Truly great businesses never fail to adhere to the simple principle that Tim O’Reilly coined:

Create more value than you capture.

The obvious examples are institutional: 

Microsoft changed the world with Gates’ vision to have “… a computer in every home”. The actual revenue the company captured from selling Windows licenses seems like a drop in an ocean compared to the value Microsoft’s customers created with the Windows product. 

Think about the businesses built. The efficiencies gained. The creativity that sprung forth from the personal computing revolution. 

Likewise, Apple put a computer in every pocket and nothing was ever the same again. 

The iPhone is consistently the most expensive smartphone out there, but a few hundred bucks every few years is a small price we pay for the benefit. Just think of any business that used ubiquitous mobile computing as a launch pad. 

(Think of all the money made by drivers, driving for ride-share apps, that couldn’t have existed without Steve Jobs walking on to that stage with the original iPhone.)

What Apple and Microsoft collect in revenue from these products is just a drop compared to the ocean of economic value the products ultimately create. 

For entrepreneurs, “Create more value than you capture” can serve as a powerful north star pointing to success.

Think of it as a guiding philosophy for optimal decision making in business. 

Example time…

Let’s say you’re pitching a B2B consulting contract. It’s valuable to think about your pricing as a fraction of the value that’ll be created by the impact your consulting has. 

Leaving enough “meat on the bone for the next guy” when setting fee structures is important. Playing the long game this way means that you yourself might be the next guy. When your customer experiences a 10x ROI from your services, they’re gonna be much more likely to re-hire you. 

Creating more value than you capture goes deeper than just pricing your services though. 

The aphorism to “sell pickaxes to the miners” is saying the same thing: When your product or service empowers others to succeed at mining – to create MORE value – you’re following the principle. 

Every technology revolution in history is a revolution precisely because of how much value it creates. The wheel. Steam power. Electricity. The telephone. These things all became tools that empowered other people to do incalculably significant things. 

Even if you’re not some patent-owning inventor-entrepreneur, you can create significantly more value than you capture…

The secret is to have a vision for your customer’s success, not just a vision for your own goals.

If you’re dedicated to creating more value than you capture, every person your business touches must be transformed. They must level up, in the direction they desire. 

Companies like Active Campaign (no affiliation but I use their stuff) are determined to turn their customers into marketing extraordinaries. To that effect, they don’t just sell software: They run workshops and host conferences. They teach. They want their customers to succeed because they know that when their customer is winning, the few hundred dollars a month for marketing automation is an afterthought. It’s a drop in the ocean of value. 

Startups focus on network effect, building market places, solving discoverability problems in the gig economy. The best startups all create economies of massively more value than the business at the center.
 
Dribbble.com (also no affiliation) helps some of the world’s best designers find the people who need their help. Those designers make magic (and money!) with the clients that discover them. Instead of clipping the ticket, instead of trying to insert a layer of inefficiency and charges between the customers and the vendors who serve them, Dribbble just charges a nominal monthly fee. It’s a total no brainer.  

Creating more value than you capture is a philosophy of generosity.

The principle holds true in the B2C world too. Most gyms just focus on optimizing for maximum fees, from a customer base who desperately don’t want to be there (and conveniently don’t show up). Meanwhile CrossFit builds a community of people dedicated to transformation, to showing up, to leaning in and learning. It really works, and people’s lives are changed – they become a better version of themselves – and the price of entry seems like nothing. 

Make Generosity your north star.

The opposite is a race to the bottom. It’s attempting to charge the biggest brokering fee you can get away with, for example.

(I once had an acquaintance who asked for a commission for referring his friend to me for therapy.)

The opposite of the “create more value than you capture” rule… is trying to inject as much inefficiency into transactions as you possibly can. The world of affiliate, referral marketing (more often than not) seeks to get between consumers and what they’re looking for, then charge for sending them where they wanted to go in the first place. And the customer ends up paying more. If any value is created, the amount is too close to what’s captured.

What you can do next:

Entrepreneurs have the opportunity to wake up to the idea that helping customers succeed massively – empowering them to go out and creating their own value – way beyond what they thought was possible… is the long term path to building extraordinary, universe-denting businesses. 

No matter what business model you’re building, it’s worth brainstorming what it’d look like – what it would require of you – to create ten times (or a hundred times!) more value for your customers than what they pay for.

Pursuing this philosophy has an uncanny way of making entrepreneurs filthy rich. It’s no accident that the companies that create vastly more value than they capture are the most prosperous on the planet. 

Brownian Motion – and seriously, bear with me here – is the theory of molecular science that explains why particles in a gas will distribute themselves to evenly fill any container they occupy. 

