What Is Mental Capital?

I value education.  I grew up determined to graduate from college, and I did.  Twice.  First, I earned a bachelor’s degree in electronic engineering (which is not a major I would recommend if you want to sail through college), and second, I earned an MBA.

I give you this background because I don’t want you to misunderstand when I say that getting an MBA or any other degree is not mental capital.  Information alone is not  sufficient.  I know enough “educated idiots” who are very book smart but are not able to put what they’ve learned to good use.  Whether your sources of information are traditional or nontraditional, your mental capital is your ability to apply that information.  

I learned things in my MBA program that have been of direct benefit—lessons having to do with finances, human resources, motivational philosophies, etc.  But the greatest benefits came from experiencing the discipline of learning—exploring, digging, experimenting, and applying.  I made it a point to continue to explore and discover after I received my diploma, and I’ve learned some lessons since that have stayed with me far longer than the content I was tested on in the classroom. 

As you assess your mental capital, by all means consider what you’ve learned in school, but also consider what you’re good at.  What special skills do you have that you could apply to your current situation? What are you curious about?  Do you have unique insight or understanding about a particular field? 

For me, I think I have some natural ability as a salesman, which helped me convince my brothers to mow lawns for me.  I’m good at understanding technology, something I was aware of when I set out to repair that old lawnmower in my parents’ garage.  Both are forms of mental capital I’ve continued to use to this day.  Somewhere in my career, I became adept at search-engine optimization, or making sure web sites show up at the top of the list you see when you push “search.”  That knowledge didn’t exist when I graduated from college, but I picked it up along the road and it’s paid big dividends. 

I Just Love Happy Endings!

I have an acquaintance who had a solid career in print journalism at the time personal computers first made their appearance back in the early 1980s.  Like everyone around him, he had to learn a new set of skills.  Some of his coworkers balked at the changes this new technology was bringing to the newsroom and did as little as humanly possible to adapt. But Bob got excited, learned all he could, dug deeper than most, then kept digging, and today oversees a vast and complex website for an international organization.

I know another man who didn’t quite finish his degree in graphic design, in part because he needed to get a job to support a growing family. He had worked for a small television station as a student and was able to get on fulltime when he dropped out of college.  Rather than feeling he was at a dead end, though, he taught himself everything he could about a technology that was shifting from analog to digital and from standard definition to high definition.  Soon he became indispensable to the organization, and a few years later he caught the eye of a major television studio that needed someone who could keep pace with systems that change almost daily.  It was not a degree that got him this higher paying job, it was his mental capital.

Sometimes our schools present learning as a straight line:  You learn this, you pass the test on that, you get your diploma, you get your first job, and you move up the ranks.  But identifying and applying our mental capital will inevitably lead us to zigs and zags throughout our lives, if we are willing to open our eyes to our potential and to the possibilities that lie before us.

Passion is a vital form of mental capital.  It not only drives us, but it gets people aligned with us as we pursue our goals.  In my professional pursuits, I am passionate about technology and about building businesses.  Now, technology can be a pretty dry subject, but I can almost guarantee you I’ll bring so much passion to any discussion we have that you’ll find yourself fascinated before long.  Recently, I was given one hour to meet with an internationally known figure to discuss a technology I thought might benefit him.  The one hour he agreed to turned into four hours, and at the end of our discussion he introduced me to his colleagues by proclaiming, “This is the coolest geek I’ve ever met!” 

Your passions will be different from mine.  But find them.  Make sure your own fire is burning brightly, and others will see it and support you in your pursuits.

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I am so excited by the fact that McGraw-Hill has allowed me to blog the entire Zig Zag Principle book, that I fear I’ve gotten a bit exuberant. Some reader feedback indicates that daily email updates from my blog have become too burdensome. The last thing I want to do is to create a burden. Therefore, a new plan is in order.

I will still post to the Zig Zag Principle blog daily, however I’ll scale back and only publish a weekly e-newsletter.

My team and I thank you for your patience with us. We appreciate your understanding as we fine tune the best way to share information and add value. I invite you to send me your thoughts, findings, and insights. My personal email address is rich@zigzagprinciple.com.  I look forward to receiving feedback from you.

