There are certain attitudes that are visible even at an early age,
and Tony Hsieh was a kid with a passion for business. When he was very
young he had already decided that he wanted to get rich, and this
intention was very clear in his mind. Driven by his desire to see
something grow, on his tenth birthday, he bought himself a box of
earthworms. He had read that a worm would grow back if you cut it in
two, and this gave him an idea to cut them in half and resell them. His
parents indulged him and bought a box of worms for $33. Eventually, Tony
took the easy way out by putting his box of worms in the garden, and
fed them with egg yolks every day.
But after a month on a diet of
egg yolks, the worms had disappeared: Tony found the box empty, either
because the worms had escaped into the garden, or because they had been
eaten by birds who were attracted by the eggs.
He changed
businesses when the idea came to him of selling Christmas cards door to
door, but this idea didn’t work either, and he realised that a seasonal
business was no good for year-round profits, so he knew he had to change
his strategy.
So he started selling via post. He had seen an
advert in a kids’ magazine for a machine that could print photos on
badges. He made some calculations: the machine cost $50 and he had to
calculate another fifty for parts and accessories. It might have seemed
too much as an initial investment, and he would have to sell 100 badges
for a dollar each, but once he had made his money back, he would earn 75
cents for every badge he sold.
Thinking about a preadolescent
child trying these experiments out makes you smile, but it is also
interesting to observe how his imagination helped him to come up with
some great plans that really worked.
He remembers a book that one of his classmates had, entitled Free Stuff for Kids,
a book that listed a series of products that kids could get for free or
for up to a dollar. Tony sent a letter to the editor to get his badges
in the book with an advert that read “badge maker with photo”. His offer
was for kids to send a photo, a self-addressed stamped envelope and $1.
He would then turn the photo into a badge and send it back in the
envelope, making a profit of 75 cents per order.
When his first
order arrived, he officially felt “in business”. In his first month he
made $200, not only did he earn back his initial investment, but he also
made a profit. His business went really well, so well that he was able
to buy a more sophisticated machine to reduce his production time. It
had become a family business, small but profitable, with a very specific
niche market. The great lesson that he learned from this experiment is
that a business can also work at a distance, and does not require
physical interaction with the client.
After his first
experiment,several more followed. From the photo badges to magic tricks
with an analogue formula, which didn’t go as well, to a pizza business
that had a high profit margin because a pizza costs the producer two
dollars to make and he can sell it on for at least ten.
What is
surprising in the precocious nature of his experiments is the experience
that they provided him. These little businesses laid the foundations
for Tony’s future, helping him to understand, from very early on, the
importance of adapting the offer to client demand.
This is why,
when he ended up working in an office once he had finished school, he
found working a 9-5 job boring and not very stimulating. At this point
it became clear to him that he wanted to start his own business and to
be the master of his own destiny.
