The 100 Rules for Being an Entrepreneur

Photo: Digital Vision

This is a cross-post from James Altucher‘s blog Altucher Confidential. His previous appearances on the Freakonomics blog can be found here.

If you Google “entrepreneur” you get a lot of mindless cliches like “Think Big!” For me, being an “entrepreneur” doesn’t mean starting the next Facebook, or even starting any business at all. It means finding the challenges you have in your life, and determining creative ways to overcome those challenges. However, in this post I focus mostly on the issues that come up when you first start your company. These rules also apply if you are taking an entrepreneurial stance within a much larger company (which all employees should do).

I’ve started several businesses. As I’ve described in the rest of this blog, some have succeeded, many have failed. I’m invested in about 13 private companies. I’ve advised probably another 50 private companies. Along the way I’ve compiled a list of rules that have helped me deal with every aspect of being an entrepreneur in business and some in life.

[By the way, Claudia thinks I shouldn’t put this post up. This is going to be a chapter in a book I am self-publishing in a week or so: “How to be the Luckiest Man Alive.” But I’m trying to price the book for free on Kindle so why not? Plus, once I write something, I can’t help myself. I have to put it up.]

Here’s the real rules:

A)        It’s not fun. I’m not going to explain why it’s not fun. These are rules. Not theories. I don’t need to prove them. But there’s a strong chance you can hate yourself throughout the process of being an entrepreneur. Keep sharp objects and pills away during your worst moments. If you are an entrepreneur and agree with me, please note this in the comments below.

B)        Try not to hire people. You’ll have to hire people to expand your business. But it’s a good discipline to really question if you need each and every hire.

C)        Get a customer. This seems obvious. But it’s not. Get a customer before you start your business, if you can. (see, “the Easiest Way to Succeed as an Entrepreneur”)

D)        If you are offering a service, call it a product. Oracle did it. They claimed they had a database. But if you “bought” their database they would send in a team of consultants to help you “install” the database to fit your needs. In other words, for the first several years of their existence, they claimed to have a product but they really were a consulting company. Don’t forget this story. Products are valued higher than services.

E)        It’s OK to fail. Start over. Hopefully before you run out of money. Hopefully before you take in investor money. Or, don’t worry about it. Come up with new ideas. Start over.

F)       Be profitable. Try to be profitable immediately. This seems obvious but it isn’t. Try not to raise money. That money is expensive.

G)       When raising money: if it’s not easy then your idea is probably incapable of raising money. If it’s easy, then take as much as possible. If its too easy, then sell your company (unless you are Twitter, etc).

H)       The same goes for selling your company. If it’s not easy, then you need to build more. Then sell. To sell your company, start getting in front of your acquirers a year in advance. Send them monthly updates describing your progress. Then, when they need a company like yours, your company is the first one that comes to mind.

I)        Competition is good. It turns you into a killer. It helps you judge progress. It shows that other people value the space you are in. Your competitors are also your potential acquirers.

J)        Don’t use a PR firm. Except maybe as a secretary. You are the PR for your company. You are your company’s brand. You personally.

K)       Communicate with everyone. Employees. Customers. Investors. All the time. Every day.

L)        Do everything for your customers. This is very important. Get them girlfriends or boyfriends. Speak at their charities. Visit their parents for Thanksgiving. Help them find other firms to meet their needs. Even introduce them to your competitors if you think a competitor can help them or if you think you are about to be fired. Always think first, “What’s going to make my customer happy?”

M)       Your customer is not a company. There’s a human there. What will make my human customer happy? Make him laugh. You want your customer to be happy.

N)       Show up. Go to breakfast/lunch/dinner with customers. Treat.

O)       History. Know the history of your customers in every way. Company history, personal history, marketing history, investing history, etc.

P)        Micro-manage software development. Nobody knows your product better than you do. If you aren’t a technical person, learn how to be very specific in your product specification so that your programmers can’t say: “Well you didn’t say that!”

