Do's and Don'ts for becoming an entrepreneur

My first job after college was selling fish tanks. My friend had created a new invention called 'The Rivertank Ecosystem,' and I had joined up with him to turn it into a business. My first business trip was to Minneapolis to train our first distributor how to introduce our product to customers, and I asked my college roommate if I could crash at his parents' house while I was there. It turns out that his father, Jerry Gallagher, was the most successful retail venture capitalist in the country, having made early-stage investments in Whole Foods, Ulta Beauty, Office Depot, PetSmart and countless other big box retailers and restaurants that took over American strip malls. He would ultimately fund my first business too, but on that first night over dinner, he told me a story that paved the path to becoming a serial entrepreneur.

We were sitting in a stately dining room in a beautiful, early 1900s mansion. At some point, Jerry asked me if I planned to sell fish tanks as my main vocation (I'm sure in a very polite, yet funny way), and I shared that I didn't know what I wanted to do, but that my father seemed to like the idea of me getting a law degree. Here's how he responded:

"Eli, let me tell you a little story that you may find interesting. I was on a plane flying home to Minneapolis from Detroit and I'd just settled into my seat when a young woman sat down next to me. Now, I'm on a plane many times a week, and as a rule, I avoid making any conversation with anyone sitting next to me, and that evening was no exception to the rule. But the young woman was very energized and excited, and she eventually couldn't contain herself any longer and introduced herself. I acknowledged her and turned back to my reading when she said, "I'm so excited because I just found out I got into law school!" I turned to her and said, "Congratulations, that's wonderful," and then turned back to my reading again. She was quiet for a bit, and then said, "You don't seem to actually think it is that wonderful. Why is that?" And so I decided to break my own rule. I put down my reading and asked her, "How many lawyers will the U.S. graduate this year? 20,000? 30,000? You seem like an intelligent, engaged young person. Does the world need another lawyer? I'm not so sure. So the truth of the matter is, I'm not actually that excited for you." Well, she was taken aback, but she was now curious and maybe a touch combative, and so she asked me what I thought she should do instead of becoming a lawyer. "Well, if I were you," I told her, "I'd go to beauty school." He paused for emphasis to let that sink in — with all its implied chauvinism. "And when I graduated from beauty school, I'd get a job as a hairdresser in a high end salon and then I'd get a job in a low price salon chain." Another pregnant pause for effect. "And then, I'd go to business school and get my MBA, because I'm just coming back from a meeting where I'm on the board of directors for the largest salon chain in the entire Midwest, and I've been interviewing dozens and dozens of people and I have not been able to find a single person who both understands the salon industry and knows how to run a business." Pause. So Eli, I guess I'm inclined to give you the same advice I gave to that young woman on the plane. When everyone is running in one direction, the best opportunities often come from heading the other way. That's what makes the difference."

Fast forward less than 10 years later, and I had earned my MBA and was running a hair business (Bumble and bumble)! Was I following Jerry's plan? I don't think so, but there were several key components to Jerry's advice that are incredibly important when considering becoming an entrepreneur.

Become an expert by learning from others.

My fishtank experience only lasted one year because I quickly realized that trial and error is a very inefficient way to learn. I had cold called hundreds of pet stores and figured out how to generate sales. I had taught myself excel and taken accounting classes at night so I could track and forecast our finances. But my friend and I knew nothing about building a business and I knew I needed to learn from experts. With Jerry as my mentor and guide, I spent the next decade getting as much exposure as I could. I learned how to analyze and value consumer businesses from the best analysts on Wall Street, I studied with top business school professors at Stanford and, most importantly, I spent years working directly with experienced, best-in-class operators in the industries that interested me — most of whom didn't have a fancy education and had risen to the top of their trade through a combination of grit, street smarts, raw intellect and decades of experience. Along this journey I gained the confidence to believe in my ideas and convictions paired with the deep humility to know that experience is essential to success (if you don't want to count on being lucky).

Find the open space.