This week I will be in Japan taking (my soon-to-be-12-year-old son) Timmy Tyrus on his grand adventure “becoming a man”–one of the traditions in our family. I’m excited to blog and offering some insights from Japan.

Thank you so much for your support and interest in Zig Zag Principle and I look forward to our future dialog.

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Do you have business traditions in your organization? Most people have special family traditions. I think it’s also important to set business traditions for your company and for your family. I’m currently on a business trip with my twelve-year-old son. Trips like this give me the opportunity to help teach my children how to conduct business in other cultures, and as Timmy Tyrus puts it, this tradition helps him to “become a man.” Watch this quick video to get a kid’s prospective on this fun tradition.

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Now that you know who you work for, you need to take an honest look at two things:  what your resources are right now, and where they can take you.

I currently drive an Audi A6.  I love this car, and I love going on road trips in it.  No matter the distance or destination, I know I’m going to get there, and I know I’ll travel in comfort.  I can sing along with my favorite music on the satellite radio, and my biggest worry is that my speed will creep up to the point where I’ll get a ticket.  Driving this car is an absolute pleasure!

We Lived on Potatoes and Love!

My Audi A6 is dramatically different from what I drove in college.  When my wife and I were first married, we drove a1972 Dodge Colt that had been wrecked three times.  I know people joke about cars that are held together with bailing wire and duct tape, but ours actually was.  We tried to improve its appearance by covering up some of the larger dents with a rough coat of Bondo and then painting the entire car with blue spray paint.  

That plan didn’t work very well.  In fact, I was so embarrassed by the car that when I was working on my MBA, I would park half a mile away so that no one would see what I drove. The car had a broken oil pan, and the head was cracked.  It would get me to school and back, but I never dared take it out on the freeway, let alone on a road trip.

Back then, that was my only resource for getting to my destination.  I can go a lot farther now in my Audi A6 than I could in that old Dodge Colt.  But the Colt was better than my eight-year-old son’s current resources.  He recently founded a business selling homemade crafts around the neighborhood. When he makes his deliveries, his mode of transportation is a kick scooter.  So, while my Dodge Colt was constrained by the city limits, his radius is a few blocks from our home.  But he is making do with the resources at his disposal.  His vehicle is different from my Audi A6 and even my Dodge Colt.  But it can still take him places.

Of course, the business he is building with his resources is dramatically different than the type of businesses I am able to build.  But then, the businesses I build are dramatically different than the ones Donald Trump builds.  Which is why he has a jet!

Obviously, we can go farther if we have a jet than if we just have a kick scooter.  But any one of these vehicles will get us somewhere.  We may have farther to go and more zigs and zags to create if we are starting with the kick scooter, but even when we think we have no resources, we actually do. Whatever your circumstances, it is important to look deep down in your pockets.

Just A Small Town Boy

I grew up in a rural Southern Utah town with a population of about 2,000, if you include the cows and chickens.  My family did not have any worldly wealth to speak of. But I had dreams of going to college, succeeding as an engineer and businessman, and moving somewhere a bit bigger than my beloved hometown.

When I was a young boy, my resources were the equivalent of my son’s kick scooter.  They consisted mainly of sheer determination, the guts to move forward, time, and boundless energy. I also had a bicycle, which was handy because a nice neighbor who knew I wanted to work offered me a paper route.  With that paper route, I was able to save enough money to fix up an old lawn mower that was sitting unused in our shed. After a bit of self-promotion, another neighbor offered me the job of mowing the hospital’s lawns.  Between the paper route and the lawn mowing, I was able to buy more lawn mowers, and I invited my brothers to help mow other lawns.  I kept a percentage of what they earned, which seemed fair because I was supplying the equipment.  I saved most of the money I earned and put it toward my goal of going to college.  I also worked hard in high school and received a scholarship, which added more resources toward my goal to graduate from college.

