When I was the COO of CDNOW and we were starting to go through some hard times, I’d look at the stress our CEO was under and it’s impact on him and - honestly - was thankful that I didn’t have his job. We were losing money in a crumbling music industry with fierce competition and a crashing dotcom capital market. 700 jobs and years of hard work were almost lost. We ended up selling to Bertelsmann and I was offered the CEO role when our founding CEO exited. I took the job. Insane, right? And guess what? Despite the overwhelming challenges, difficult decisions to make, and constant harassment from our acquirer, I found myself comfortable and confident. We quickly saw success, right-sized the company (from 700 to 350 without significant impact to revenue), building focus, shifting marketing and pricing, quickly improving the bottom line by $40M. It certainly wasn’t easy, I worked a lot, but I wasn’t unhappy. When I now look back, I think know why. I wasn’t emotional about the company or the business. Music wasn’t necessarily my passion. It’s not that I didn’t care about the company, the hundreds of people on our team, or our industry - I was tremendously committed and as caring as I could be. I just didn’t give birth to it - it wasn’t my baby.
Despite what I’ve thought in the past, and what many of the blogs and mentors tell you, to build a business, passion and emotion hinder your ability to succeed. I’ve been known for heresy every now and then. Today is no exception.
Let me first acknowledge that emotion is human and we can’t be expected to (and shouldn’t) be void of emotions or even try to control them. The trick is to be aware, understand and behave in a way that is in the best interest of growth and money. (Emotional intelligence, which is something different, is important to develop and have, is a different subject which I won’t cover today.) Passion, while helpful to motivate us, usually gets in the way of building business. It’s a distraction that we need to put in perspective.
Passion is a Barely Controllable Emotion
What is passion? By definition, it’s “a strong and barely controllable emotion.” I hadn’t realized that until I heard Suzanne Evans say it at a coaching event last month. She asked, “do you want to run your business through uncontrollable emotions?”
I do think it’s important to be able to feel passion. I have a lot in my life for which I am passionate. I just don’t let passion run my business. That’s a conclusion that has come to me over the past couple of years, mostly as I’ve been building Trajectify and able to look at many companies from the outside-in and work with dozens of entrepreneurs. Two years ago, I was likely quoted as saying that passion is the first thing I look at when evaluating an entrepreneur’s business. I was wrong. The way to grow a business is through being practical, measurable, and grounded, not by being “barely controllable.”
Passion and Entrepreneurship are Difficult to Separate
I've worked for and with some pretty passionate people. In my commitment to the tech and entrepreneurship community, I see a lot of passion. It’s exciting and infectious. But when you do the math, it doesn’t always add up. What good is that excitement if you can’t make it last? Strong businesses that create measurable value and financial success enable us to do what we find exciting - to get what we want, to be able to spend time where we are passionate.
This is also true for non-profits or social impact businesses. It’s good to be mission-driven, but even charitable organizations must be financially stable in order to be effective. You can best help others and promote causes for which you’re passionate when your needs and wants have been met. It’s not selfish. Take care of yourself, your family, your company and you’ll then be better able to serve a greater good.
I once worked as a software developer for a company led by a extraordinarily passionate entrepreneur. We never built a sustainable business model and the company crumbled over time. Years later, that entrepreneur re-emerged to build two socially impactful, mission-driven businesses. His passion was exciting to the community and many rallied around him to help. There was a problem, however - no measurable financial results or sustainable business model. As reports of their impending failure began to surface, the excitement turned to frustration, anger, and resentment. It wasn’t pretty and was completely avoidable. The business was built and led with passion, but should have been built around a model where making money was the primary focus. We make far fewer mistakes when we decisions are based on a clearly measurable analysis. We make lots of mistakes when we let passion drive those decisions.
Passion is good for your life, but not necessarily your business. How do you best keep things controlled?
1. Know Your Numbers
With a new coaching client, the first big thing we do (after setting goals) is to focus on understanding the numbers. You’ve heard the expression that “numbers don’t lie.” When it comes to your business’ financials, that’s true. The P&L and Balance Sheet together clearly show the health of your business. You learn and grow by understanding your customers, where revenues come from, your costs and margins, and your marketing effectiveness. Financial awareness and making decisions based on numbers should be a primary focus to ensure you have a sustainable and growth-oriented company.
2. Work with SMART Goals
It takes guts to start a business, but it takes clear goals and a strategy to build and run it. I've spoken and written about how important it is for an entrepreneur and their business to have clear and measurable goals. “An entrepreneur who knows where they're headed is more likely to get there.” SMART goals (Specific-Measurable-Attainable-Relevant-Time-based) are hard to do, but without them there is no path to follow to success - you end up relying on gut and serendipity (which is as uncontrollable as passion).
3. Get Unemotional, Outside-in Perspective
We work inside of our businesses every day which often makes it difficult to see it unemotionally. I also recently wrote about the benefit of outside-in perspectives. You can certainly get these through coaching, but also through advisors and peers. Be sure to have a few people who can help you see your business without the emotion that you and your insiders inherently have (insiders usually include employees, consultants, investors, and family). I like building peer groups and advisory boards - since having multiple, diverse perspectives interact usually leads to better insight and innovation.
4. Separate Personal Wants from Business Goals
Suzanne says to not “fix life’s problems through your business.” Business is business. Yes, our business (or job) has a huge impact on our lives, but when we let the issues and desires in our personal life run our business, it becomes uncontrollably emotional. Have both business goals and personal goals. Figure out how to get what you need out of your business to contribute to your being able to reach your personal goals. Make the results of your successful and sustainable business be the vehicle that allows you to follow your passions.
Money Doesn't Buy Happiness?
We hear that money doesn’t buy happiness. Comedian Daniel Tosh sarcastically reminds us of otherwise.
Seriously, building a business based on sound financial plans and measurable goals are what enable you to get and do all that you want and to spend time where you are truly passionate. Maybe that seems cold and unemotional at first, but numbers speak volumes. A successful business is financially secure, taking care of the needs of you and any employees, and is hopefully growing. Uncontrollable emotions won’t build a successful business.