What follows is an article by Launch413 advisor, Dr. Murdoc Khaleghi.
Want a Successful Startup? Consider Minimalism!
If you were to closely question most successful entrepreneurs on why they do what they do, they would tell you that it is not for a big payoff or the status of succeeding. It’s because they want to find a solution to a problem they care deeply about. This desire to solve a meaningful problem allows them to sustain the motivation, passion, and energy needed to overcome insurmountable odds.
As a physician, it’s been illuminating to review the research that demonstrates how classic extrinsic motivators, such as money, status, and possessions, only produce a temporary stimulation of pleasure in the brain. Similar to drugs, this dopamine increase is fleeting, leading to wanting higher amounts until further increases aren’t possible anymore. Meanwhile, the pursuit of meaningful challenges and service offers a long-term satisfaction that can sustain an entrepreneur. Since creativity is a key asset for a successful innovator, I find it also significant that extrinsic motivators have been demonstrated to decrease creativity, while intrinsic motivators offer no such limits.
Fortunately, there are a number of sources of sustainable long-term satisfaction inherent in entrepreneurship, including the challenge and service of trying to solve a meaningful problem, as well as the autonomy to pursue what one wishes. The joy of autonomy is why it’s rare for an entrepreneur to ever go back to doing anything else.
Funding Your Startup
While having the right motivations can increase the chance of a startup's success, the biggest reason for a startup’s failure will always be funding. When managed properly, financing and motivation can be optimized by decisions you make in your own life.
When we think of financing, we focus on debt and equity. Debt is not a good option for a startup, as most ventures are considered too high-risk for debt financing, and interest payments are required while cash flow is still typically negative. Instead, most startups seek financing through equity, exchanging shares in their company for funding. While this is the most common option, it comes with serious drawbacks. At early stages, ventures generally do not have much worth, so to raise sufficient funds a significant portion of the company has to be exchanged. In addition, autonomy is one of the primary sources of the joy for an entrepreneur, but when entrepreneurs exchange equity to fund their venture, they lose a sizable piece of their company, as well as their autonomy and control since they must now report to their investors. A venture has only two possible paths: failure - losing everything, or success - which makes the equity given away early very valuable. Giving away valuable equity is not something most entrepreneurs want.
There is a third funding option: bootstrapping. Bootstrapping means funding your venture as long as possible with your own money. The longer you bootstrap, the greater the possibility of increasing your company’s valuation. Then, when you do need to raise money, you can give less of your company away. While bootstrapping sounds ideal, many entrepreneurs don’t have significant funds to bootstrap. Fortunately, there are changes you can make in your life to maximize your ability to fund your venture independently.
Minimize Your Lifestyle to Maximize Your Startup
Most people live up to or close to their means. When we’re young adults we live on very little, and then as our income grows, our expenses do too. While some increase in expenses is necessary and unavoidable, most increases in expenditures are optional decisions under the guise of necessity. We buy newer cars, bigger houses, upgrade our TV, get a daily coffee, eat meals out, etc. These changes are subtle and gradual, to a point where I observe many of my colleagues who make high 6 or 7 figures finding a way to spend most of their income. While you might think they are excessive, they are just doing what seems natural--spending most of what they have.
There is an alternative that I have embraced in my life that has significantly helped me as an entrepreneur, including building several 8 and 9 figure companies, publishing eight books, and running a 30 member provider group. I’m a minimalist. Despite sometimes earning 7-figures, I still drive my 96 Civic, live in my modest home, don’t own a TV, get my books from the library, cut my own hair, and make most of my own meals. Because of this, I’ve had the resources to pursue whatever endeavor strikes my fancy, and had to worry far less about the runway, the amount of time my funds will last me, for either my personal life or the venture. Interestingly, this minimalism has many other benefits:
When you start trying to live simply, you find joy in activities that cost little if anything. Forget the fancy meal or ultra4K TV--give me a run through park trails or a hug from my child any day.
One of the secrets to building wealth is buying assets instead of liabilities. I spend most of my money on things that make money and then use that money to buy more things that make money. The growth is exponential.
Having savings and those assets has given me the security to never have to worry about having enough and the freedom to never have to do anything for money. With that freedom I pursue activities that are meaningful to me. Additionally, whatever I do, I enjoy it more knowing I don’t have to do it. After all, how can you find your calling if you are focused on needing to pay the mortgage? By not giving much attention to buying stuff and then managing that stuff, I’ve had a lot more time and mental freedom for more interesting pursuits. Rather than spend my time looking at new cars, TVs, or houses, I write books, design courses, and start disruptive companies that try to solve major problems.
Living my minimalist life I now get more sustainable satisfaction from creating, helping others, and forming relationships, without needing the dopamine hit of moment to moment consumption gratification.
I have the money to do some good. Many studies have shown that while the pleasure of purchasing for ourselves is fleeting, using money to help others makes us happier and for longer. I spend money to make a significant impact in a way that’s meaningful to me.
Making these changes is not easy. People often feel overwhelmed regarding where to start, and how far to go. They might feel uncomfortable about not following societal convention, or experiencing the changing of priorities. Embracing a minimalist lifestyle can also greatly impact one’s identity and like the best entrepreneurial pursuits, it’s not about achieving some destination, but about moving in a direction, with every step forward bringing a victory. What’s wonderful is no one ever regrets living more minimalistically, just like no one ever regrets being an entrepreneur. Doing one can make you successful being the other.
Besides being an advisor to our client companies at Launch413, Dr. Murdoc Khaleghi, MD MBA FACEP, is an emergency physician and Co-Founder or Founding Chief Medical Officer of many companies: including WellnessFX, StemoniX, and EverlyWell. He is the CEO of Westfield Emergency Physicians, and has published 8 books, including an Amazon bestseller. Dr. Khaleghi teaches Entrepreneurship at Westfield State University, with a focus on the practical changes to your life and skills you can develop to maximize your success as an entrepreneur.