It may seem that I traveled in a fairly straight line toward my goal, but if you look more carefully, I did a lot of zigging and zagging. It may also seem that I had very limited resources, but let’s review them before arriving at that conclusion:

•  
  • Determination
  • Time
  • Energy
  • Good Health
  • Supportive parents
  • A bicycle
  • A neighbor who offered me a paper route
  • An old lawn mower in the shed
  • Money to fix the lawn mower
  • Knowledge to fix the lawn mower
  • Another neighbor who offered me the lawn-mowing job
  • Friends who wanted to mow lawns
  • Good grades, which led to a scholarship

I love speaking to young, enthusiastic college students.  But whenever I talk about resources, one of them will say, “Rich, it’s great you’ve been able to start all these businesses, but look at where you are!”  I then have to tell them that I had to climb the ladder rung by rung, starting at the very bottom.

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Join our chat at #businesshowto

Tomorrow I (actually, www.zigzagprinciple.com and I) are having a little site-warming party, in the form of a Twitter chat.

1entrepreneur, 33 businesses, 11 multimillion-dollar successes, 11 ugly failures, 90 minutes to ask anything your little heart desires.

Please join the party. June 1st, 7:00 pm to 8:30 pm MST (9pm EST/6 PST) use hashtag #businesshowto to ask questions and get involved in the fun and learning.

I’m opening up the discussion to anyone interesting in the how-to’s of business. Of course we’ll be talking a lot about the Zig Zag Principle too—since you can’t talk about one without the other.

Free Zig Zag t-shirts will be given away randomly during the discussion. Also a signed copy of Zig Zag Principle goes to one avid, entrepreneurial chatter with intriguing questions and ideas. I’ll be awarding fun prizes every 5 minutes to random Tweeters. (This giveaway is open to U. S. residents only.)

Hope to see you there. Follow me on Twitter @richchristianse and join the chat using hashtag #businesshowto

Also follow me on Facebook for more insights on starting a business, Zig Zag Principle, and other topics I’m passionate about. “Like” me on Facebook for a chance to win a Nike Driver!

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Assessing Resources: What’s in Your Pocket? 

After I wrote my first book, Bootstrap Business, which told the story of how my partner, Ron Porter, and I took $5,000 and within one year grew it into a $1.2 million business, I had the opportunity to be interviewed by Garrett Gunderson for a national radio show.  Garrett is the author of the New York Times bestseller, Killing Sacred Cows, and he started the interview by asking, “Rich, tell me about how you started this last business.”  I said, “Oh, I took $5,000 and…” Garret interrupted me mid-sentence and said, “No! No you didn’t.”

 I was kind of stunned and tried to explain, “Well, yes, I actually did start it with $5,000.”  He corrected me again, “No you didn’t.” And I retorted, “Yes, I did!”

After what I initially thought was a rather awkward beginning, Garrett went on to explain that the $5,000 my partner and I put up was the smallest part of the equation.  In fact, in his words, the money was really meaningless. And in making that point, Garrett was teaching an invaluable lesson.

Most people assume we need to have money to succeed in business and to reach our goals in life.  If we want to start a business, the reasoning goes, we first need capital. If we’re given a major project at work, we immediately want to know what our budget is.  If we want to take our family on a much-needed vacation, the first thing we do is check the balance of our bank account (or, if we really enjoy paying interest, our credit cards). That view develops a straight-line mentality as we undertake whatever we have set our sights on—whether it’s a house, a business, a contribution to our team at work, a strong marriage and a stable family…you name it.  But if all you think in terms of is how much money you need to achieve your goals, you’re missing the fact that success is actually the result of identifying and maximizing a couple of foundational resources that have nothing to do with our traditional view of “capital” and have everything to do with zigzagging toward our intended outcome.

The point Garrett was making was that Ron and I succeeded because of what he calls “The Value Equation,” which is that Mental Capital (meaning our knowledge, skills, talents and passions) plus our Relationship Capital (meaning the quality of our relationships with a broad pool of friends and associates) will equal Financial Capital.

