So when I got to read the book and it far exceeded my already high expectations, I contacted Mike back and asked him if he'd do an interview to share some of the highlights of the book, as well as his own experience as an entrepreneur. Read on and find out if you too are a toilet paper entrepreneur.
Scott Allen: I’ve heard of business ideas drawn on the back of a napkin or business card, but I’ve never heard of a “toilet paper entrepreneur.” Explain the metaphor.
Mike Michalowicz: The media habitually glorifies entrepreneurialism and there seems to be an overwhelming amount of "fisherman stories" that business people share. My experience is different. There is no question that being an entrepreneur can be a wonderful thing, but there is a lot more to it that rarely gets discussed.
I believe the real story of entrepreneurialism ironically relates to the bathroom experience. There is a lot of stuff that goes on in there that no one talks about. A common situation is when you or I finish-up our bathroom “business” and only then discover a mere 3 sheets of TP dangling off the roll. It is in this moment of necessity that we find a way to clean up and end up coming out smelling like a rose.
Perhaps we dug through the nearby garbage can to pull resources (like cotton balls, and used snot rags) out of the trash, or maybe we found a way to get a lot done with three sheets and a torn up cardboard roll.
Entrepreneurialism is the same, it’s about coming out successful even when, or especially when, we don't have a full roll of cash and/or resources. The get rich quick schemes, MLMs, and overnight success programs are scams. Entrepreneurial success takes lots of time, tons of hard work, and your ability to leverage what you already have within arms reach. People who know this and exploit the opportunities within it are who I call toilet paper entrepreneurs.
SA: In the book, you contrast toilet paper entrepreneurs (TPE’s) with media darling entrepreneurs (MDE’s). What’s the difference?
MM: I think there are two types of successful entrepreneurs and both achieve "overnight success." The thing is the MDE's achieve overnight success literally overnight. The TPE's success is perceived by the outside world as an overnight but in actuality it happens after a deliberate, relentless commitment to their company, often over 10 or 15 years. The more common path to success is that of the TPE.
SA: Do you think the media over-glorifies successful entrepreneurs? And if so, what impact does that have on the 99% of the rest of us who may never be MDE’s?
MM: Successful entrepreneurs are not over-glorified by the media, they deserve the attention. The problem is that there are millions of other successful entrepreneurs who’s stories are never heard. All entrepreneurs, not just a select few, should be glorified.
The ones you do hear in the media most are the stories of MDE’s. They have amazing stories. They are the likes of Google & Facebook and should be applauded for what they have done... but they shouldn't be seen as the only path to success.
The media's intensive focus on the MDE's has given many aspiring entrepreneurs unrealistic expectations. I have seen too many people give up way too early simply because they didn't achieve Google status within six months.
I think it is dangerous that people label themselves as the next Google, with the belief of mega size in micro time. I think everyone should aspire to be as big as they desire (perhaps even bigger than Google), but they also need to allow themselves to achieve it on their own time schedule, not one that has been set by the media.
SA: What are the defining characteristics of a successful TPE?
MM: Let me answer that by first saying what a TPE is not. A TPE is not the struggling artist who lives on a few pennies and PB&J their whole life. A TPE is someone who, among other things, get’s rich. The TPE way is to get rich right.
A TPE is an individual committed to their own success who, at a minimum, has the following characteristics: 1) They take FULL responsibility for all their problems and successes. 2) They are frugal (not cheap) and proud of it. 3) They use ingenuity over money. 4) They use atypical resources and leverage them up. 5) They are masters at focusing on niches (the one task at hand, as it were). 6) They are relentless, never stopping until they have come out smelling like a rose. 7) They exploit their own strengths tremendously. 8) They tend to slant toward action rather than planning - when it comes to choosing between starting now or thinking more, they choose action now.
SA: I love the fact that you’re willing to defy conventional wisdom with your advice for entrepreneurs. For example, you suggest starting out as a sole proprietor, then moving to an LLC, rather than incorporating right at the outset. Why is that?
MM: When you grow a company, you go through distinct phases. The first phase, which I have never see anyone talk about, is simple day to day survival. Are you doing something with your brand new little business that will bring in enough cash right now to allow you to open the doors tomorrow? It is all about feeding the new little beast (your company) and preventing the leeching of cash (life).
Initially, every decision needs to be about short term survival and controlling cash flow so that the fledgling business’s life is not leeched away. So even on small things, like a sole proprietorship vs. LLC, you can save money. Less spent means longer survival. Plus, when you are tiny, no one gives two cruds about you, so the legal protection that an LLC provides is not needed (yet).