These are the fancy science words for describing complex probabilistic math that’s baked into the laws of physics… which makes gases in a container spread out as much as they can, until the gas is distributed as diffusely as possible throughout the container. 

(I told you to bear with me!)

This is a crucial METAPHOR for entrepreneurial productivity.

When you inflate a balloon with helium, the particles you put in the balloon don’t hang out in one corner of it. They spread out as much as possible, filling the balloon evenly. When you smoke a cigar in an office – like an old timey entrepreneur fat cat – the smoke wisps and curls… but eventually spreads out to evenly fill the room. 

This law of physics basically states that individual particles in a gas will always spread out, endlessly distributing themselves equidistantly from each other, evenly filling the container they occupy.

That’s “Brownian Motion”. 

Got it?

Entrepreneurs fill their days with work in the same way. 

Your calendar is the container/room. 

Your to-do list is the gas that spreads out into it. 

“Entrepreneurial Brownian Motion” is in play when you have your to-do list… and you dive into your day with a loose plan to get things done. 

What happens next? 

Your work spreads out over the day, filling all your available time. 

This is especially true for “important not urgent” creative work. The kind of growth-driving activity that takes courage and produces exponential leaps forward.  

On any given day, you may or may not get everything on your list accomplished. Regardless, the available hours – the space inside the “container” of your day – will get entirely filled up by work.

Like that cigar smoke, uncurling and spreading out, filling every corner of the room… you’ll constantly feel like you’re working on something. Every inch of your schedule will fill up. 

The whole day gets spent. Every time. The work seems to expand to fill it. 

Entrepreneur “Brownian Motion” is why deadlines work 

Have you ever wondered why a very real deadline has this magical power to 10x your effectiveness? 

When you book a flight to take a trip, and you have to finish X project before you leave… it’s amazing how much you get done in those last few hours of crunch time. 

It’s because a pressing deadline shrinks the container. 

You have less time in which you’re able to do work, so the work you need to do compresses like a gas to fit the space available. 

Brownian Motion is a principle of physics, aerodynamics and pneumatics that scientists and engineers take into account and plan around. 

They don’t try to fight it. 

Neither should you. 

Entrepreneurial Brownian Motion is a principle that YOU should take into account and plan around. 

Your work is going to want to spread itself out to occupy all the nooks, crannies and time available in your day. 

The solution isn’t to wish for more willpower to fight this effect… it’s to shrink the container that’s available. 

Parents know what I’m talking about

Over the last decade of my Shrink-for-Entrepreneurs client consults, every entrepreneur who’s had their first child while on my roster has described learning the true meaning of productivity. 

They suddenly start getting WAY more done, in FAR less time each day.  

It’s not that some faculty of theirs shifted or improved. In fact, sleep deprivation probably means they’re less energetic than before! 

What’s really happening is the container – the time they’re actually able to make available for work to gaseously fill has seriously shrunk. 

Smaller container = less diffuse spreading-out of work. Their execution, in other words, is concentrated. 

Why wait for life to shrink your container for you? 

Do it now. Do it with volition and mindfulness.

You have the potential to get much more done in less time than you normally do. 

You know this is true. It’s already happened on dozens of occasions where something external (like an impending vacation) shrunk your “container”.  

Instead of urging yourself to be better – or trying to use more willpower or caffeine to “focus” – why not stack the laws of entrepreneurial physics in your favor? 

Shrink your container. 

That means putting other stuff in your schedule to act as the container walls. 

The most effective entrepreneurs I meet have other stuff going on. They have to knock off work at 5:30pm on Tuesdays – instead of working all evening – to go to their Ultimate Frisbee league. Or they pick their kids up from school every day, because it matters to them. 

They commit to things that make life worth living outside of business… and those commitments serve as strong bulwarks against the naturally ever-diffusing Brownian Motion of their to-do list. 

Figuring out what your stuff should be – what would be worthwhile committing to – is the most fulfilling, rewarding part of all. It’s the whole point of entrepreneurship, remember?

The best thing you can do to make yourself more productive… is make other plans. 

Completely clearing your calendar is not an opportunity. It’s not a good tactic for boosting focus. It’s an invitation to fluff around and do in 10+ hours what you’re capable of doing in three. 

If you want to make an impact, and to find (and keep) Wealth, Freedom and Sanity along the way… you have to make Entrepreneurial Brownian Motion work for in your favor. You need a smaller container. 

There’s a fun game entrepreneurs play over drinks: 

Imagine starting over, totally from scratch.

With nothing.

