Why You Should Ignore Your Business Finances
The Inputs of Entrepreneurship
I earned bachelors and masters degrees in accounting from the number 1 accounting university in the country, and it’s likely one of the biggest mistakes of my life.
Why? Because accounting trains you to think in terms of outputs – in this case, numbers – and to mistake them as the thing that matters in business.
Entrepreneurship instead is really all about the inputs: what value are you actually creating for your customers?
Only after the product has been made, the customer found, and the final product delivered do we use the accounting numbers as a medium to talk about what happened and how we performed.
Of course the finances matter, my provocative title notwithstanding.
But they’re the map, not the territory.
The Inputs and Outputs of Lambda School
In our case at Lambda School the goal is to help our students get jobs in new careers. This is obviously valuable.
This last week our CEO & Chief Product Officer came up with an awesome idea to help our students get job interviews. I can’t tell you (yet) what the idea is, but the gist is it’s a way to line up a lot more interviews in a lot less time.
You’d probably never have an idea like this (or, frankly, start Lambda School) if you were focused directly on making money.
The founders of the greatest businesses don’t focus on “making money” (the output), they think about the inputs.
Walt Disney said this explicitly: “We don’t make movies to make money, we make money to make more movies.”
Jeff Bezos writes in his annual Amazon shareholder letter about satisfying customer expectations: “One thing I love about customers is that they are divinely discontent. Their expectations are never static – they go up. It’s human nature.”
Nowhere will you see him talk about making more money. This isn’t just a CEO avoiding an obvious taboo, he’s focused on creating value for the customer. The outputs will take care of themselves.
And Steve Jobs said much the same on how he viewed Apple’s relationship with its customers: “That’s what a lot of customers pay us to do, is to try to make the best products we can. And if we succeed, they’ll buy them. And if we don’t, they won’t.”
Today the opposite at Apple is so easy to see, when Tim Cook goes on about their "services narratives", which is literally a story told to investors about how Apple can make more money. The products – the inputs, the things that actually matters in the long run – are clearly suffering.
The Inputs of Life
Why do we have friends and family and relationships?
If we’re doing them right we know the output is awesome: meaning and purpose, love and affection, a reason to exist outside of ourselves.
But focusing on those outputs in a relationship is to think of yourself instead of the other person.
Much like in entrepreneurship how focusing on the accounting or making money shifts your frame of reference from the customer to yourself.
If instead you focus on the inputs: on serving others, on being there for your friends and family, on being a good human being – the outputs will take care of themselves.
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