Two years after that dinner with Jerry and just one into my Wall Street education I found myself mulling over Jerry's words as I walked out of an after-hours meeting at a super hip salon in New York City called Bumble and bumble. The owner of the salon, Michael Gordon, lived in a mini commune of sorts in my small suburban town with his best friend, the pioneering yogi, Alan Finger. Alan's son, Tevya, had become a friend and, after graduating from high school, had decided to work for Michael at Bumble. Tevya would go on to become one of the most successful entrepreneurs in the hair business, founding Oribe, R&Co and a handful of other hair brands through his investment vehicle Luxury Brand Partners, but at that point he was a lowly photo assistant to Michael and was just starting his journey. Tevya and Michael had reached out to me because they wanted help thinking through how to start a line of hair care products with the Bumble brand name. I had spent the evening helping Tevya with a basic business plan — products, pricing, margins, and distribution. They already had the brand nailed. It felt great to be able to leverage what I'd already learned to help them chart a path forward. Wandering up 56th street I mused to myself: How many ivy league grads are there in the hair industry? According to Jerry, not many. Maybe this could be a good place to make my mark one day. Seven years later, after selling a controlling stake, Michael and Tevya asked me to help them run Bumble and I became the youngest General Manager in Estee Lauder Companies' history. I have loved the hair business for many reasons, but #1 is that it has been forgiving enough competitively to allow for the many mistakes I've made as a leader and entrepreneur along the way. It has been a perfect proving ground for the unconventional, non-conformist business ideas that have been my muses.

You can't force inspiration, but learn to seize the moment.

Fast forward almost a decade. I was sitting in a fabulous hedge fund conference room with Michael Gordon after years of zero contact. Michael and I had a falling out after I left Bumble to run Jurlique, and only recently had we cautiously reconnected. Since I'd seen him last, he'd made a series of decisions that hadn't gone his way, and the fortune he'd earned selling Bumble to Estee Lauder was largely gone. He needed my help and I was reluctant to get involved for many reasons. As the meeting came to a close and I'd shared my feedback, Michael handed me a bottle and asked me to please try it.

Standing in the shower the next morning, as I massaged into my hair a ludicrously luxurious cream with a consistency something like custard, I marveled at how differentiated the experience felt. No foaming bubbles, just silkiness with a subtle beautiful scent. Rinsing, my hair felt soft with a slight slip. It wasn't squeaky clean but somehow I could tell it was indeed clean — just a different kind of clean. And I understood why: without any detergent, the oil-based cleansers in this crazy product had removed everything that needed to go and left behind a deeply conditioning yet light coating. I smiled and thought to myself, "This is probably the single best, most innovative beauty product I've ever encountered." Within six months Michael and I were partners in a new venture called Hairstory, and I attribute 90% of our tremendous success since to New Wash — that amazing, innovative, incredibly effective cleansing cream that still to this day has no competition in the marketplace.

I attribute all of the best things that have happened in my life to an innate, subconscious willingness to act swiftly with conviction when confronted with a compelling opportunity. I married my wife within a year of meeting her on a blind yoga date. We conceived our first kid before there was even a room for her to sleep in our loft. Our second, while we were commuting between Australia and New York. I don't consider myself impulsive, but I'm definitely a risk-taker. The caveat: only in the context where I have conviction in my own ability to control the outcome to a reasonable degree and protect against the downside. I'm a rock climber, not a skydiver.

Opportunity often presents itself out of nowhere and when you least expect it. If you've done the pre-work, you'll recognize the moment when it arrives. The contrapositive to this is equally important and true — you can't force inspiration. A close friend and serial entrepreneur proved this point for me. After founding, building, scaling and selling a business to a top strategic buyer, he and his co-founders decided to "do it again" and locked themselves in a co-working space for a few months with a goal and a deadline. They ideated and researched and analyzed dozens of potential next businesses, debating and deliberating, even force-ranking. Ultimately, they landed on an idea they thought had the highest potential for leveraging their experiences and meeting an unmet market need. It wasn't any of their favorite idea — no inspiration — but they hoped it would be the highest common denominator. They raised millions from top VCs and spent a full decade building a business that was indeed successful enough to generate sales but never broke through with true momentum. Ultimately, they wound it down and one of the founders stayed to pivot to a new idea. It still languishes to this day.

Building a business is incredibly challenging and being an entrepreneur requires deep resilience and perseverance. You simply can't invest the proper creativity, endurance and positive energy into an idea that is anything short of inspiration. You need to believe in your bones that this new business deserves and needs to exist in the world. This is not something you can manufacture — it hits you in the face. And when it does, you need to recognize it and respond.

So back to my earlier question: Was I following Jerry's plan for me? No. But that fateful night, he gave me something incredibly valuable and profoundly important: he gave me permission to take the path less traveled. Not only did he give me permission, he presented it as a noble undertaking. Taking a step back, I'm guessing Jerry had already figured me out. He saw that I was entrepreneurial, independent and I wasn't likely to follow a traditional path anyway, and so he helped me realize it myself and made me feel good about being who I am. It was an incredibly gracious, generous gift — one of the best anyone has ever given me — and I will be forever grateful.