Q)       Hire local. You need to be able to see and talk to your programmers. Don’t outsource to India. I love India. But I won’t hire programmers from there while I’m living in the US.

R)       Sleep. Don’t buy into the 20 hours a day entrepreneur myth. You need to sleep 8 hours a day to have a focused mind.

S)       Exercise. Same as above. If you are unhealthy, your product will be unhealthy.

T)       Emotionally Fit. Don’t have dating problems and software development problems at the same time. VCs will smell this all over you.

U)       Pray. You need to. Be grateful where you are. And pray for success. You deserve it. Pray for the success of your customers. Heck, pray for the success of your competitors. The better they do, it means the market is getting bigger. And if one of them breaks out, they can buy you.

V)       Buy your employees gifts. Massages. Tickets. Whatever. I always imagined that at the end of each day my young, lesbian employees (for some reason, most employees at my first company were lesbian) would be calling their parents and their mom and dad would ask them: “Hi honey! How was your day today?” And I wanted them to be able to say: “It was the best!” Invite customers to masseuse day.

W)       Treat your employees like they are your children. They need boundaries. They need to be told “no!” sometimes. And sometimes you need to hit them in the face (ha ha, just kidding). But within boundaries, let them play.

X)        Don’t be greedy pricing your product. If your product is good and you price it cheap, people will buy. Then you can price upgrades, future products, and future services more expensively. Which goes along with the next rule.

Y)        Distribution is everything. Branding is everything. Get your name out there, whatever it takes. The best distribution is of course word of mouth, which is why your initial pricing doesn’t matter.

Ya) Follow me on Twitter.

Z)       Don’t kill yourself. It’s not worth it. Your employees need you. Your children or future children need you. It seems odd to include this in a post about entrepreneurship but we’re also taking about keeping it real. Most books or “rules” for entrepreneurs talk about things like “think big”, “go after your dreams”. But often dreams turn into nightmares. I’ll repeat it again. Don’t kill yourself. Call me if things get too stressful. Or more importantly, make sure you take proper medication

AA)     Give employees structure. Let each employee know how his or her path to success can be achieved. All of them will either leave you or replace you eventually. That’s OK. Give them the guidelines how that might happen. Tell them how they can get rich by working for you.

BB)     Fire employees immediately. If an employee gets “the disease” he needs to be fired. If they ask for more money all the time. If they bad mouth you to other employees. If you even think they are talking behind your back, fire them. The disease has no cure. And it’s very contagious. Show no mercy. Show the employee the door. There are no second chances because the disease is incurable.

CC)     Make friends with your landlord. If you ever have to sell your company, believe it or not, you are going to need his signature (because there’s going to be a new lease owner)

DD)     Only move offices if you are so packed in that employees are sharing desks and there’s no room for people to walk.

EE)     Have killer parties. But use your personal money. Not company money. Invite employees, customers, and investors. It’s not the worst thing in the world to also invite off duty prostitutes or models.

FF)      If an employee comes to you crying, close the door or take him or her out of the building. Sit with him until it stops. Listen to what he has to say. If someone is crying then there’s been a major communication breakdown somewhere in the company. Listen to what it is and fix it. Don’t get angry at the culprits. Just fix the problem.

GG)     At Christmas, donate money to every customer’s favorite charity. But not for investors or employees.

HH)     Have lunch with your competitors. Listen and try not to talk. One competitor (Bill Markel from Interactive 8) once told me a story about how the CEO of Toys R Us returned his call. He was telling me this because I never returned Bill’s calls. OK, Bill, lesson noted.

II)        Ask advice a lot. Ask your customers for advice on how you can be introduced into other parts of their company. Then they will help you. Because of the next rule…

JJ)      Hire your customers. Or not. But always leave open the possibility. Let it always dangle in the air between you and them. They can get rich with you. Maybe. Possibly. If they play along. So play.

KK)     On any demo or delivery, do one extra surprise thing that was not expected. Always add bells and whistles that the customer didn’t pay for.

