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Inc. Magazine's How I Did It Ebook PDF
Inc. Magazine's How I Did It Ebook PDF
10 Entrepreneurs, 10 Stories:
Success, Failure, and Lessons Learned
VOLUME 1
10 Entrepreneurs, 10 Stories:
Success, Failure, and Lessons Learned
EDITORS LETTER
First, a little history. How I Did It was conceived in 2003 by John Koten, a
former Inc. editor in chief who saw the need for a short, as-told-to article about
an entrepreneur who had made big things happen. In choosing subjects for
this feature, industry didnt matter, location didnt matter, gender or race didnt
matter. What mattered was the story of an entrepreneurs journey, often from
humble beginnings and almost always to national prominence.
Overnight, How I Did It became one of Inc.s most beloved and durable
features, ranking high on subscriber surveys and on Inc.com. Now in its ninth
year, it continues to draw readers to its simple format and personal tales
of entrepreneurship. For those readers in the throes of starting or running a
company, it offers dramatic proof that though every entrepreneur has a
distinctive style and way of seeing the world, success comes to those whose
focus is on quality and execution.
How I Did It has been much imitated by other publications, which we take as
a compliment. But it began with Inc., and with Inc. it stays.
We hope you enjoy this introduction to the magazine. Our aim, always, is to
be the premier source for inspiration, information, and strategic advice about
starting and running an entrepreneurial venture.
Welcome to the Inc. community of readers. We wish you great success.
Jane Berentson
Editor
Contents
6 Jerry Murrell 28 Reid hoffman
FIVE GUYS BURGERS AND FRIES LINKEDIN
The Secret Recipe: A Global Community
Keep It Simple for the Work World
Copyright 2004, 2005, 2007, 2008, 2009, 2010, 2012 by Mansueto Ventures LLC. All rights
reserved. Printed in the U.S.A. Articles originally appeared in previous issues of Inc.
No part of this reprint may be reproduced by any mechanical, photographic or electronic
process, or in the form of a recording, nor may it be stored in a retrieval system, transmitted
or otherwise copied for public or private use without prior written permission of the
publisher. Inc. is a registered trademark of Mansueto Ventures LLC.
The Real Deal
His restaurants are Spartan.
And Jerry Murrell never
advertises. Instead, he prefers
to spend on worker bonuses
and fresh ingredients.
There was this little hamburger place remarried. I moved to northern Virginia
where I grew up in northern Michigan. and was selling stocks and bonds. My two
Almost everyone in our town, except the eldest sons, Matt and Jim, said they did
uppity uppities, ate the burgers. Even not want to go to college. I supported
though the owner had a cat, which hed them 100 percent.
pet while cooking. People called them fur
burgers, but they still ate them because Instead, we used their college tuition
they were good. to open a burger joint. Ocean City had 50
places selling boardwalk fries, but only
I studied economics at Michigan State. one place always has a 150-foot line
I had no money and needed a place to Thrashers. They serve nothing but fries,
stay, so I ran a fraternity houses kitchen. I but they cook them right. That impressed
got the cook a raise and let her do the me. I thought a good hamburger-and-fry
ordering. We started making money, place could make it, so we started with a
because she knew what she was doing. takeout shop in Arlington, Virginia.
My parents died my last year in college. Our lawyer said, You need a name. I
I married, had three kids, divorced, then had four sonsMatt, Jim, Chad are from
courtesy company
he converted and built into the Hot
Shoppes chain. He said, Anyone can
make money in the food business as
long as you have a good product, rea-
sonable price, and a clean place. That Burger University Jim Murrell, left, put
his tuition money into the business.
made sense to me.
We figure our best salesman is our cus- potatoes, because they grow in the day-
tomer. Treat that person right, hell walk time when it is warm, but then they stop
out the door and sell for you. From the at night when it cools down. It would be a
beginning, I wanted people to know that lot easier and cheaper if we got a Califor-
we put all our money into the food. nia or Florida potato.
Thats why the dcor is so simplered
and white tiles. We dont spend our Most fast-food restaurants serve dehy-
money on dcor. Or on guys in chicken drated frozen friesthats because if
suits. But well go overboard on food. theres water in the potato, it splashes
when it hits the oil. We actually soak our
Most of our potatoes come from fries in water. When we prefry them, the
Idahoabout 8 percent of the Idaho water boils, forcing steam out of the fry,
baking potato crop. We try to get our and a seal is formed so that when they get
potatoes grown north of the 42nd paral- fried a second time, they dont absorb any
lel, which is a pain in the neck. Potatoes oiland theyre not greasy.
