding also means we are totally free. For a lot of businesses, raising a lot of capital at the beginning can be a bit of a curse, because money is never free. And the people who gave you that money likely have a ton of really specific expectations of what needs to happen as a result of that funding.

You may, for example, need to follow a growth trajectory that's not sustainable or not what you would have desired. Which is why I always get frustrated when business publications do that big PR push when this or that company raises a bunch of capital, because that's not the end of the story. That's the beginning of the story.

And you will find that with many of those businesses who raise that big fancy capital, just a few years later, that capital became their undoing. So sometimes going it alone at the beginning and self-funding in a sustainable way can prove to be a huge asset later in the game when you have no one to answer to. Myth number three-- you always have to be hustling or getting up at 4:00 AM to get on that grind.

Listen, we're year five into this business, and we are literally millionaires. Well, I mean, we're not, but the business is literally a seven-figure business, and my ass still does not get up before 8:00 AM. Please.

In fact, for many of us, that is part of the wonderful thing about being your own boss, is that you don't have to get up at some insane time if that's not how your internal clock works. Now, to be clear, for people who do find that they do their best work super early in the morning, that's awesome for you. But the framework of having to work yourself to death in order to be competitive as an entrepreneur is not only not true, it's actually a bit of a self-own.

Because if what you're saying is that you need to work 20 hours a day in order to be competitive, what you're really saying is that you're either extremely incompetent or possibly on drugs. Because ultimately, what makes you competitive is not how early you can wake up or how many raw hours you can put into doing something, it's how intelligently and efficiently you can do something, how creative you can be about finding solutions. And part of the beauty of owning your own business or being self-employed is that you have the ability to set the schedule that works for you.

I don't happen to be a mother, for example, but if I were, one of the things that would be beneficial about my work is that I could set up my schedule to align more with my children's schedules. And maybe waking up at 4:00 AM would be a part of that journey, but it's not necessarily a given that it is for everyone. And for all of those people who are constantly pushing that hustle, grind, LinkedIn post narrative, remember that entrepreneurship looks totally different for everyone.

And it is not a competition for who can work themselves the hardest. Myth number four-- you have to be a lone wolf in your business strategy. One of the things that frustrates me the most about our cultural conversation around entrepreneurs, CEOs, et cetera, is the idea that these people are sort of lone wolf geniuses who only succeed through sheer will and force of their own brainpower and personality and are solely responsible for the successes and failures of that enterprise.

We hear so much about Steve Jobs or Mark Zuckerberg or Elon Musk and very little about the teams that are built up around them and the key people around them, who are not only there to counterbalance that star personality but add so much entirely on their own to the secret sauce of what makes that organization successful. The issue is that most of us want a clean narrative. We want something that feels like a movie.

And it's really boring and unsatisfying to be like, and through 20 years of working in a complicated, nuanced, and sometimes uncomfortable way with a large, sprawling team of many different talents and personalities, this company was able to grow in a sustainable way. We want to hear about the meteoric rise or the one person who gets not only all of the accolades, but also all of the cultural mythos built up around them. I mean, lest we forget, there were literally two simultaneous Steve Jobs movies out basically at the same time that were both kind of centered around the man himself as the nucleus of this empire.

Now, I have taste, so I've only seen the Michael Fassbender one. I've heard the Ashton Kutcher one was a bit of a train wreck. But the point is for all of the other many people who arguably have just as much of an impact on why Apple is the way it is today-- for example, people like Tim Cook-- we're only getting multiple blockbusters about Steve Jobs himself.

And it can't all be the turtleneck. The point is it makes for a clear and compelling narrative, but ultimately, it's just not true. From a Harvard Business Review essay on the importance of good teamwork, the basics of team effectiveness were identified by Jay Richard Hackman, a pioneer in the field of organizational behavior, who began studying teams in the 1970s.

In more than 40 years of research, he uncovered a groundbreaking insight. What matters most to collaboration is not the personalities, attitudes, or behavioral styles of team members. Instead, what teams need to thrive are certain enabling conditions.