Yes, at some point money is often needed if we are to reach our goals.  But that form of capital will grow out of the knowledge and the relationships we have, and the pace at which it grows will be influenced in large measure by our passion.  If you need proof of this point, consider this extremely condensed list of transformative businesses that got their start in a college dorm room or garage:  Apple, Facebook, Microsoft, Hewlett-Packard, and Google.  And while the founders of each of these companies are now household names worth billions, they all began with little more than their smarts and their passion to achieve their goals, combined with their networks of friends.

This view of capital is very different from how most of us think about resources, and most people get the equation backwards.  We think, “If only I had some money, I could reach my goals or realize my dreams.”  Money cannot build intelligence, relationships, or passion.  But intelligence, relationships, and passion can always yield money.  Coming to this view, though, may require you to adjust your thinking.

A few years after I graduated from college with a degree in electronic engineering, I enrolled in an executive MBA program while working for Novell, then the pioneer in computer networking (and yet another company founded by four guys with little capital, a bright idea, and a lot of passion—who are now multimillionaires). The vice-president over the division where I worked was an individual named Dave Owens.  As I neared the completion of my MBA, I was preparing to move to another division in the company. Before I made the move, Dave called me into his office and asked me a simple question: “Rich, who do you work for?”  The answer seemed obvious, and I told him I worked for him.  His response was “Wrong!” and that was the end of that meeting.

A week later he called me back in and again asked me, “Rich, who do you work for?”  Well, I had been thinking about his question, and this time I confidently told him, “Novell!”  Again, he told me I was wrong.  A week or so later, his administrative assistant made yet another appointment. I rather timidly went into his office, only to be asked the same question for the third time.  But this time when he asked, “Who do you work for?”  I answered, “I work for myself.” 

Finally, I had found the right answer, and as a result my view of resources shifted dramatically.  Whether we work for someone or are off on our own, seeing ourselves as the person we work for will light a fire under us to identify the resources we can access, rather than waiting for buckets of money to appear through venture capital coups or budget allocations.  

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I have a friend and business associate who usually introduces me as a nerd—he assures me it’s a good thing. Last week I sat on a panel and was not called a nerd. Instead, this associate said, “I am pimping out Rich.” (Hum, is that a better intro?) He went on to say that although I’m passionate about sharing the Zig Zag Principle with everyone, I am indeed an SEO expert (Search Engine Optimization) with valuable insights to share.

It’s true. I have used SEO as a power hammer in various businesses.

I want to emphasize it is one of the tools I use, but it is not the only tool. So with that introduction, I want to outline the three major components of SEO done right. I call it the three legs of the SEO stool. 

The first leg is content—rich, relevant, fresh, new content. If you are using old, cruddy content…forget it. Game over. You can’t even start to compete with weak content.

The second leg of the stool is structure. Structure means ensuring the meta data: the meta tags and meta titles are specifically tuned and accurate. Meta data consists entirely of controllable elements. Although there are approximately 50 variables that go into meta data, the good news is that there are only a few things to look at. 

-    The structure of your website has to be aligned with the keywords you are targeting.
-    The keywords also have to align with all of the meta data (including the meta title, meta description, header 1, all text tags, etc.). 

Meta data is technical stuff. However, if you don’t understand it, you can get pretty much any SEO guy to help you implement and get that structure right. You’ll easily learn the meta data rules. And that’s the second sturdy leg.

The third leg of the SEO stool is the hardest, but only because of the time involved. This leg consists of the links to your site. Search Engine Optimization works similarly to how we as humans operate. The more people (sites) you have pointing to you and saying “That is a smart person on such and such topic.” the more authority you (and your site) have. Of course sites with more authority rank higher. So the goal is to get other people with authority linking to your site. That gives you rank. And that helps you get to the top of the search engines. 

It’s really that simple.

Although there is a lot of hard work involved, SEO success really is based on this three-legged stool. Pay attention to those three aspects then you’ll find success.

Feel free to follow me on Facebook and Twitter (@richchristianse) for more insights on SEO, Zig Zag Principle, and other topics I’m passionate about.

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Components of the Zig Zag Principle

Before you can begin to zig and zag, there are certain foundational elements that you must build upon in order to succeed, as well as some critical tools you will need.  This book is organized around the following tried and true principles that will help you make your way to the top of any peak you decide to summit. 