LL)      Understand the demographic changes that are changing the world. Where are marketing dollars flowing and can you be in the middle. What services do aging baby boomers need? Is the world running out of clean water? Are newspapers going to survive? Etc. Etc. Read every day to understand what is going on.

LLa) Don’t go to a lot of parties or “meetups” with other entrepreneurs. Work instead while they are partying.

MM)    But, going along with the above rule, don’t listen to the doom and gloomers that are hogging the TV screen trying to tell you the world is over. They just want you to be scared so they can scoop up all the money.

NN)     You have no more free time. In your free time you are thinking of new ideas for customers, new ideas for services to offer, new products.

OO)     You have no more free time, part 2. In your free time, think of ideas for potential customers. Then send them emails: “I have 10 ideas for you. Would really like to show them to you. I think you will be blown away. Here’s five of them right now.”

OOa) Depressions, recessions, don’t matter. There’s $15 trillion in the U.S. economy. You’re allowed a piece of it.

PP)       Talk. Tell everyone you ever knew  what your company does. Your friends will help you find clients.

QQ)     Always take someone with you to a meeting. You’re bad at following up because you have no free time. So, if you have another employee, let them follow up. Plus, they will like to spend time with the boss. You’re going to be a mentor.

RR)      If you are consumer-focused: your advertisers are your customers. But always be thinking of new services for your consumers. Each new service has to make their life better. People’s lives are better if: they become healthier, richer, or have more sex. “Health” can be broadly defined.

SS)       If your customers are advertisers: find sponsorship opportunities for them that drive customers straight into their arms. These are the most lucrative ad deals (see rule above). Ad inventory is a horrible business model. Sponsorships are better. Then you are talking to your customer.

TT)      No friction. The harder it is for a consumer to sign up, the less consumers you will have. No confirmation emails, sign up forms, etc. The easier the better.

TTA) No fiction, part 2. If you are making a website, have as much content as you can on the front page. You don’t want people to have to click to a second or third page if you can avoid it. Stuff that first page with content. You aren’t Google. (And, 10 Unusual Things You Didn’t Know About Google)

UU)     No friction, part 3. Say “yes” to any opportunity that gets you in a room with a big decision maker. Doesn’t matter if it costs you money.

VV)     Sell your company two years before you sell it. Get in the offices of the potential buyers of your company and start updating them on your progress every month.  Ask their advice on a regular basis in the guise of just an “industry catch-up”

WW)    If you sell your company for stock, sell the stock as soon as you can. If you are selling your company for stock it means:

  • a.         The market is such that lots of companies are being sold for stock.
  • b.         AND, companies are using stock to buy other companies because they value their stock less than they value cash.
  • c.         WHICH MEANS, that when everyone’s lockup period ends, EVERYONE will be selling stock across the country. So sell yours first.

XX)     Ideas are worthless. If you have an idea worth pursuing, then just make it. You can build any website for cheap. Hire a programmer and make a demo. Get at least one person to sign up and use your service. If you want to make Facebook pages for plumbers, find one plumber who will give you $10 to make his Facebook page. Just do it.

YY)     Don’t use a PR firm, part II. Set up a blog. Tell your personal stories (see “33 tips to being a better writer” ). Let the customer know you are human, approachable, and have a real vision as to why they need to use you. Become the voice for your industry, the advocate for your products. If you make skin care products, tell your customers every day how they can be even more beautiful than they currently are and have more sex than they are currently having. Blog your way to PR success. Be honest and bloody.

ZZ)      Don’t save the world. If your product sounds too good to be true, then you are a liar.

ZZa) Your company is always for sale.

AAA)  Frame the first check. I’m staring at mine right now.

BBB)   No free time, part 3. Pick a random customer. Find five ideas for them that have nothing to do with your business. Call them and say, “I’ve been thinking about you. Have you tried this?”

CCC)   No resale deals. Nobody cares about reselling your service. Those are always bad deals.

