What’s Your 737 Plan?

30 comments
What’s Your 737 Plan? post image

This is a Boeing 737. It has many exciting features. For example:

  • It flys over 500 miles per hour.
  • Has an impressive on-board navigation system.
  • Has extra seating for all of your friends.

Depending on your skills as a negotiator, you can roll one off the lot for around 50 million US dollars.

The other night I was hanging around with fellow entrepreneurs Joel and Danny and posed what I call the “737 challenge” to them (I’ve got a bunch of these things, remember “Bat vs. Knife?“). They said “you should blog that!” and so here it is:

Suppose I said to you, “you have to buy a brand new 737 within 7 years. If you fail, [someone close to you in your family will die]. Given the constraints– how would you generate the money?”

This thought experiment is interesting to me because over the past decade I’ve spent most of my career thinking about building products for customers, and not so much about building companies for buyers. Although we’ve managed to sell one of the mini-businesses we’ve created, we haven’t put much thought into positioning our company for strategic buyers.

Joel and Danny gave some great answers (I wouldn’t dare share!), but if asked this week, I might say something like this:

  • I’d incorporate businesses for people and offer a robust suite of add-on services once they are set up.
  • Incorporating businesses might seem like a commodity… but then again I thought web hosting was and then WP Engine came along and offered a premium service to an emerging market of WP users.
  • Why not offer full service options to the vast growing market of small business owners, entrepreneurs, and start-ups who are globalizing at unprecedented rates?
  • Good margins!
  • Charge annually for high margin back end services!
  • It’s tough for them to switch providers.
  • Provide merchant banking services or other high-margin services that are relatively easy to transfer to big buyers.
  • Focus on marketplaces that are already poppin’– HK, Sing, USA, BVI and similar to start. Keep it simple.
  • There’s so much room to create a compelling marketing front end for this business. Think “SovereignMan” style, but focused on people who are building businesses, not protecting assets.
  • ORDER ME ANOTHER BEER!

You get the idea. Try it next time you are out with entrepreneurs! Let me know what you come up with.

Cheers,

 

Dan

PS, my friend read this post and said that entrepreneurs ought to be good at answering these types of questions. I’m not sure if he’s right, but if you’d like us to evaluate your answer drop the broad strokes in the comments!

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Published on 11.12.13
  • Srdjan Popovic

    OK this is what I’d do…I’d start approaching small to medium sized businesses, sit down with the owners, and start asking lots of questions. I’d want to know what their biggest challenges are in their business, what tasks they find painful. Then I would create (either by myself or outsource to a team) a piece of software that will help them solve that problem (alleviate that pain). I could even get the owner to finance the whole thing with the right deal. I’d lease out the software and charge a premium cost for which they’d gladly pay because I’m eliminating a pain point for them. Then I’d just rinse and repeat over the course of 7 years.

  • MarkManson

    Meth lab.

  • Taylor Plumer

    ^high margin back end service

  • http://www.webagencypodcast.com/ Matthew Newton

    Dane Maxwell style

  • Kai_Davis

    Not an Internet Business. Or a software business. I’d open a chain of convenience stores. Three reasons:

    (1) Already established market / game plan

    (2) Highly systematized. Easy to break down standard operating procedures and delegate, delegate, delegate.

    (3) Repeatable and scalable.

    Grow the business. Leverage the high revenue / portion of equity in the business for the capital to purchase a 737.

    Or, heck, I’d start a white-label airplane leasing service for corporate businesses. Need a G6 once a month for three days? We’ll provide it from our fleet of planes.

    Purchasing a 737 in that business seems to be a natural step.

  • Srdjan Popovic

    Precisely ;)

  • http://www.webagencypodcast.com/ Matthew Newton

    have you started doing this?

  • http://www.webagencypodcast.com/ Matthew Newton

    Haha. Brilliant. Start a business which involves buying airplanes…

  • Ron Davies

    Not really a revelation. Taking companies public, that’s where the money is. Incorporation is an a la carte thing that anyone can do themselves. Come one people, think bigger!

  • Ron Davies

    Small businesses generally don’t have software problems. I have been coaching in that space for over a decade. Their problems seldom tie to technology at all, though it can help them. Most struggles relate to not knowing how to run/grow business, how to strategize, how to manage/train staff, how to JV effectively. They really have no idea lol

  • Sigurdur Gudbrandsson

    Which family member?
    *evilgrin*

  • Bruce

    Excellent article.Have you checked out Jake’s “Sovereign Man” article at http://www.cedonulli.com.

  • http://www.tropicalmba.com/ Dan

    funny you mention this, that’s another one of my favorite challenges… “if you were a criminal….” :D

  • http://www.tropicalmba.com/ Dan

    good point! :)

  • http://www.tropicalmba.com/ Dan

    haha yeah i’m no good at this stuff ! given my limited time frame i’m probably better trying to take something to investment bankers or private equity firms than the open marketplace

  • http://www.tropicalmba.com/ Dan

    mmmhmmm.

  • http://www.tropicalmba.com/ Dan

    my concern with already established industries is slim margin and amount of capital required. unless you see a shift i’m not sure you’ll be able to sustain beating stiff competition.

    also: gangsters!!!!

  • http://www.tropicalmba.com/ Dan

    good process, when you get a good idea let us know! my sense is to meet you goal you’d want to find one basic big idea / direction rather than a suite of apps. one thing about people with these killer big ideas, everything else melts away and it becomes the only business/project. that’s what i think most people in our community are stepping their way up to (as Rob Walling says) a project/idea worth all your energy.

  • http://www.tropicalmba.com/ Dan

    Interesting here I think something very much like the foundation would qualify as an idea that has a shot here.

    Competing with “University of Phoenix” / classic university and with a better paid-education model is a huge opportunity.

  • Srdjan Popovic

    I’ve started exploring it, but nothing in terms of execution yet. I think the principle Dane highlights of finding a business’s/client’s most challenging problems and helping them resolve it (with our without software solutions) can be a powerful business/freelancing model.

  • Srdjan Popovic

    You don’t think it’s possible to create software solutions for those specific struggles?

  • Srdjan Popovic

    I agree that focusing on one solution (at a time) is the best approach.

  • http://gregmberry.com Greg Berry

    buy $737 worth of bitcoin, wait 7 years… buy a 737.

  • Guest

    I’m going to listen to this soon. I imagine that it will be interesting as usual.

  • Francisco

    24/7 convenience stores are cash-cows, definitely a good business. Just look at 7-11 in Thailand, they are milking it like if there was no tomorrow.

  • Ron Davies

    I do, to a limited degree. Software is not an end-all solution, it is a tool. Solutions tend to be more strategic. Software development is a supporting tactic. Do you have an example you could share where software was a solution? That would help me with context.

  • http://www.tropicalmba.com/ Dan

    :D nice!

  • http://www.chiaracokieng.com/ Chiara Cokieng

    Dan, this is a very scary question. Suppose you are a new entrepreneur who’s just gotten off the shiny object wagon and finally focusing on ONE thing… Then you answer this question and decide to totally change course.

    Would that be good or bad?

  • http://www.tropicalmba.com/ Dan

    keep it for the barroom!! :) keep crackin on your cash flows, this is just for fun.

  • http://www.chiaracokieng.com/ Chiara Cokieng

    Something for someday/maybe? Heh. Thanks Dan.

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