The TV show Breaking Bad on the AMC network is nearing the end of its five-season run. If you haven’t yet made the acquaintance of Walter White, mild-mannered high school chemistry teacher turned bad-ass meth tycoon, you may want to check out Netflix and catch up on the story. (Warning: This article may contain some spoilers.)
Even if you never watch a single episode, however, Walt can teach you a lot of valuable lessons about how to launch a successful startup.
Success Secret #1: Do What You Know Best
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When Walt is diagnosed with cancer, he worries that he does not have enough savings to provide for his wife and children. In an effort to make more money in less time, he quits his extra part-time job and starts cooking meth. He does not try to learn some totally new business, but starts with what he is good at and builds from there.
Walt draws on both his skills and his knowledge to make this new venture a success. He has a thorough understanding of chemistry, both in theory and in production volumes. He also is meticulous in his work. As a result, he is far better prepared to create a quality product than is his amateur competition. Walt is able to create demand because his product is purer and more effective than the other drugs available on the street.
In other words: Use what you know. Don’t try to start a business in which you can’t deliver a superior product on Day 1.
Success Secret #2: Don’t Spend Startup Capital on Appearances
(Image credit: AMC)
Do not waste your launch stake on fancy offices or other status symbols unless your particular business absolutely demands it, and even then you should try to avoid investing in expensive equipment if you possibly can. If there is one absolute truth about startups, it is that the launch takes at least twice as long and costs twice as much than predicted in your business plan. Probably more. A lot more. Do everything you can to reduce your “burn rate” so that you don’t run out of capital before your business starts generating a profit. When the money starts rolling in, you’ll have plenty of time to decide to spend it on fancier facilities and other prestigious trappings. But if a garage was good enough for Hewlett Packard and Apple Computer, it’s good enough for you, too.
Walt understood this. That’s why he and Jesse started their meth production in a beat-up old Winnebago. Not only was it inexpensive to acquire (especially if you’re not too particular about how it was sourced), it also had the benefit of being fairly unobtrusive when driven out into the desert to cook up another batch. Of course, you may want to do what you can to recover value from such initial investments, unlike Walt who had to watch his investment collapse.
Success Secret #3: Build Your Brand
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People buy products and services from people, not from companies. Customers buy from people whom they know, like, and trust. (Well, in the drug business, it may be enough to cover the “know” and “trust” parts.) A key to Walt’s success was that he created a unified brand that made him and his product immediately identifiable within the marketplace. When Walt dons his black pork pie hat, he becomes the mysterious “Heisenberg” who is known as the source for the pure, blue meth that is in such high demand on the streets. The quality of the product and Heisenberg’s reputation of being a hard case go hand in hand.
Startups need to make sure that all the parts that prospects and customers encounter are coherent and work together: company name, logo, product name, packaging, and more. Spend the time and money to get this right from the start; it’s difficult to make a change after your product or service is in the market.
Success Secret #4: Use Care When Hiring Friends
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Some would advise you to avoid hiring “targets of opportunity” such as friends, neighbors, or relations when you are starting your company. This is probably too harsh, though you certainly need to be careful. You might be able to find more appropriate employees by conducting an exhaustive search for the right candidate for each position, but you may well do better by hiring familiar people who can help you get started quickly. Speed is important, because you need to reverse the cash flow as soon as possible.
When you do hire these familiar faces, however, be honest with yourself about their strengths and limitations. Be careful about giving them tasks and responsibilities that they can handle with excellence. Walt and Jesse needed to scale up quickly, so Skinny Pete, Badger, and Combo were recruited at the start to help with both supplies acquisition and product distribution. None of these burnouts were going to earn an MBA any time soon, but their contacts and street cred made them valuable to the startup. (There’s probably a lesson in team diversity as well.)
And when your business scales up, be sure that you’re ready to bring in more skilled or experience staff to help manage the larger operation. (Good luck on convincing the family member it’s time to move on, though.)
Success Secret #5: Get the Right Advisors
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First: Admit that you cannot do everything yourself. Whether it’s bookkeeping, legal and tax advice, design for print and online, or any of a thousand other essential tasks, know that you’re going to need some help in some of these areas. And when it comes time to obtain these services, put some thought into your choices.
Of course, you want these people to provide excellent quality at a price that is reasonable. But also look beyond just the product or service, at the business that provides it. Choose companies that are already tied into the market that you want for your company. Accountants, lawyers, and printing companies can be excellent sources of referrals for your business. Not only can they connect you with other services that they know and trust, they may also be able to direct prospects your way. So if you want to have a blue chip business, get blue chip services to help you. If you want to get into a local market, then use services that are embedded in that market.
Walt knew that he was not prepared to handle certain aspects of his new business. You may not need expertise in money laundering or need referrals to “clean up specialists,” so you may choose someone with a different portfolio than Saul Goodman. But pick your advisors carefully, as they can mean the difference between success and failure.
Success Secret #6: Don’t Swim with Sharks
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The people who want to give you money are not necessarily your friends. Be wary of investors and other business partnerships because they rarely have your best interests at heart. So long as your goals and theirs are congruent, things can be just fine. But when you hit a rough patch and fail to meet their expectations, you could end up losing your business and getting wiped out.
Also watch out for customers who want to capture your output; if you become too dependent on one outlet for your products or services, you run the risk of them calling the shots. You may find that you have less leverage in such a situation, and you can lose your operation. Once you’re in such a situation, it can be extremely difficult to regain control.
Walt and Jesse were sitting pretty when Gus Fring gave them a blank checkbook to set up their underground industrial production facility. They soon grew to understand that investors may have other plans for your business and your future, especially when they are at risk of losing face.
Success Secret #7: Have a Complete Business Plan
(Image credit: Lewis Jacobs and AMC)
Too many people start a new venture knowing how to do just one or two key parts of the business, and hope for the best that the rest can be figured out as they go along. These people often find themselves painted into a corner, with no way to turn.
It could be as simple as having reliable suppliers for raw materials. If you start small, as Walt did, you may be fine with a local supplier who can meet your needs. But what happens if your business grows rapidly? Will that supplier be able to provide the volume you need? If they can, will you end up being trapped into dealing just with them, or will you be able to find alternate sources of supply?
Be sure to consider the entire product flow, several steps both up and downstream. Make sure that your suppliers have an adequate and reliable source of the materials so that they can meet their obligations with you. And develop a plan that provides ways to get your product or service to the markets that buy them. You don’t want to end up with warehouses full of either supplies or products that you don’t know how to move. Or as in Walt’s case, a storage unit with a stack of currency the size of a king-side bed, with no easy way to turn the millions of dollars into money that he and Skyler could spend.
Who knew that a mid-life crisis on steroids could yield so many valuable insights into launching a successful business? And you don’t even need to shave your head to put these to work for your company. Follow Walt’s lead, and you too will be ready to go knock on some doors.
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