1. Assessing Resources

2. Identifying Your Beacon in the Fog

3. Creating Catalyzing Statements

4. Driving to Profitability

5. Defining Processes and Adding Resources

6. Scaling Your Business

7. Staying within Your Guardrails

8. Developing Reward Systems

Chapters 1-3 provide your foundation, which I like to compare to a road trip.  Think of the resources as your vehicle.  It may be an old clunker that, on a good day, may get you across town.  It may be a jacked-up, high-powered four-wheel drive that knows no fear.  Or it may be a vintage Mercedes that you’ll only drive when there is not a cloud on the horizon.  Think of the Beacon in the Fog as your destination.  When you jump in your car in New York City and decide you’re heading to San Francisco, there’s no way you can see the Golden Gate Bridge.  But you know it’s there, and, if you’re smart, you’ve mapped out a route that will take you there.  Think of Catalyzing Statements as the fuel that will get you to your goal.  Once you get the foundation for your business in place, then you can begin to zig and zag.  The Zig Zag Principle for growing your business follow a specific pattern: 

• Zig #1 Always get to Cash (chapter 4)

• Zig #2 Adding Resources (chapter 5)

• Zig #3 Scaling the Business (chapter 6)

In chapter 7, we’ll discuss how important it is to establish your own personal guardrails so you don’t find yourself driving off a cliff as you fly down the road.  I’ll share mine, and encourage you to find yours.

Chapter 8 introduces the concept of reward systems.  Zigzagging is hard work.  And now and then you need to pause and reward yourself, your associates, and those family members and friends who are supporting you.

This book is a step-by-step, tactical book.  It is not a theory or a vague concept.  You will get practical application tips you can use to succeed, not just in business but also in your life.  In addition, you will be provided with a suite of resources and tools that you can use on-line and off-line to assist and use in your progression. 

In my years in business—whether working for someone or pursuing my own dreams—I have had several multi-million dollar failures, in addition to several multi-million dollar successes.  Many of the failures were of my own doing; and, thankfully, enough of them were not. I can honestly say that in most instances, I failed because I tried to go straight for my goal and then ran out of gas before I hit profitability.  The Zig Zag Principle is not easy.  It requires discipline, hard work, tenacity, and focus.  It is not a lazy man’s game.  And it is what will help you achieve the successes you seek.   

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For me, it has been interesting to see that before I defined the steps of the Zig Zag Principle, my business model was that I would succeed one out of three times. In fact, I would create three businesses, consciously telling myself, “Okay, of these three, one is going to fail, one is going to be mediocre, and one is going to turn into a multi-million dollar business.” I figured I was batting about .333 with a series of strikeouts, easily caught pop-ups to left field, and hits that scored. Frankly, having played some baseball, I was feeling pretty good about my average. But, in looking back, I’ve realized I was zig zagging, just without any real structure or discipline. Ever since my moment of clarity, I have been consciously applying the formal structure of the Zig Zag Principle, and my success rate has dramatically increased. My partners and I have now had four out of five successes—an average I’ll take any day.

As I’ve considered this revelation, I’ve come to realize that the Zig Zag Principle has its roots in the laws of nature, with evidences everywhere we look. Rivers don’t flow in a straight line from mountain springs to the ocean. They twist and turn as they adapt to the things that would impede their flow. Mountain peaks are formed by the violent acts of nature, which leave no straight shots to the top.  So much of the beauty we see in nature is the result of its forces carving out paths that must wend their way around never-ending obstacles.

My family and I are avid hikers and love to climb mountains. We’ve scaled summits in the Rocky Mountains and in the Himalayas. In all our years of climbing, we’ve never been able to actually climb straight toward the peak. Instead, just as my son learned as he skied down the mountain, we’ve had to hike the switchbacks in order to reach the top of the mountain. In the process, we have found ourselves going around large canyons and cliffs, often hiking in directions opposite to the summit.

