The 10 Most Important Business Lessons I’ve Learned

August 27, 2010 · Print This Article

Here are the most important business lessons I’ve learned building iContact from 2 to 220 employees over the last eight years.

  1. Just get started, have a bias toward action, and don’t get stuck in analysis paralysis.
  2. To grow your sales, it is critical to calculate the lifetime value of an average customer, calculate what you’re currently paying to acquire an average customer (total monthly ad spend divided by customers acquired in that month), determine the maximum you’re willing to pay to acquire an average customer, and scale your marketing scientifically by testing relentlessly and finding the channels in which you can acquire customers for less than your maximum acceptable customer acquisition cost and then growing spend within those channels.
  3. Never raise more equity capital than 1x your current annualized revenue (monthly revenue x 12). If you raise too much money too soon you’ll give up too much ownership and control of your company and be tempted to spend the money in ways that aren’t carefully controlled. Wait to raise a large round until you have proven mathematically than $X amount of additional spending with generate $Y amount of additional revenue. (once you figure out #2 this is easy).
  4. If you choose to raise money, raise it from investors you like and get along with well. You’ll have to hang out with these people for the next 3-7 years, make sure you enjoy spending time with them.
  5. After the first year or two, your success is determined by the people you hire, not by you. Stop trying to do everything yourself. Scale yourself by hiring people more experienced than you in their field as soon as you can afford to.
  6. Every member of the team should have a significant portion of their compensation based on the company’s success and their department’s success, quantified and communicated clearly in advance.
  7. Your job as CEO is not to micromanage/tell your team members what to do, but rather to hire experienced people who can do their jobs better than you could, collaboratively set numerical goals, and hold your direct reports accountable for their performance individually and as a team.
  8. Once you get past the start-up phase when you’re responsible for everything, the five parts of a CEOs role are 1) Set strategy and vision 2) Manage the senior team 3) Communicate with stakeholders 4) Oversee resource allocation and 5) Build the Culture.
  9. It is possible to become more socially and environmentally responsible and increase your financial returns at the same time
  10. If you create a great culture (a fun work environment filled with people who are high performers and who care about their work and their impact on the world) you will be able to attract and retain better people who will be much more engaged and productive and create a much more financially successful company.

I’ll be writing more about building a great company culture in the next post.

What lessons have you learned over the years in business? What do you think about these lessons?

Comments

16 Responses to “The 10 Most Important Business Lessons I’ve Learned”

  1. Spencer on August 27th, 2010 10:59 pm

    Ryan,

    Great post, one of the best sets of lessons for any entrepreneur. The funding equations you have set make a lot of sense. I think that culture is probably one of the most important things a company can focus on.

    Have you read Tribal Leadership? I assume so, as the list you have made here, and your attitude towards business represent a level 4 (and hopefully level 5) culture.

    If I could add anything, it would be to comduct your business with only the highest level of integrity. I still think that is the most important word in business.

    Overall, great post. Keep up the good work.

  2. Jeremy Campbell on August 28th, 2010 12:48 pm

    Awesome points Ryan, I would also add that it will likely take you at least 2x as long as you originally thought to get where you’re going, and cost at least 2x more than you originally thought. This is certainly true in my case!

  3. Trace Cohen on August 29th, 2010 4:34 pm

    Great points that you make here – coming from your experience and successes.

    My only concern is #3 because it is rare that a company seeking capital will abide by it. At the angel level (90%+ of most investments), most of the companies that they invest in have no revenue and won’t for a while. It’s a delicate balancing act, so I hope they follow lesson 4 because they will be spending a lot of time with their investors.

  4. Zaid on August 29th, 2010 11:21 pm

    Great post, Ryan!

    In future posts, I’d love to hear more about how how you go about doing each of the 5 duties you list under being a CEO.

    Love your emphasis on metrics and keeping it simple(figuring out $x brings in $y rev).

  5. Shay Mandel on August 30th, 2010 3:22 am

    Great post! is sounds simple but there is definitely a lot of art in doing all that right.

  6. the five parts of a CEOs role « What makes a Great CEO ? on August 30th, 2010 3:44 am

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  7. Manjti singh on August 30th, 2010 4:41 am

    Ryan, will totally agree with you in this….have experienced most of the things in my 3 yrs of entrepreneurship.

  8. Bissu on August 30th, 2010 5:00 am

    Today, i’m part of a business where I need to increase one better profissional culture inside the employees.

    Along years the administrators hire people only to execute tasks, not to thinking.

    The lessons 5, 6 and 7 give me more confidence about my plan to install this spirit.

  9. Robert Hacker on August 30th, 2010 5:55 am

    #2 is a secret known only to sales oriented executives
    # 7 should be the second tattoo for every entrepreneur after “don’t run out of cash”
    #8 should be the second course in entrepreneurship at universities

    #3 is suspect but it would be interesting to see a post where you try to prove this theory

    You mentioned nothing about the customer, which I would have included.

    Good post!

  10. Andrew on August 30th, 2010 7:28 am

    11. If you choose the right direction and start walking and you don’t stop, then there is a good chance you will get where you intend to go.

    Culture is the social glue of any company and pours from top to bottom. Point 10 is arguably the most important point for companies with employees.

    Happy employees = happy customers = happy shareholders.

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  13. Entrepreneur Ideas on September 16th, 2010 4:58 pm

    Great pointers, Ryan!

  14. Pankaj Sharma on December 20th, 2010 12:02 pm

    Ryanallis,

    This sounds quite practical while undertaking any business. I suppose in addition to all the essentials for success, the real and truededication on the part of innovator with strong confidence in one self is magnifying the possibility of entrepreneur’s success.

    I appreciate the codification of the victorious entrepreneur.

  15. Corinne Floyd on January 30th, 2011 3:17 pm

    Good business pointers. I agree – take action – too many people analyze things too much then do not take action. Also being socially and environmentally responsible is the only way to build a lasting, successful business and sleep well every night!

  16. Terje Sannarnes on April 5th, 2011 6:33 am

    Great recommendations for people, who plan or already do business. Here, the attention of the author is focused on the most important things that every entrepreneur has to know, good job!

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