are like oak treesthe slower they grow,
the more solid they are. We like northern
The magic to our hamburgers is quality food to the Pentagon. Matt and I got a
control. We toast our buns on a grilla 22-foot-long banner that said ABSO-
bun toaster is faster, cheaper, and toasts LUTELY NO DELIVERY and hung it in
more evenly, but it doesnt give you that front of our store. And then our business
caramelized taste. Our beef is 80 percent from the Pentagon picked up.
lean, never frozen, and our plants are so
clean, you could eat off the floor. The burg- When we first started, people asked for
ers are made to orderyou can choose coffee. We thought, Why not? This was
from 17 toppings. Thats why we cant do our first lesson in humility. We served
drive-throughsit takes too long. We had a coffee, but the problem was that the
sign: If youre in a hurry, there are a lot of young kids working for us dont know
really good hamburger places within a anything about coffee. It was terrible! So
short distance from here. People thought I we stopped serving coffee. We tried a
was nuts. But the customers appreciated it. chicken sandwich once, but that did not
work, either. We do have hot dogs on our
We have never solicited reviews. Thats menu, and that works. But other than
a policy. Yet we have hundreds of them. If that, all you are going to get from Five
we put one frozen thing in our restaurant, Guys is hamburgers and fries.
wed be done. Thats why we wont do
milk shakes. For years, people have been Our food prices fluctuate. We do not
asking for them! But wed have to do real base our price on anything but margins.
ice cream and real milk. We raise our prices to reflect whatever
our food costs are. So if the mayonnaise
When we first opened, the Pentagon guy triples his price, we pay triple for the
called and said, We want 15 hamburgers; mayonnaise! And then well increase the
what time can you deliver? I said, What price of our product. About five years
time can you pick them up? We dont ago, hurricanes killed the tomato crop in
deliver. There was an admiral running Florida, and prices went from $17 to $50
the place. So he called me up personally a case. So a few of my franchisees called
and said, Mr. Murrell, everyone delivers and said, Were not using tomatoes. The
Burts Bees was a result of having realized my informal vow of poverty was
my kids. Id been an artist, part of a gen- limiting my childrens choices. I had
eration that was very critical of capital- traveled; my parents had given us a great
ism. When I was 25, my husband and I educationmy sisters are both M.B.A.s.
bought 30 acres of land and built a cabin To give my kids opportunities I had to
in the Maine woods. I washed diapers in start a business.
water heated on the wood stove. I lived
that way because I didnt want to com- At 36, I met Burt. He was selling honey
promise; I didnt want to be part of the on the side of the road. I stopped to buy
problem. It was difficultthere was an some on my way to my waitress job. We
amazing amount of hauling thingsyet became romantically involved, and I
I loved it, because it was a chosen chal- started helping him with the bees.
lenge. But after my marriage broke up, I
made labels and started making candles it there. I really believe that success is just
out of the beeswax. Then I took them to getting up one more time than you fall. It
the little craft fairs in the little towns. Id doesnt come from one brilliant idea, but
make $200 a day. It gave me such a sense from a bunch of small decisions that
of accomplishment. Nobody told me accumulate over the years. And you
what to do, when to be there, and how shouldnt underestimate the amount of
long I had to stay. That wonderful sense work thats involved, the amount of fear
of independence was just intoxicating. thats involved.
And I thought, This is for me.
Im not sentimental about prod-
At the fairs, I focused closely on uctsthey perform or they dont. We
what sold the most and tried to figure tried lots of different things. One was
out why. I didnt know it then, but it was beeswax lip balm. It was clear, very early,
like having one focus group after that people bought lip balm 10 times
another. I learned, for instance, that faster than they bought beeswax furni-
when people pick up a candle, they turn ture polish. Next was a moisturizing
it over. For some reason they want to see cream. It sold better than the polish too.
the bottom, so I made sure the candles
were nicely finished with a sharp knife to By 1993, we reached $3 million in
smooth the mold. sales. Thats when I realized I had to
leave Maine. The disappointing thing was
I was born and raised in Taiwan. port, answering customers calls. I worked
I came to California with my parents there until 1990. After a while, I thought
when I was 14. It was a difficult adjust- I could build a better computer monitor
ment because of language problems, cul- than the IBM standard. So I started a
tural problems. I came to the U.S. without company called MAG Innovision, just
any knowledge of English. I originally like that. I was 26fearless, young,
wanted to be an architect, but being an and foolish. My boss gave me $150,000.
architect doesnt pay that much, so I got I borrowed some money from my par-
into electrical engineering. I went to ents. I had some money myself, and I
USC, graduated from the engineering found another shareholder from Asia
school in 1986, and answered a newspa- who gave me $150,000. I founded the
per ad from a Chinese company that sold company on $350,000.
