Conversations With Millionaires:Interview With Michael Gerber

Mike Litman: Michael Gerber, welcome to The Mike Litman Show ! Michael Gerber: Hi Mike ! Mike Litman: People all over the world are fascinated by The E-myth. But there are people out there who say, “ Michael, what is the e-myth?” Can you just go right to the chase, what exactly is “the e-myth”? Michael Gerber: The e-myth is the entrepreneurial myth. And essentially what it says, is that most people who go into business aren’t entrepreneurs as everybody says they are, but what I’ve come to call ‘technicians’ suffering from a entrepreneurial seizure. So Mike, everybody goes to work in their business, creating a job for themselves. And it suddenly becomes the worst job in the world because they’re working for a lunatic. Mike Litman: Who is that lunatic? Michael Gerber: The lunatic is us. Mike, everybody who owns a business- doing it, doing it, doing it- busy, busy, busy, knocking their brains out 12, 15, 18 hours a day. They go home. They can’t sleep. They get up in the middle of the night. They got to go back. They got to do they work. They got to make it , sell it , do it , ship it. They can’t think of anything else and the sucker doesn’t work. They do! So the problem with small businesses is, the businesses don’t work, the people who own them do. And they’re doing the wrong work. Mike Litman: Okay, let’s take a step backward before we go forward. What’s fascinating about things that you talk about is the true purpose of business. Why should an individual be in business? Can you go a little step further and explain the concept of how somebody can properly use their business to enhance their lives? Michael Gerber: The real purpose of creating a business is to sell it. So in other words, if somebody wants to start a business, the very first thing they’ve got to ask themselves is, “how do I get rid of it? Most people who own and operate their own business, Mike, haven’t the faintest idea how they are eventually going to get rid of the business. They haven’t started it as an entrepreneur does. An entrepreneur is already thinking about when they are going to sell their business-they’re going to go public-they’re going to find a buyer-they’re going to find the capital they need to expand it, to replicate it, to grow it, to take it worldwide or whatever. Most people don’t do that. Mike Litman: Wow! That’s really interesting. And we look at rates of business today.95% of businesses go out of business. Eight out of ten businesses fail. And the franchise concept, which we will get to soon, succeeds. Let’s take a step back here. So technicians start businesses. But let me ask this, what a technician is. Michael Gerber: Well, a technician is someone who has done something. They make something. They fix cars. They sell something. They make something. In other words they are people who do it, do it everyday and they are doing it for somebody else. So they’re working for the boss and someday some of them wake up and say, “what am I doing this for? Anybody can run a business. Any dummy can do this. I’m working for one. Why don’t I do this for me?” So the auto repair guy, the mechanic, decides to open an auto repair business. And the graphic designer decides to open up a graphic design business. And the attorney decides to open up a legal practice. Each of them believing in what I call the ‘fatal assumption’ behind every small business out there and that is “if I understand how to do the work, I understand how to build a business that does that work.” And it’s absolutely 180 degrees from the truth. Mike Litman: Wow.So their entry into business is the wrong way.So let’s ask this, what’s the first step an entrepreneur can take? How does an entrepreneur think? What are some questions they can ask themselves to start a business the correct way? Michael Gerber: Well, the very first question is, “What do I want?? And not about the business.It’s not about the business.Business is a boring thing. You’ve got to understand, you know, I call it “C.O.D.” It’s your crap-out-date. You are going to die. Every single one, I am 61, so understand that mortality is the issue. I am gonna live and I am gonna die. And every single second we stay here doing this we’re getting closer to C.O.D. So the real question isn’t, “What business do I want to be in?’ The real, first, very most important question in the E-myth is, “What’s my primary aim? What’s my vision for the life that I want to live, in order to get what I really wish to get while I am here?” Mike Litman: The question, Michael, that you just said, ‘ what do I want my business to accomplish for my life?’ is a very unique question. Would it be correct to say that why small businesses fail all across America is because their entry into business is totally corrupt? Michael Gerber: Yes. Their entry into business is totally corrupt. They started for the wrong reason. They started “to get rid of the boss.” And then they become their own boss and as I said earlier, they’re working for a lunatic.” They are busy, busy, busy, busy knocking their brains out doing every last important thing in that company, that in fact, is exactly the opposite of what they need to do. Mike Litman: Okay, let’s do this. We’ve painted a picture. The E-myth. The picture of the entrepreneurial myth in America. But somebody is listening right now and saying, “Michael give me an example. Make it clearer to me.” You talk about an instant that happened in 1952 that has changed the way I think, changed the way millions and millions of business owners think across the country. In 1952, the man with the milk shake. Can you take it from there? Michael Gerber: Sure. We’re talking about Ray Kroc. We’re talking about McDonalds. Ray Kroc was in fact the epitome of entrepreneurial thinking. But, of course, so is Fred Smith of Federal Express and Anita Rodick at the Body Shop. How do those people think that is different from most people who start their own business? Well, Ray Kroc saw the business called Mcdonald as his product. Mike Litman: Hold on. The business as your product? Michael Gerber: The Business is your product. The business is the entrepreneur’s product. Not the hamburgers. Not the French fries. Not the milkshakes. Not the software .The company called Microsoft is my product. The company called Federal Express is my product. So, Ray Kroc went to work on McDonalds, not in it.To create an absolutely impeccable turnkey system that would replicate the results he wanted no matter how many stores he opened. No matter how many trucks Federal Express has got out there’re in the street.No matter where they are. No matter where the are those little suckers work in an absolutely predictable way so he can make a promise, “ when you absolutely, positively go to get it there overnight, call us. And when you don’t, call the post office.” Copyright © Conversations with Millionaires By Mike Litman and Jason Oman

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Conversations With Millionaires:Interview With Michael Gerber

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