Probably in an unfamiliar country or something. 

You have zero access to any of the capital or physical resources you have now.

You get to keep everything that’s already in your head: All the experience and hard-won learnings. 

But that’s it.

How long would it take you to get back to where you are today, success-wise?

People like to imagine that the Richard Branson or Elon Musk types of this world would wake up unrecognizable in some exotic place and immediately concoct a scheme. They’d figure out some re-brand, re-selling of bananas (or whatever).

Within a week, they’d be being driven around in a Rolls Royce. They’d be wearing a five thousand dollar suit. They’d be hailed by the locals as an entrepreneur genius. 

Or so the popular wisdom goes. 

I’m skeptical. 

I think there’s one important question to ask about this game:

Do you get to take your Rolodex with you?

If you were to really “start from scratch”, do you get access to that mentor who set you on your path when you were young? 

Do you get access to that first boss, who taught you everything you know about X?

Do you get that first client who unknowingly financed your first website… the website that landed you your second client… 

You get the idea. 

You can’t really remove entrepreneurial success from the environment it happens in.

An intricate and invisible web of social, psychological relationships weaves around you. It lifts you up and is as much a part of your success as your attitudes and thinking. 

Entrepreneurs struggle when they operate from a place of total entrepreneurial isolation.

The internet enables more people to build small – and large (but decentralized) – businesses from home than ever. The side effect of this? Entrepreneurs are more disconnected than ever before in history.

It is now absolutely normal for a business owner to operate from home and only socialize with “civilian” 9-to-5er friends, or – at best – people in wildly different businesses to theirs. 

The days of spending your time in close physical proximity to the people you’re accountable to – as an entrepreneur – are over.

This is problematic.

Isolation makes entrepreneurship harder than it should be.

This is why – if you really were to start over from scratch – your results would skyrocket the second you got someone in your corner. Genuinely support does tremendous things for the entrepreneur brain.

To drop into any situation and show up immediately as a focused, high leverage, execution powerhouse… requires help: Business success requires other humans to activate your social-primate brain that, in turn, motivates and focuses you. 

The first thing Richard Branson would do if were he dropped (unrecognizable) into Marrakesh with ten dollars in his pocket… would be assembling a team. 

You’re not supposed to do this by yourself. 

The bad news…

… is that making Good Decisions is the only way that entrepreneurial success happens. 

Things like product-market-fit, the right timing, great investors/mentors, assembling a phenomenal team and access to capital all matter, too. But these are all downstream consequences of Good Decisions being made by the entrepreneur. 

It’s all on you. 

The only way to make Good Decisions is to have the experience to know good from bad. This is why entrepreneurs become serially-successful. The more you know, the easier it gets. The rich tend to get richer. Success begets success. 

The good news…

… is that making Bad Decisions creates experience. Making Bad Decisions often creates the best kind of experience. Because entrepreneurs learn better when they have scars to serve as reminders. 

Bad Decisions – executed with conviction – create experience.

Experience trains you to make Good Decisions.

Good Decisions lead you to success. 

This means that the door to entrepreneur success is still wide open… For anyone willing to find the courage to execute on their Bad Decisions. And for anyone with the tenacity to keep pushing through that uncomfortable “experience” part. 

The good news is that the opportunity hasn’t gone way. The even better news is that fear, perfectionism and most people’s inability to focus… is keeping the playing field relatively empty. 

One in three Americans dream of starting their own company. But only a tiny fraction of those have what it takes to act on their bad ideas such that they find their way to a good one. 

  1. Connect with the beneficiaries of your passion.  The people whose lives your work transforms when you do it best. Your customers. They’ll remind you why it matters.
  2. Take a deliberate, outsized break. Absence makes the heart grow fonder and getting distance on something you’re stuck on tends to make the brain sharper. Sometimes stepping away – even when it feels like a failure – is exactly what we need to want to create again.
  3. Start something new. A lot of people confuse novelty for passion. If you find that doing something new ignites a new passion, the lesson may be that it was novelty all along that was fueling you. Sorry, but it’s better to know.
  4. Absorb the work of the masters. Whatever your field, there’s someone (or several someones) whose work dwarfs yours. This is a good thing. Soak it in. Revel in what’s possible.
  5. Write down your rationale. Don’t assume you’re totally mentally aligned on the significance of your thing. Don’t take your motivation for granted. Articulate it. Tease it out. Write down why you want to do this. Express it such that a toddler or a layman would understand why your thing seriously matters. Chances are you’ve forgotten, or weren’t sure in the first place. Doing the work of articulating your Why fixes that. 

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