Most employees, contractors, and freelancers adopt a give and take mindset. You do X and receive Y. If you do X and do not directly receive Y, your parents or mentors encourage you to be less giving because people will take advantage of you. While this mindset may hold true for legal contracts, in my opinion, this mentality is the recipe for failure in entrepreneurship.
Often times, it takes months, if not years, for hard work to snowball into even small amounts of traction or financial results. You are not always directly compensated for your efforts, be it talking with potential customers, writing promotion articles, or building new functionality into your product.
In his recent PandoMonthly interview, Brian Chesky talked about some of the pivots that Airbnb went through before beginning to take off and generate cash. Although his initial efforts may have seemed like failed attempts at building a company or work that he was not compensated for in the marketplace, they were directly related to his success farther down the road.
Few people will tell you that when you actually do see success, you will rarely receive 100% of the rewards of your hard work.
Kickstarter, the popular crowdfunding website that helps creative types fundraise online, is a good example of this. Since their launch, they have helped people raise over $800 million. However, since they take 5% of funds raised, they only have received $40 million in revenues from these crowdfunding projects. After taxes and expenses, the founders likely see a fraction of that amount each year as dividends.
You will only receive a fraction of the value that you create in the world.
If you grow a company to annual sales of $100 million, you personally might only be earning $1 million from dividends after taxes, retained earnings, and money paid out to other shareholders. Assuming an average annual customer value of $500, you would be making 200,000 lives better with your product each year. However, you would only directly receive the annual monetary worth of 2,000 customers (not including the value of your stake in the asset which can be sold later).
Don’t worry about being directly paid for your work. Just work harder than your competitors to add as much value as possible to your customers’ lives.
If you do this and bundle it in the form of products, services, and customer service, you will soar past your competition and give your customers a reason to talk about your awesome company.
When networking, the same rule applies.
Adopt a 100:1 give/receive ratio.
This means that for every 100 people you help in some way, 1 of those people will lead to new clients, good opportunities, money, or helpful introductions.
In internet marketing, it’s natural to expect a 1% conversion rate for actions like banner clicks or twitter recommendations. Many times, it’s even less than 1%.
For example, in order to make $1-2 from an article you write online using programs like google adsense or chikita with a 1% conversion rate and an average of 1 page view per unique visitor, the article must be helpful to at least 100 people. They must have clicked on it or read it.
If you genuinely help 100 new people that you meet in some way, be it making an introduction, providing feedback, or sharing relevant articles, only expect 1% to lead to worthwhile clients, connections, or opportunities.
This might not seem like a lot, but let’s say you have a service based business that generates an average of $5,000 per customer. Maybe you are a web developer or a marketing consultant
If you interact with a minimum of 200 new people a year (easy to do when people find your content via google, you interact with them on social media, or go to meetup.com events), you would end up interacting with 1000 new people after five years. Holding to the 1% idea, this would be 10 people that directly lead to tangible new business or $50,000 over those five years.
It might not seem like a lot, but when you engage in content marketing or create helpful free online resources, over time, the number of new people you meet each year online will grow exponentially. In addition, by organizing in-person events or speaking at meetup.com events, you can increase the likelihood of meeting new people.
You will only receive a fraction of the value that you create in the world, so try to create a lot of value for other people!
By adopting this mindset, not only will you become the kind of giving person that others want to work with, but as you begin making money and start seeing happy clients or customers, this intangible philosophy becomes a part of your brand and why you are different from your competition.