computer monitors. I was in tech sup-
We made $45,000, which, when youre We tried to sell it to Pogo, the online
19 and from Indiana, feels like a million gaming site. Yahoo didnt want it, either.
bucks. Meanwhile, some friends of the We wound up making a flat-rate deal with
family were next-door neighbors with Microsoft. It became phenomenally suc-
the founders of Sierra, a gaming com- cessful for MSN, with 60,000 users a day.
pany in Seattle. Someone at Sierra called But we were making only $1,500 a month.
us for an interview, and next thing we
knew, Brian and I both left Indiana to Back then, in 2000, fans started asking
work on games for Sierra. After we sold for a downloadable version, because
ARC to Sierra for $100,000, we left the everyone was still using dial-up modems
company and used the money to start and didnt want to tie up their phone
our own business with Jason. lines. So we made one, with better graph-
ics and soundand charged for it. I had
It was not well thought out; more like, to convince Yahoo, MSN, and so on that
Lets live off ramen noodles, play games, people would play the free version on
and see what happens. We called our their sites and then download a better
company Sexy Action Cool because we version for $20. And then wed split the
thought it was funny; plus, we thought sale 50-50 with the host site. It was a new
we were going to develop games, not sell business model.
directly to the public. Jason and I were
working on an animated PG-13 strip- We launched in 2001 and made $35,000
poker game called Foxy Poker that had the first month. The next month, we made
no nudity but was a really good game. We $40,000. We were like, Holy crap! Were
approached Strip-Poker.com, a porn site, finally making money, but it wont last. So
and said, Why dont you give us a bunch Brian and I hang out in Argentina and
of money and sell our game? They drink wine for four months. When Yahoo
laughed and said no. signed on, we moved back.
courtesy company
We decided from the start to make
our games incredibly fun and easy so that
they appeal to everyone. We currently
have 35. We never think we have the
The Power of Three PopCap co-founders,
magic formula or assume a hit. And yet from left, John Vechey, Jason Kapalka,
every game weve done has made money. and Brian Fiete in 2009. They essentially
It took us three years to perfect Plants Vs. created the market for casual gaming.
Zombies. We dont track the resources
that go into each game. If its a great
game, its worth a lot of money. If its a B+ PlayStation, Wii, DS, PalmPilot, iPhone,
game, its essentially worth zero. iPad, in-flight entertainment.
In 2004, we had 15 employees and Jason and I interact a lot, and Jason
turned down a $60 million offer to buy and Brian interact a lot. Brians working
our company. We knew we had to start on a game with Jason, and Jason is also
taking the business side more seriously. involved with the creative direction of the
So we hired David Roberts, our CEO. He company. Theres a power to three
had worked for Apple and Adobe, and theres a constant rejiggering and shifting
he understood we wanted him to grow of opinions.
the business but leave the creative
side alone. Facebook didnt even exist when we
started the company. The iPhone didnt
When Dave started, we were focused exist. Weve adapted and changed and
on creating new games instead of sup- rolled with everything thats come our
porting revenue streams from each game. way. Weve constantly integrated our
Dave changed that. More than 30 percent approach to games. Were never perfect.
of our annual revenue comes from Were always pretty good, but were
Bejeweled, because it can be played on all always trying to be better.
these different platforms: PC/Mac, Xbox,
By John Fried
Photograph by Jeffery Salter
This article originally appeared in the March 2005 issue.
I was inducted into the real estate summer of my senior year of high
business as a child. My mother was a school, I worked with her appraising
secretary, but she went to night school to homes, learning the business. I also
get her brokerage license and worked as worked on Capitol Hill as a page and as
a sales agent. Later, she opened her own an intern for two congressmen, Rep.
real estate brokerage firm. During the John Conyers of Michigan and Rep. Ron
ence designing, need experience in prod- produce something really big. You want
uct management, need experience to be one to three years early. You want to
shipping product, need experience in start before others think its an easy idea.
building a team. I wanted to make sure I Its much harder to be successful when 10
learned everything I needed. similar things are all being financed.
My first start-up was a networking site At first, I thought all you had to do was
called Socialnet. It was based on the build a high-quality product. Who has
theory that you have this new medium in the best matching logarithm to enable
which everyone is a publisher. So what the right kind of people to find the right
are the ways in which people can live kind of other people? Thats useful stuff,
quality lives? Well, people have particular but the valuable thing is getting it in
kinds of relationships. Im looking to be front of millions of people. Our strategy
dating somebody, Im looking for a at Socialnet had been to partner with
roommate, tennis partners. The idea was magazines and newspapers, and that
that you can actually be put electroni- didnt work at all. I had a difference of
cally nearby to the people youd be inter- opinion with the board, and when you
ested in, say, playing golf with. Maybe cant resolve your differences, its gener-
theyre in the next building over, but ally better if you leave.
youd never know it.