      We have also found, while hiking in the Himalayas, that it is important not to gain altitude too quickly. Those who do often succumb to high-altitude sickness and even death. Although it seems counterintuitive, much of the time you actually have to lose altitude and hike away from your goal in order to stay healthy, gain strength, and gain the altitude needed to get to your destination. As I have become more seasoned in both business and life, the lessons of the Zig Zag Principle have finally begun to sink in. Life and business are complex and often messy, and there are always going to be bumps, dips, twists, turns, and detours along the routes we choose to pursue. It is unrealistic to think you can just charge directly at a goal without injuring yourself or others. Adjustments and course directions are required.

 I have an associate who has been extremely successful at racing directly toward his financial goals. He is charismatic, focused, business savvy, and driven. At the point I became acquainted with this man, he was well respected, a pleasure to be around, and an integral part of the community. Soon after, though, he became obsessed with becoming wealthy. In fact, he openly proclaimed that he would achieve his financial goal at any cost. In his pursuit to do so, there were marked changes in his demeanor and in his approach to life.

      Within five years he had accomplished his goal of becoming the wealthiest individual in our community. But at what expense?  His relationships with his spouse, children, and trusted associates totally vanished. He lost the love and respect of nearly everyone around him. Now, when his name is spoken in public, people recoil. Why?  Because he ran roughshod over anyone and anything that attempted to divert him from his goal. Did he achieve success?  Yes (at least for a time). Was his financial success worth barreling down the mountain with wild abandon?  No!  The end victory proved hollow and meaningless as he left behind the important things of life that he could and should have enjoyed. I would contend that he could have been successful in all aspects of his life had he traversed his way down the mountain instead.

      The more effective and rewarding way of achieving long-term goals is to zig zag toward them. It is hard work in both hiking and in business, but the vistas and rewards are, without question, worth it.

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Today is the one-year anniversary of one of the biggest scares I’ve experienced, and the day I learned how vital it is to have a bailout plan.

My family was traveling and we had an all-day layover in Hong Kong. These long hours ended up being some of the most harrowing in my life to date.

As we arrived in Hong Kong we spent a delightful time together in the city. Next we decided to take the ferry to Kowloon—the famous, and very crowded, shopping district. Like most visitors we wanted to see the Kowloon Ladies Market, so off we went.

As my family of six started to load into a cab, the driver started waving at us madly, indicating that he could legally only have four passengers, not six. Thinking quickly, I knew exactly what to do. I said, “Okay, no problem. We’ll take the very next cab and the three of us will follow right behind the three of you.”

We loaded my beautiful wife and two of our boys into the cab and sent them on their way. I turned to climb into the next cab and was dismayed to discover that not only was I not in line anymore, but the line had grown. I nervously looked down the street as the first cab sped away.

Well…my other two sons and I did eventually get into a taxi, but by this time it was clear that we’d lost my wife and sons. When we arrived at the market there were ten bazillion people running every-which way—and that was just at the drop-off point. It appeared nearly impossible to find them.  We spent the next three or four hours in a heartsick panic, attempting to find my wife and my boys. 
The thing that made me ultimately sick was that I had all the passports and all the money. Furthermore we had made no contingency plan should we get separated. 

After almost five hours, I contacted the Hong Kong Police. Every vision of tragedy was running through my mind, and I realized that there was no way we were going to find my precious family in Kowloon. I submit it is easily the busiest place on earth. There were literally hundreds of thousands of people bustling around, shoulder to shoulder.

In absolute dismay and grief I realized that the only option I really had was to go back to the airport and hope. At the airport I called the U.S. Embassy, I called security, I checked email, I did everything I could possibly think of to find my family, with no success. At this point my two sons and I were literally in tears and out of options. So we sat there in a panicked state and waited.

About an hour and a half before our plane was scheduled to depart, in walked my wife and our boys. They had walked a mile or two, boarded a bus, and using American currency, somehow managed to pay, and find their way back to the airport safely.

We had a warm embrace and continued on our journey–a little worse for wear–but none the less, very grateful for each other. At a moment like that, you define what is most important. Now when we travel internationally we always make sure that we have a common rescue plan. We always make sure that we spread our resources wisely.

This lesson can easily be applied to other areas of life and business. Today, one year after this scary experience, I’m recalling the importance of having a bailout plan.

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