'Rebel Entrepreneur' Author Jonathan Moules on Breaking the Rules

by Susan Johnston on August 24, 2012
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After profiling hundreds of business owners for the Financial Times, journalist Jonathan Moules (pictured) noticed an interesting trend: The most successful ones are often those who buck conventional wisdom about how to create a profitable company.

In his new book, The Rebel Entrepreneur: Rewriting the Business Rulebook, Moules explains that these innovators typically don’t get loans from big banks. They don’t succumb to financial pressure and lower their prices. And they don’t deploy the same old marketing strategies as everyone else.

Do you have what it takes to be a rebel entrepreneur? The Intuit Small Business Blog recently chatted with Moules about setting prices, learning to delegate, and, of course, breaking the rules.

ISBB: What are some of the biggest preconceptions about business that rebel entrepreneurs should discard?

Moules: That you need lots of funding to get your venture off the ground. Most founders approach what’s called the 3F’s: friends, family, and fools. There are other innovative ways of finding that money, even if it’s not rich Uncle Ivan lending you a few thousand. Young people use student loans as finance, you can get credit cards. It may be surprising the number of people who use credit cards to get funding. But if you think about it, it’s quick capital, and if you believe in your idea, then why not?

Rather than thinking about other sources of finance, you could bootstrap yourself by creating a business model that generates cash early on. Some of the best ideas have been created from that. When people have looked for a way to create revenue for an idea, often that method of creating revenue becomes the business itself. Richard Branson’s first idea was to create a magazine, but in order to get money in, he started selling records by mail order. That was the business that made money. Next thing you know, you had Virgin Records, which went on to sign enormous acts. That often happens in businesses.

The next misconception is that you stick to a business model and try to make it work. Often the best business ideas are ones that are just created by accident when someone was trying to create something else. Twitter is an example of that. The founders realized this Twitter thing was something people really liked. It’s about having the guts to chuck the original idea and go with the one that has momentum. Often these people are flexible enough to say, “I’m going to pursue this, but I’m not going to be driven by trying to make this one way of doing this work.”

Aside from flexibility, what traits do successful rebel entrepreneurs have in common?

I think they’re willing to listen, and to test ideas, and to be open to being proven wrong about something. It takes a sort of humility to be able to do that and to allow others to take charge, which is what you also need to do. As the business grows, once you’ve got momentum, you’ve got to be actively looking for people who are better than you at doing the different sort of functions of the business, whether that’s finance or sales or operations or marketing. Having that self-awareness of your strengths and weaknesses is key — being willing to work yourself out of a job.

These things run counter to the basics of entrepreneurs. It’s a conflict with that pioneering spirit, but you look at the most successful entrepreneurs and that is what they do. People like Steve Jobs and Jeff Bezos have been able to get to that position by enabling others around them to build the business and to step back.

What are some examples of successful rebel entrepreneurs?

There are plenty out there. There’s James Dyson in the U.K. He’s a sort of rare example outside the U.S. of someone people know. It’s other people who run the business. He plays his sort of figurehead role. He’s stepped back from running the business [and] works on the research and development side of it. Although he still sort of owns the lion’s share of the business, he’s allowed others to build that for him.

Gilt Groupe is the flash sale site business based in New York. It’s actually a French company that came up with the idea of these flash sales, but Kevin Ryan was able to take it to a [higher] level by following these rebel rules. He brought on a team of people, and he sort of stepped back and presented the company as founded by other people, which is in a sense classic rebel entrepreneur behavior. The French counterpart focused on clothes and high fashion, but [Ryan] brought the flash sale to jewelry and other products. The business has become a much bigger operation by doing that.

Your book mentions that if things get tough, you should increase prices, which seems counter-intuitive. What’s the rationale behind it?

In order to build a sustainable business, you need to have something that relies on a lot more than price. In fact, price can be a sort of counter-intuitive measure. If you lower your prices, it’s sort of worth less. If you raise your prices, paradoxically, you can say this is worth more — this is more valuable of all the things you spend money on.

There are plenty of examples of that happening. You see it in devices like the iPhone. Apple keeps a high price, and part of that is saying, “This is something that’s more technologically advanced.” It’s not that the phone costs more than other smartphones to make. The price doesn’t actually have any connection with the cost of manufacturing. Prices are, in a sense, part of the marketing of the product.

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