DDD)   Your lawyer or accountant is not going to introduce you to any of their other clients. Those meetings are always a waste of time.

EEE)    Celebrate every success. Your employees need it. They need a massage also. Get a professional masseuse in every Friday afternoon. Nobody leaves a job where there is a masseuse.

FFF)     Sell your first company. Don’t take any chances. You don’t need to be Mark Zuckerberg. Sell your first company as quickly as you can. You now have money in the bank and a notch on your belt. Make a billion on your next company.

GGG)   Pay your employees before you pay yourself.

HHH)   Give equity to get the first customer. If you have no product yet and no money, then give equity to a good partner in exchange for them being a paying customer.  Note: don’t blindly give equity. If you develop a product that someone asked for, don’t give them equity. Sell it to them. But if you want to get a big distribution partner whose funds can keep you going forever, then give equity to nail the deal.

III)       Don’t worry about anyone stealing your ideas. Ideas are worthless anyway. It’s OK to steal something that’s worthless.

IIIA) Follow me on twitter.


Will Caskey

A. A million times, A. It should be tattooed on every startup owner's face. Backwards, so we can see it in the mirror.


Two questions and one observation: Did you cash that first check you framed?
Secondly, I would like more clarification on RR and SS.
Thirdly, you opened with Here's the real rules: when, forgive me for saying (don't hate), it should be Here are...

Tim Kelly

Shockingly good and comprehensive advice. It's amazing how different business ownership is in practice rather than in theory- often described as the most over-rated thing in the world. When it's going well it is the greatest human experience imaginable, but when it goes badly, it's unspeakably awful...


James, this is well written and witty. I agree with most of your list. B and F are surprisingly uncommon philosophies but extremely important. FFF is a tough one for me. I would stress that if you plan to sell you need to become emotionally detached from your business (the acquirer will make changes you don't agree with but there's nothing you can do about it) and already have another idea you are ready to pounce on (you will miss the excitement of building something and you'll want to re-create that). Otherwise you could wind up with lots of $ but a big case of seller's remorse and nothing to pour your energy into. Either way, this is a great post that every aspiring and new entrepreneur should read. And yes, I am now following you on Twitter (@RestOwnUncorked).


My experiences to date confirm many of these items, including some conclusions I've been surprised to reach. Thanks for the affirmation. For example, (B) - where I'd add: if your startup is not gaining traction in the very early ages when it is a side-project for all involved, shrink the team. The logistics of co-ordinating people, communicating, etc, can devour time and energy that is in short supply. It is better for someone or some-two to sit down, apply shoulders to turning the grindstone, and make the ideas real, even if they have to learn new skills.

Re: "A) It's not fun." Got that right. Before I put my savings, my credit, my life energy and will on the line for my businesses, "risk-taking" sounded like a positive personal characteristic, closer to sexy, fun, or daring rather than something incredibly dangerous and potentially life-changing in a lasting and negative fashion. I admit I have only partly refined my view on this, and am likely to "learn" more. ("Learning" being a euphemism for "being beaten up in the dark alley behind the street of broken dreams".)

I'd add:
(JJ) Those unlikely, worst-case scenarios you prepare conservative contingency plans for? Cross out "unlikely". If any one of them kick in, chances are that all of them will, creating a sort of perfect storm period of challenges. Such periods are frequently kicked off by an additional worst-case factor you simply hadn't heard of or imagined in your novice planning, such as a sudden regulatory change, a key person's criminal behaviour, civil war, economic chaos, meteor strike, rampant spontaneous dinosaur regeneration or other macro, contextual, big picture factor. You can never plan adequately for these, so (Z) Don't Kill Yourself, adapt and move forward. This is Earth, with a pesky time-space continuum and an unknowable future.