In our own studies, we've found that three of Hackman's conditions-- a compelling direction, a strong structure, and a supportive context-- continue to be particularly critical to team success. In short, what often allows any organization to thrive is making sure that all of the different personalities are put into a structure in which they themselves can do their best work. And the more we constantly build structures up as being one genius with a bunch of little underlings just constantly running around shuffling papers and being scared, the less we enable that framework.

Obviously, I'm no Steve Jobs, although I do love a black turtleneck. But it is indisputable in my own experience that TFD would never have been able to succeed in the way that it has if there weren't many key people around me from the beginning. I have my co-founder, Lauren, obviously, who has a completely different skill set than I do.

I have my partner, Annie, who thinks about things in almost the totally opposite way that I do, but who allows for a way of running the business that I never would have thought of, but that functions so much better than anything I could have come up with. And we also have many other people within the team and even third parties that we've worked with who've totally changed the way that we think about things and added much needed structure and balance to the organization. Whatever you are looking to do, making sure that you can find a few key people around you who provide a necessary corrective to your own tendencies-- and sometimes, let's be honest, bad habits-- is almost as crucial as the idea itself.

Very rarely can one person do something entirely on their own. And even if you could, having only one ego in the room can often have disastrous impacts. According to the consultant Kerry Goyette, just look at how Mark Zuckerberg handled the 2018 Facebook data breach crisis.

While he could have enlisted the expertise of his chief operating officer and lead board director, he relied solely on his legal counsel. This led people to believe that Zuckerberg considered the Cambridge Analytica scandal merely a legal concern, rather than an ethical one. And the consequences of Facebook's poor response are obvious, but the effects of constantly riding solo go well beyond bad publicity.

In July of that year, the social media giant lost about $119 billion of its value, which was deemed the single biggest one-day loss in the history of the US market. Now, could we say with 100% certainty that if this decision were made more collectively than just Zuck and his lawyer that it wouldn't have turned out this way? Maybe, maybe not.

It's impossible to say. But chances are, you probably would have had at least an opportunity for a much more nuanced-- and, therefore, less costly-- outcome. Myth number five-- CEOs and executives receive huge bonuses because they deserve them.

As of this recording, I am currently the fourth highest paid person in my company. And while you could argue that that is or isn't perfectly reflective of the value that everyone in the company is bringing to the table, everyone's compensation is within a pretty tight range. And while I, a person who owns 60% of this company, could easily just plonk down my jewel-encrusted scepter and be like, more money for me, I would never do that.

Because ultimately, what makes the structure of the business successful is that everyone is indispensable. The idea of one person adding a level of value that nobody else could ever replicate or ever come close to isn't just unethical. It's also pretty fundamentally untrue.

It's more obvious, of course, in a company with eight employees, because if any one of those eight employees were to disappear tomorrow from the company, that loss would be massive. But in many organizations, even much bigger ones, this is also very true. Now, you can say, of course, that in a large organization, executive leadership is perhaps more valuable to the overall structure than other lower level employees.

But the disparities between executive compensation and average compensation has gone well beyond any possibly justifiable notion of value. According to the Economic Policy Institute, CEO compensation in the US grew 940% between 1978 and 2018, while typical worker compensation only rose 12% during that time. And CEO pay is more likely based on CEO's power within their company to set their own pay, not on the market for talent.

Now, you cannot tell me that between the late '70s and now, CEOs have magically been able to add 78 times more value to the companies that they work for than the other employees now add. I'm sure some of them have may be picked up a few new skills along the way. But the value that they represent to their companies could not possibly have increased to that extent.

What likely happened is that over the years they got more and more influence and power in setting their own terms, while the average worker has progressively less. And part of the reason why we're often so comfortable with these high level executives, and especially CEOs, taking home these massive bonuses and salaries is because of that lone wolf myth we just discussed. We tend to think of companies as truly being defined and their trajectory completely outlined by whoever is at the very end of that company, or whoever happened to found it.

But that is completely untrue in practice. Yet, because we tend to think of these structures as one person and everyone else, we are subconsciously more comfortable with the idea of that one person having an insanely outsized level of compensation. I don't choose to pay myself on par with what other people in the company earn because I'm some sort of martyr.

I love buying nice things. Who doesn't? I do it because it makes sense for the overall structure of the company and the value we're all adding to it, and because it's the ethical thing to do.

