Rich Christiansen. Author, Founder & CEO.
- Date of Incorporation: June 2007
- Location: Provo, Utah
- Industry (Yahoo Finance): Internet Software & Services
- Employees: 45
- Website: www.castlewave.com
Please tell us how you began as an entrepreneur.
I began as an entrepreneur at five years old selling candles door to door. After that, I sold night crawlers. I was always selling something, creating some business as a child, but it kind of gets pounded out of you. Then I followed the traditional route of the corporate world. Then eight or nine years ago, I was in a corporate job, a very prestigious position. I had what would be considered the green job of Utah—an office in New York and one in Utah. My office looked down on Times Square but I just wasn’t happy. I wasn’t content. My wife and I would go on what we called our three-mile talks each night and she would just stop in the middle of it and say, “Rich, when are you going to do it? When are you going to become an entrepreneur? Are you going to wait until the kids start college, or are on their missions? What is the timing on this? Because you are not going to be happy until you do this.” And that was the point where I became a full-time entrepreneur. My wife pushed me out.
What was it about the corporate world that you felt uneasy about?
Multiple things, the first being that I wasn’t ready to face the market forces eyeball to eyeball. I didn’t have the opportunity, based on my credentials, my own ability, to be fully accountable and to reap the rewards, and or pay the price, to head a corporation. Where I was, I felt bounded and somewhat stifled and it just wasn’t me. It wasn’t comfortable; it wasn’t natural. That was when they began to demand things of me that I wasn’t comfortable with or prepared to give.
What were some of these demands that they requested of you?
Timing. Timing of my resources. I didn’t have the flexibility to go to my child’s kindergarten program. The travel became a very significant issue; extensive travel and time away from the family was required in order for me to succeed. And then there were certain business practices that I became uncomfortable with: how accounts were managed, and how contracts were structured—other things that just didn’t align with my soul.
Was it always your plan to go into the corporate world?
It would be nice if there really was a perfect plan but there wasn’t. I grew up in a rural community in Beaver, Utah, and my plan was to become an engineer. Indeed, I would have spent my entire life as a deck-head engineer. And indeed I went down that path. I was an okay engineer. I was working on power line technology. But having faced failure in the company I was involved in, I got pushed into MBA School at a very young age and it turned out that I was a far better businessman than I was an engineer. So that portion of my life was really influenced by an external event.
I love the concept of bootstrapping a business and have enjoyed yours and Ron Porter’s book, Bootstrap Business. Please give us an overview of what “bootstrapping” is.
Well, bootstrapping really is using a small amount of resources to start something. Constantly chasing cash, and then using that cash mechanism to fund the progression through the business. That really is what it has meant to me and as I mentioned to you earlier, the reason I bootstrap is not just that it is not a barrier to entry but more importantly because it is a control mechanism from day one. It keeps me profitable and gets me really disciplined about my finances. Bootstrapping is a way that almost anyone can get into business and control their life and destiny. I can take five or ten thousand dollars and start a million dollar company. That’s my story. It’s not everyone else’s story. You could strongly argue that pretty much anyone could take $5,000 or $10,000 and with a little perseverance could start a $100,000 company. Bootstrapping is a very viable path.
Besides being a low barrier entry, why do you recommend this means of financing compared to more traditional means?
Having gone down that path, let’s begin with Venture Capital (VC). It is very difficult to get Venture Capital. And if you do qualify and ever do get the funding, even if you have a brilliant idea, they are looking to fund a scale; they aren’t looking to fund ideas. In the second place, if you ever do get funded by a VC, then it is, well, the opposite of Heaven, let me put that way. That is the definition of misery, and loss of control of your life, from my experience. And very few of those that found those companies rarely end up getting anything financially out of it. Venture Capital is a more difficult way of running a business.
The next way of getting money is by using a credit card, which is high risk. That never suited me. Borrowing from friends and family, there are too many strings attached. If I had to fund a business another way I would go with an SBA loan.
So there are other funding methods available to you, but this [bootstrapping] is just one that is viable for most people. It gave me a certain level of discipline and it allowed me to grow my business while maintaining the control that I desired.
In Bootstrap, you indicated that you have co-founded 28 different businesses of which 10 were failures, 9 are in the process, 7 were moderately successful, and 7 have became multimillion dollar home runs, all with less than $10,000 start up capital. What is your process of taking an idea and turning it into a product or service that is profitable?
What I can say is most people are worried about the ideas. But ideas, million dollar ideas, are everywhere. I taught a Boot Camp out at the Wizard Academy last week and there were 42 ideas that came out of one 20-minute session. Ideas from bright individuals who were far better at coming up with ideas than I. Everyone loves the story in the book where we proved our process by taking $5,000 and making it into a $1.2 million business [CastleWave] in one year, with a 62% margin I might add. But this was a crappy idea. I wasn’t really in a good mental state when we did this. The idea is the easy part. Here’s the hard part: is it a good idea or a bad idea? Is it a stupid idea or a good idea? I look for ways. I look for transactional businesses that have barriers to entry that I can get through that others can’t. I use something called the Porter Model. In five minutes, or even less than that, I can tell if it is going to be successful. Every day people bring me business ideas and ask me, “Rich, will this be successful?” By using the Porter Model I can say, “Go ahead,” or “Don’t do that. It will fail!” Really quickly I can assess with high probability what will work and what won’t. You have to get the book to be able to do this. I’m dumbing it down. The five-force Porter Model was created by Mike Lee Porter out of Harvard. That little model is what I filter everything through.
Tell us a little more about this model.
The model is real simple. Give me a business idea, any business idea.
Starting a business for search engine optimization.