(KK) People in your personal life who are not recidivist entrepreneurs are likely to treat you like you are a fool for having ever thought you might succeed. Expect to be offered a steady stream of encouragement to give up and cut your losses at every challenging juncture. "You just don't seem very happy." This may be fair feedback. Expect to be judged harshly. Accept being judged rigorously, and simply require of yourself that you learn whatever it is you must learn in order to make your business a boon to yourself, your customers, your investors and suppliers, and your employees. I hope to be able to say I've attained that goal, and soon, before the dinosaur regeneration begins.



As a young entrepeneur I agree with the first point. IT IS NOT FUN. But once you're past that, the reward is incredible, then, it becomes fun.

Jessica D Chapman

Amen, brother.
I love how you bookend the first alphabet with "It's not fun." (A) and "Don't kill yourself" (Z). I think those are the truest words spoken in this post. I'll take those nights of thinking "what the hell did I get myself into" and figuring out how to solve a customer problem over punching a clock and pushing paper all day and night long. Even if I have to medicate with wine, whisky and sleep to get me through. Jessica
p.s. followmebackon twitter: @jessicadchapman ;-)


The product vs service point is contradictory to the point Mark Suster made on Techcrunch recently.

Who is fooled by randomness here?

Michael Parks

I didn't even finish the list.. and I've already purchased the new book! I always look forward to your posts, they have begun to guide my career progression.

Tomislav Pokrajcic

It's not fun, I second that and underline.
But you have to keep happiness about your entrepreneurship idea in order to push it to success.


Being smooth and having tones of patients is must and Pulling off is more important than starting it up.

Daniel Gomez Alvarez

Nice! it a wonderful way of saying things easily but carefully at the same time. Everyone should bear in mind all of the ideas above mentioned.


JJJ) Learn to count to 100.

Did no one else notice that a post entitled "100 Rules for Being an Entrepreneur" has only 70-something rules?


I'm sorry, EE) Did you really just say to bring in off-duty prostitutes and models? 1) Perhaps you're assuming that these companies are all male/catering to men only?... - Which is pretty offensive; and 2) The off-duty prostitutes and models is just offensive in its own right. At what point do we start to take into account that women are actually entrepreneurs and employees and that these types of comments are completely offensive?


EE) Off duty prostitutes? Really? Do you really think that is going to convince VCs you can make good choices with their money?


Absolutely loved it!
What is with these readers who have no sense of humor?!

Shirlene B

(A) is so true. The highs of successes in the business venture(s), help assuage that feeling of desperation when you are hunting down the offending client with a smoking invoice and a frown on your face as they hide in the jungle of oblivion after a project...grrrrrrr!


A is painfully true, but I noticed it didn't mention about keeping the liquor cabinet shut during crunch time. As for the damage caused by hating myself, the product list of things destroyed are... desk, numerous expensive meters, a vehicle, and a hot water pump.

Thinking back on it, there's more to the list.

"W) Treat your employees like they are your children."

Every conversation with my father starts off with "how are your kids?... How many diapers have you changed today?" It's a fact of life, and one that everyone should just realize and get it out of the way.

"J) Don’t use a PR firm. Except maybe as a secretary. You are the PR for your company. You are your company’s brand. You personally."

Another completely true fact about being an entrepreneur. There's been a few clients who have been upset because they couldn't use me under specifications, and have had temper tantrums in the meeting.

Just also wanted to note that the list was funny (yet true), which put a smile on my face! Thanks.


Dr Margaret Rogers Van Coops

Appreciate you and thanks. Looking for partner for all the above??


I haven't made any real returns( money) not even 100usd. its been 3 years, and all i really want is for the brand to just sustain itself ( production eg) yet the brand is so popular. I know I'm doing something wrong, something I can't personally fix, I know what and who I need ( money, advertising, sponsorship and someone to find it for me) but no one believes I'm struggling that much. either that or....

anyway, a lot of your rules/points make sense.
I'm recovering from hating myself and I've put the product/company on hold. which is hard- because i think I've failed. I'm starting to believe no one cares or just enjoy my work from afar ( from their computers) and think its simply a " cool" project.

good grief.