Barry Merkin, who teaches classes in entrepreneurship at Northwestern’s Kellogg School of Management, says that not long ago one of his best students tried to avoid him at graduation time. He finally cornered the student and asked about his plans. The student acknowledged shamefacedly that he wasn’t going to be starting his own business–he’d accepted a job with General Motors. Merkin surprised him by hugging him and saying how happy he was that he’d figured out that going it alone wasn’t for him and that he’d found a good job.
He also gets his kicks by telling more personal stories than is customary in the world of business books. Few books that explain how best to fire an employee will add, as Moltz does, that he never fired anyone without first getting sick and wondering how their families would take it. In this genre that’s a breakthrough. And a lot of the usual boilerplate is left out of You Need to Be a Little Crazy–on purpose. This has to be the only start-your-own-business book in which the phrase “business plan” doesn’t appear in the index or the table of contents. Plans are worthless, says Moltz, echoing Dwight Eisenhower, though planning is essential. No plan can really prepare you for the unexpected. Have a plan, he says, but count on chance to shred it and force you to improvise.
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Moltz values all three of his start-up experiences, but he talks and writes more about his failures than his subsequent success. Not boasting is realistic, as he sees it. He knows how much he learned from his failures–and how lucky he was to succeed.
Moltz expected that his new business would move steadily, if slowly, upward–not unlike someone riding an escalator or rising in the IBM corporate hierarchy. The experience turned out to be more like riding an overpowered and badly maintained roller coaster. It was “a lot of work, unbelievable hours, but at the same time it was fun,” recalls his partner Smith. At one point “we realized that we were spending more money on Chinese food than on office supplies.”
He decided he’d had enough of working for someone else. It was 1991, a recession year, but in the classified ads he found two people seeking capital and a partner. Their references checked out, and their business idea seemed certain to be the next big thing–integrating existing components to make voice-activated computers and selling them to manufacturers to use in quality control. What could possibly go wrong with a great idea like that? “I invested all my family’s savings, which included all the money from our wedding gifts, and money my wife had received when her father had died in a car accident. I even got some of our friends to help fund the company.”
By now he knew to expect a roller-coaster ride. He would be on it with someone he respected and could communicate with, but he knew that wasn’t enough. In his book Moltz describes business partnerships as “marriage without sex.” When partners first meet everything looks rosy, and the very suggestion of a prenuptial agreement is chilling. But his experience in the voice-activated computing business persuaded him to take a friend’s advice, and the new partners entered into a formal partnership agreement so they’d have a civilized way to break up if it came to that.
In December 1998 a larger company expressed interest in buying their business, and within a few months Moltz and his partner accepted their offer, with relief. But they hadn’t climbed off the roller coaster just yet. “Months of due diligence followed,” Moltz says, “where they found flaws in our business that I did not even know existed.” The deal was called off. Negotiations began again with the same company, and the sale was made at a lower price late in 1999. Moltz won’t say what the company sold for, but it was more than enough to pay off the $1.3 million he and his partner owed the bank.