In November of 99, I told Peter Thiel,
I realized the only way I was going to who was the co-founder and CEO of
do this was just start. So in July 1997, I quit PayPal, that I was leaving Socialnet and
my job at Fujitsu, started seeking financ- wanted to do another start-up. I had been
ing, and by November it was, OK, lets find on the board of PayPal since it was started.
the people to start the company with me. Peter said dont do another start-up, come
join us. So I resigned from Socialnet and
The trick to doing well with these started at PayPal the next day. I was in charge
things is to be in a place where people of external relations: corporate develop-
are saying, Hey, thats a crazy idea. If ment, banking, international. This is one of
youre right, theres the opportunity to the things I love about entrepreneurship.
Ive been working since I was 10. My myself. I didnt want men to think that
parents got divorced when I was 9, and they had anything on me.
my mother raised me, my brother, and
my sister on a teachers salary. She was I spent my first two years at Oswego
tough. I probably would have been very State partying. My mom read about a
lazy if she werent always on my ass. new program in cosmetics marketing at
the Fashion Institute of Technology in
My first real job was at McDonalds. New York City, but I needed experience
There was a girl there who taught me to even apply. My first interview was at
how to apply double shades of eye the Christian Dior counter at Gimbels,
shadow, which I still do today. I always on 86th Street, but I wasnt their type.
loved makeup, even though my mother Bloomingdales wouldnt hire me, either,
didnt approve. She was into the wom- so I waited outside the buying-office door
ens-lib movement. She never remarried, every day until they gave me a commis-
loved her independence, and always told sion job selling hair sticks. I made 21 per-
me to have my own career. Whenever I cent of all sales and ate a lot of popcorn
went out with a guy, Id always pay for and ramen noodles.
Curious Man
A book about an
18th-century gristmill
inspired Bob Moore to
launch his second career.
I grew up in Los Angeles in the 1930s, In those days, you didnt just take care
when it was a wonderful place to be a of cars; you took care of people. I would
child. I got out of the Army in 1950 and wipe windows, check the tires and under-
went to work for U.S. Electrical Motors neath the hood. I cleared 4 and a half
theyre still in business. I had a bright cents a gallon, 5 cents for high test. My
future with them; plus, I was married with bookkeeper would laugh at me. But I
three little boys. But Id always dreamed wore a freshly washed uniform every day,
about going into business for myself. and the sun was always shining.
To put a few extras on my familys Then the smog started to get bad.
table, Id been working weekends at a Charlee, my wife, and I felt that getting
Shell station. A sign went up on one out of L.A. would be good for the boys
corner saying a new Mobil station would health. I drove around the state looking at
be opening. I called, and pretty soon we gas stations for sale and ended up buying
had a deal. I sold our house and put the one in Mammoth Lakes, California, in
$4,500 down on the gas station. I quit my September 1959.
job and went into business.
foods trade show in Anaheim. Our booth of our employees have been with us a
got flooded with visitors. Bobs Red Mill long time, some as long as 30 years. One
was the only company that had gone for of our electricians put four kids through
the production of deep-down, funda- college while working for Bobs Red Mill.
mental whole grains. I never plan on retiring, but the day will
come when Im not around anymore. Ive
When youre in business, there are done a lot of thinking about that day.
two doors you can walk through. You can
walk through the door where you treat I just cant envision the company in any
the customer like your guest, operating better hands than those of the workers
by the rule that the customer is always and management we have now. Thats
right. Or you can be cutthroat. The first where the ESOP idea comes from. In an
door is the door of kindness. Thats the ESOP, Im selling them Bobs Red Mill,
one I decided to walk through. but at the same time, as individuals, they
dont have to pay for it. The idea might
I field a lot of offers from corporations not work for a company with a different
wanting to buy us, but Ive never consid- philosophy toward its customers and the
ered that option. If you visit our mill, people who have built the business, but I
youll notice a strong family feeling. A lot think it will work for us.
I grew up in New York City during the My mother was the greatest mother
Depression. My earliest recollections in the world. She thought I was the great-
were of my parents talking about what est thing on two feet. Id come home with
they would do if they didnt have the a little composition I had written at
rent money. Luckily, we were never school and shed look at it and say, Its
evicted. But my father was unemployed wonderful! Youre another Shakespeare!
most of the time. He had been a dress I always assumed I could do anything. It
cutter, and during the Depression, there really is amazing how much that has to
wasnt much need for dress cutters. So I do with your attitude.
started working when I was still in high
school. I was an office boy, I was an My cousins husband, Martin Good-
usher, I wrote obituaries for celebrities man, had a company called Timely Publi-
while they were still alive. Lots of jobs. cations, and they were looking for an
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