The Toilet Entrepreneur — What Mike Michalowicz Wants Founders to Do First

Mike Michalowicz’s The Toilet Entrepreneur is a book about starting a business. The Korean edition uses a title that translates as The Instinct to Innovate, while the original points to its author’s taste for a joke about making do with what’s left.

A Subtitle about Spending Your Last Money on Soju

The Korean cover makes an extravagant pitch about losing a business, spending the last ₩20,000 on a drink and making a fortune anyway. It certainly got my attention.

The question inside is more practical: what gets an entrepreneur’s attention once they have decided to build something?

Michalowicz writes to founders and people considering becoming founders. The examples and questions assume you will have to make choices about a real business soon.

Begin by Believing You Can Do It

The opening asks the reader to give up familiar excuses and decide whether they are willing to act on the ambition they brought to the book.

Michalowicz treats conviction as a condition for doing the work. He suggests several ways of keeping it:

• Take an interest in people who succeed and learn from them.
• Share an idea with people who can make something of it with you.
• Treat never trying as a failure worth avoiding.
• Rephrase “impossible” so it leaves you somewhere to begin.
• Work out what you value before deciding what to do.

Start While There Is Still Something to Find Out

The repeated instruction is to act. The author asks what will still be uncertain if you wait another month, and whether doing something small now would teach you more.

What Does an Innovative Founder Pay Attention To?

The business needs a decision about what to do and how much to take on. Michalowicz returns to a handful of principles about focus:

• A smaller offer can do more.
• Simplify until the essential parts are clear.
• Pay attention to a small thing you can improve in pursuit of something larger.
• Choose one thing you can do properly.

Three Places to Make a Difference

Quality, price and convenience are the three areas he proposes for improvement. A business can choose which of these matters most to the particular customer it has in mind.

Finding Your Strengths

The book invokes Sun Tzu’s advice to know yourself as well as the opponent. Here, the useful part is the injunction to look inward with some care.

Knowing a customer and a market helps you see what is wanted. Knowing your own abilities helps you decide whether you can provide it.

Michalowicz suggests asking a few questions:

1. What work do you consistently look forward to?
2. What work do you always leave until last?
3. Where do you pick up knowledge quickly?
4. Where do you struggle to make progress?
5. What kind of effort leaves you feeling it was worth doing?
6. How do you improvise when only three squares of toilet paper remain? The joke gets at a serious question about what you do when the obvious resource runs out.

Three Documents Instead of a Long Business Plan

The author sees little benefit in spending months on a plan whose assumptions will change as soon as it meets the market.

He would start with three working documents that can change as the business learns:

1. A prosperity plan that identifies the purpose and values behind the work
2. A quarterly plan
3. A daily set of measures

The 40–70 Rule

Michalowicz also describes a rule of thumb about making a decision when you have roughly 40 to 70 percent of the information you think you need. He treats the figures as a prompt to act before the opportunity has passed.

He puts the practical sequence in five steps.

Five Actions the Book Returns To

1. Decide what you want.
2. Make room for the belief that it can be done.
3. Give the goal your attention.
4. Take the clearest step toward it.
5. Check what changed and adjust the next step.

What Can You Do with the Budget You Have?

A budget matters, but the book uses deliberately extreme examples to ask whether a lack of money is always the thing keeping someone from beginning.

Kyle MacDonald and a Red Paper Clip

Kyle MacDonald offered a red paper clip online in exchange for something else. He offered the next item in turn. After fourteen trades, he had a house.

It’s an unusual example, and the book uses it for the gap between imagining a trade and posting the first offer.

A Separate Account for Profit

Michalowicz compares cash to the blood supply of a business. One proposal is to start setting aside a small share, around five percent in his example, in a Profit First Account. He suggests beginning at a level that leaves enough to run the business and increasing it gradually.

The funds could eventually be put back into a profitable part of the business.

When Might Outside Capital Make Sense?

The book also considers taking investment once the business is established enough to show what it does.

Angel investors generally invest their own money and may give advice. Venture capital typically comes from a fund seeking a return from companies with growth potential and substantial risk.

Michalowicz favours waiting until the business can show sales. The revenue thresholds mentioned in the review are examples from the book’s approach. The point of waiting is to know what you would use the money to expand.

I finished with the impression that the useful part of the provocation is its insistence on choosing a specific thing to do. The book keeps turning a large ambition into an action someone can take before the day ends.

Book Information

The Toilet Entrepreneur

Author

Mike Michalowicz

Publication

29 July 2013 (Korean edition)

ISBN13

9788996230090

View the book on YES24

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