There's no reason that other companies should be able to get away with doing the exact opposite or that we should be comfortable with it as a narrative. Myth number six-- companies with female founders or CEOs are inherently feminist. My favorite pet topic.

So it's easy to read headlines like, where are all the female CEOs? And start to believe, even on a subconscious level, that having a woman at the top of an organization is going to inherently lead it to being a more feminist workplace or a more healthy work environment generally. But that is not a given.

Just in recent memory, let's go down the list-- Thinks, Girl Boss, Away, The Wing, Man Repeller, Outdoor Voices, Nasty Gal-- which I know is technically also the same leader as Girl Boss, but that was also a train wreck, too, so let's put that one on the list-- frickin' Theranos. There have been scandal after scandal after scandal of female leaders stepping down after creating a work environment that employees described as hostile or untenable or even, in many cases, un-feminist. Now, I'm not here to get into the nitty gritty of each one of those different cases, because there are some differences there.

And the level of egregiousness when it comes to the alleged behavior also widely varies. But one thing that seems pretty consistent is that just because a woman is at the head of the company does not mean that that work environment is automatically feminist. Ultimately, a commitment to a feminist, egalitarian, healthy work environment has to do with how everyone, male and female, all up and down the ladder of the company, are treated.

Having women in power if the women at the lowest levels of the company don't have things like maternity leave or benefits or a decent work life balance doesn't really mean much. And in some cases, you can even see a toxic dynamic, wherein women at the very top of leadership enable other women at the company to become targeted or subjugated for doing things like choosing to have children. And some of this rationale seems to be that if female managers at the top are able to work insane hours every week while also being mothers, everyone else at the company should be OK with doing it, too.

Now, of course, this says nothing about the domestic resources that someone who is at the top of a company might have that other employees don't. But the point is just that unless the leaders are going to be setting a good precedent across the board for gender dynamics, no matter the gender of the leader, the company is not feminist, even if the CEO or founder is a woman. Lastly, myth number seven is that you need to run your company full-time in order for it to be a real business.

Now, this is one that a lot of us struggle with at the very beginning of starting a business. For most of us, myself included, going out on your own as an entrepreneur or self-employed person is going to be something that you have to do gradually, especially if you don't have a ton of funding or come from enough wealth that you can afford to just up and leave your job overnight. And it can lead to this sort of imposter syndrome, where we feel like just because we are not able to fund ourselves full-time on the work that we're doing that the work we're doing isn't real.

I used to have huge internal conflicts about whether or not I could legitimately say that I was a writer, for example, when I was halfway between freelance writing as a part-time job, but still also nannying and tutoring in order to pay my bills. I spent so much mental energy and anguish on feeling like a fraud and feeling uncomfortable with saying that about myself when, really, I was a writer because I was writing. And ultimately, looking back, who really cares if it's full- or part-time?

What matters is that it's something that you are giving your energy to, that you are giving a real shot at working, and that you truly care about. And while, yes, other people's perceptions of us can have a real impact on how we feel about ourselves, only we really know what's happening behind closed doors. And even though something may not yet be turning a profit, it can be every bit as real as a Fortune 500 company when it comes to the energy and effort that you're giving it.

But I think the broader point here is to remember not to define ourselves by how other people may perceive our own pursuits. We don't need to get permission from anyone to consider our work real. We just need to comfortable with ourselves.

I wish that I could get that time back where I felt so conflicted about being able to use that term for myself. Because in the end, it didn't really matter at all. And the same thing with TFD.

There are still people in my life to this day who don't really think of the work I do as real, even though we have employees and an office and all of the other normal structures that you would need to think a job is real. And at this point, who cares? I know it's real, and so do you.

Remember, at the end of the day, that nobody needs to give you permission to be an entrepreneur and that you don't have to be some mythic, questionably behaved, crazy genius in order to be considered one. This path is available to so many more people than we think it is. And a lot of getting there is about changing your perceptions and forgetting some of these myths.

As always, guys, thank you for watching. And don't forget to hit the Subscribe button and to come back every Monday, Tuesday, and Thursday for new and awesome videos. Bye-bye.