Clay Collins is a well-known internet marketer and serial entrepreneur, as well as the co-founder of LeadPages, which helps businesses generate more leads and grow larger audiences. In addition to working a wide range of clients- from unknown small startups to large, high profile clients, such as Fox Television Studios, Clay offers keynote speeches, advising, coaching, and mentoring.
I spoke with Clay in August, 2013 to learn more about his approach to entrepreneurialism. Below you will find his helpful advice regarding sound business strategies, compelling visions, launching without investment capital, legal logistics, simplifying one’s work, and investing in game-changing employees.
A Healthy Approach to Monetization
Clay is not a proponent of the “build the perfect product, then figure out how to monetize it” approach. Instead, he advocates choosing a sound model that sparks your attention, then creating the perfect product around that model. Wal-Mart is successful because it was built to make money, not because it was built to provide the world's best shopping experience.
Should you wish to combine your personal passions with entrepreneurship, you will have a much easier time making an income by using a proven business model rather than by attempting to jerry rig a pet project into a source of revenue. Clay points out turning a pet project into a profitable business is as practical as turning fat into muscle. Fat is not converted into muscle; fat is lost and muscle is gained. Start with muscle rather than fat and you’ll save yourself a lot of trouble (plus be far more likely to be a true contender).
The Importance of a Strong Vision
Many people start companies that revolve around their personalities or certain types of lifestyles (e.g. earning passive income or working from home with super flexible hours). Clay rarely sees such companies successfully grow, attract talent, and garner lifelong customers. After all, who wants to invest anything significant in someone else’s self-indulgent dream?
The companies that make the biggest impact, attract the most valuable employees, and win over the best clients are those with visions that extend far beyond a single individual or lifestyle perk. These visions are world-changing, refreshing, and compelling- capable of appealing to individuals' higher intellectual needs.
If you want to build a truly successful company, you must therefore reach beyond your self interest and creature comforts. Create a vision that resonates with others, and let it drive you forward.
How to Launch a Business Without Investment Capital
LeadPages was successfully launched without a single dollar of investment capital. Though there are many ways to go about bootstrapped launches, Clay is the fan of a Kickstarter-like crowdfunding approach that involves:
- Building an audience
- Listening to your audience’s problems
- Turning your audience’s problems into potential business solutions that you then pitch to your audience
- Working with your audience to co-create products that resonate with them
- Offering advanced sales of that co-created product
- Using profits from advanced sales to fund the product's creation
- Launching the product
Clearly this approach requires the presence and involvement of a pre-existing and sizable audience, but there are more than a couple of ways to build audiences online (many of which are discussed in our courses). Audiences also won’t create business solutions for you; it is up to you as an entrepreneur to actively listen to potential customers’ needs and respond to them accordingly, but once you know a group’s needs and pain points, inspiring ideas can flow in pretty quickly.
This crowdfunding approach resembles a Kickstarter campaign in that it relies on the interest of potential customers for funding, but it offers the added bonus of enabling you to:
- Keep all the money
- Keep your own email list
- Own the process
It certainly worked well for Clay. Even before LeadPages was publicly available, it made around $40,000 in profits from early sales.
Making Sound Legal Decisions with Fledgling Companies
On the legal front, Clay pointed out that it is very important to establish solid subcontractor agreements, especially if you intend to raise additional capital or go public. Your contracts with employees and contractors should make it very clear that you are the owner of your company’s intellectual property (be it in the form of code or know-how) so that when you decide to go public, you do not run the risk of previous employees claiming that you owe them hundreds of thousands of dollars.
Should you indeed decide to raise investment capital at some point, make a point of incorporating as a C corp instead of an LLC or S corp- the reason being that making the switch later on is both time-consuming and costly (Clay went through this and is not keen on repeating the arduous process).
With regard to incorporating, Clay has discovered that many CPAs will help you write up articles of incorporation and file for incorporation as part of their services. Should you want extra help with incorporation and know that you will need the services of an accountant, look for CPAs who include incorporation services as a part of their overall offering (Clay highly recommends using the services of a CPA in general- it is essential to have good bookkeeping practices from the get-go).
How to Get the Most Value Out of Your Time
Clay relies on two primary tactics to get the most value out of his time:
By batching, Clay can focus on one thing in a given day (such as holding back-to-back webinars) and not suffer from constant distractions.
By delegating, Clay can focus more on the tasks with which he is the most talented. When starting a new business and doing everything himself, Clay has realized the value of his time is around $4.00 per hour, simply because he is doing a wide variety of tasks (at which he is not skilled) inefficiently. As Clay hires more and more help and is freed up to do the things he does best, the value of his time can spike as high as $20,000 per hour.
The moral of the story is that it pays to delegate and simplify your workflow as much as possible. Maximize your talents and minimize your weaknesses. As much as you may love control, you must learn to delegate.
Helpful Hiring Tips
The key to successful delegation lies in the caliber of the people to whom you delegate various tasks. Clay hires people based on ROI, not some pre-formed idea of what they should “cost.” In the past, Clay has hired people he could clearly not afford, knowing that their help will boost his business’s earning potential so significantly, they will literally pay for themselves within one or two months.
When looking for potential employees, you may therefore consider how they might boost your company’s revenue- not whether or not they are “really cheap” or “incredibly expensive.”
When it comes to finding high ROI employees, Clay explains it all comes back to your company’s vision. If your company is a giant ego juggernaut, you aren’t likely to attract employees who are willing to go above and beyond (unless they’re hopelessly in love with you). If your company is built around a certain lifestyle, you will attract employees who are there for the in-house massage therapist or flexible hours, not for the product or customers. If, however, your company is inspired by a compelling vision, you will attract singularly-talented employees who are intrinsically motivated to lean in to their work.
The Importance of Being Honest with Yourself About Entrepreneurship
On a final note, Clay pointed out how trendy it has become to take on entrepreneurship. He remarked at the number of people who approach him and ask him what sort of business idea they should be working in. Many people with whom Clay speaks have the impression that work as an entrepreneur will lead to higher income and ultimately less work.
The reality of entrepreneurship involves everything but tons of money and lots of free time. Can entrepreneurs create profitable businesses and develop more independent, flexible lives? Absolutely. But not everyone is cut out to be an entrepreneur, and not everyone has a the disposition required to be an effective business owner.
If you do not have original, compelling business ideas of your own, if you are not willing to give up a balanced life and work incredibly long hours, and if you are not willing to contend with significant financial insecurity, consider focusing instead on looking for better employers rather than branching out to start a company of your own. You are far more likely to find yourself with a good, steady income, a healthy work-life balance, and a pleasant working environment if you cultivate your career and hunt around for better employers instead of launching an independent venture.