No fair [laughter], because that is the company I created and we know that the stars are smiling on that one! I’m going to pick one randomly off my desk: bananas. We’re going to sell bananas. I’ve got this great import opportunity from Chili to import bananas. So, what are the entry barriers to this business? How hard is it to get to sell bananas? What sources do we have? If I have a brother-in-law in Chili and I know that he has contacts then maybe I have a plus but can I go to a food wholesaler and sell these bananas? Can I negotiate a better price? Do I have an exclusive source? Maybe if I had exclusive rights to sell at a BYU football game. How intense is the competition? This isn’t like Coke and Pepsi, even though it is a commodity. What can you substitute instead of bananas—well there are apples, tomatoes; there’s grapefruit, soda pop; there’s yogurt; there’s lollypops. There are lots of substitutes. Now the big kicker question: do I have a channel to sell those bananas? If I happen to have a brother-in-law who controls all the distribution of produce going into grocery stores then I have a channel. If not I’ll never proceed with the business unless I have a plus in that category. So right there is the biggest success or failure of the business.
So at what point would the pluses outweigh the minuses?
First of all you have to get the channel and the barriers to entry. That’s where I pull it out. What can I get across that someone else can’t do? I was a general manager of a dot com. I had SEO knowledge and skill, so I have a channel plus. There are a lot of hacks out there and not many of them are doing it very good. Let’s say you have a digital asset, so the costs are zero. Do I have flexibility in what I charge the customer? I pretty much do. For one paper I charge anywhere from $5,000 to $30,000 just to engage. That’s a lot of flexibility. How much competition is there in SEO space? Not much at all. I’ve run into two or three SEO companies [OrangeSoda, SEO.com, and other companies are named] and there’s sometimes verbal sparing but never really any competition. I think I ran into them once since we started this company. What are the substitutes? Do it yourself or list it in the yellow pages. What are the barriers? Patents, huge capitol investment, being the first product into the market, and capitol. I have intellectual capitol so I have a plus there. Then there’s the channel. I can go on and on.
What is the difference between your successes and the failures?
Financial factors. That’s the only tag I put on them. The failures were some of the best life lessons. Some of the failures lead into the successes. The successes would never have occurred without the failures. Everyone wants to talk about the successes, but I say let’s talk about the failures because that is where real learning occurs. When I sit around with my colleagues, we don’t talk about our successes. We show each other our scars. It would be meaningless without the failures—failures are just part of the game. I’ve learned to fail very efficiently. That is the major difference between now and when I started.
So you have started 29 businesses. Why do you keep doing it?
What is success? I don’t know what success is. It’s a gift that God gave me. The gift that I have is to add value by creation. I have found great joy in it—and great frustration. It is part of my makeup. The wiring inside me is to create. It is frustrating when people say, “You are so successful.” Success and failure are both very temporary. Three years ago I didn’t feel very successful. I went through a very ugly partnership meltdown. I felt so gutted that I almost crawled under a rock and never came out. What is success? Success comes from the meaningful things in your life: your family, your friends, and your trust relationships. That’s where real success and purpose derives from.
Is there anything else about your business or principles that you would like to share?
Well, I have a shameless plug for the book I have written: getting into a business following these exact viable principles, using the zig-zag-zig method, et cetera. There are also a lot of resources like our online video and interactive training resources. If you want to exponentially accelerate your progress, we are teaching boot camps every other month, with never more than 20 people in it. It’s expensive. We charge a minimum of $2,000 and up to attend.
I was ecstatic to learn that you are a mountain climber. I am as well. Why do you climb?
As George Mallory said, “Because they are there!” It is a place where I define myself. I like to go into the Himalayas and spend a month, and after three weeks there’s no liking yourself. When you stink and you’re in pain it brings clarity; clarity of who you are and what’s inside you. It is one of the main ways I have used to find clarity. I have also used it as a major tool in the raising of my children. At a young age my children climbed with me and it was an opportunity to teach them hard work and discipline, and how to push through pain. Hitting that mountain summit, reflecting and capturing the joy and pain of something that very few people are going to enjoy, is a physical manifestation of entrepreneurship. Most people aren’t crazy enough to get up at two a.m. to go climb a mountain and most people aren’t crazy enough to push through the pain to have a business and be successful.
What is your favorite mountain experience?
Oh boy! I just can’t count them all! It’s impossible. They are different genres. Getting my son to the top of Kalapatar in the Himalayas, looking down at the top of Everest—there was a lot of pain involved. And seeing this young man who had persevered and then hugging him at the top. That was a great one. Watching my son’s eyes light up, and they get it, going to what we call our happy place when the pain gets going. Watching them learn that and then applying that principle into their lives; you see them literally go from tears to determination to manhood.
So what is the next mountain you plan to climb?
We wanted to do Kilimanjaro this summer but didn’t get the chance to do it. That is our next family goal. We’ll do some of the local 13-14,000 foot peaks in the meantime. We have a little daughter we raised in the Himalayas, a little Sherpa girl, so we are supposed go back to the Himalayas for her wedding in the spring.
Do you have any advice for aspiring entrepreneurs in our community?
Yes, I have three pieces of advice. The first one I say to those who ask, “What do I have to have to succeed?” Number one – have an unalterable determination. If you are getting into this game you have to have unalterable determination. If this will interfere with your spouse, or other trust relationships, then don’t do it. I think we have talked some people out of it because they are not prepared or not ready have been just as successful as those who have entered into it. Number two – have a higher purpose. Money is a pretty fleeting purpose. Driving a BMW is a pretty fleeting purpose. You have to have something more significant and with more durability then money, something that you are willing to get up in the middle of the night for and go forward with. Number three – make sure you have your support system. Make sure your significant other is brought into this because this is the bond that soothes the wounds. Having what my wife gives me is unbelievable. She reads more business books than I do; she is the one who gives me faith and a safe place to go. I think it would be really hard to do it without that.
