Part 1: What does a successful Entrepreneur look like?
I truly believe that there is NO singular path to success. There are, however common traits that successful entrepreneurs have embodied along the way. Here’s my list of the top 5 traits:
5. Dogmatism: I’m referring to grit and determination. Seasoned entrepreneurs are students of failure. They’re used to picking themselves back up, dusting themselves off and refocusing on the horizon. At the earliest stages of a startup, the Founder embodies the culture and cadence of the business, The entrepreneur must soldier on, despite prospective customers shutting their doors, employees resigning and investors leaving.
I believe this has a lot to do with the level of emotional effort invested in a business. For the founder or owner, the business is an important vehicle to emotional fulfillment. They want to fulfill a need or solve a problem that they are passionate about. The other people involved in the business are less likely to be as invested emotionally. They require tangible rewards like compensation, the promise of increased rewards or the emotional satisfaction of aligning with the vision or culture embodied by the startup environment .
At an early stage startup, the founding team may be many years away from experiencing financial success and the corporate culture is quite a ways from being established. It’s quite common for people to enter and leave the startup as through revolving doors since their needs are not being met. The founders need to be prepared for this eventuality and notwithstanding the emotional toil and self doubt brought on by individual departures, they must be undaunted and continue to grow the business.
4. Pragmatism: Good entrepreneurs understand the concept of an opportunity cost. The philosophy of “good enough” rather than “perfection is key” is important in a startup environment where resources are constrained. It’s been my experience that there always aren’t enough people, skills or expertise to accomplish a task and funding very frequently is limited. Each decision to engage in an initiative, such as building a new feature to an app, or launching a marketing campaign, takes away from limited resources that can be invested in other priorities.
Early in my career, I helped to establish a Point of Sales software business serving small and medium-sized liquor retailers in New York City. We initially toyed with the idea of developing our own system after investigating a number of POS applications on the market that were either too expensive or difficult to use. We however acknowledged that our proficiency was not in software development, but in sales and after-sales service. Instead of focusing considerable effort on building an application from the ground up, we licensed a simple software platform and started selling it almost immediately with a goal of getting customer feedback on the software from day one.
This “R&D by doing” approach allowed us to enter the market a lot sooner than our competitors and by learning about the business of liquor retail, we were able to design our own POS system in tandem, launching it a year later to great success. Steve Blank’s philosophy of Customer Development Model resonates very well with this point.
3. Adaptibility: One of the most important lessons I learnt early on in my career was to not be too set on an idea. If a superior idea presented itself, I had to weigh it’s relative merits and if need be, change course and move on. In it’s simplest sense, we define a solution to a problem based on our ability to understand and assess the situation, and as we learn more about the problem, we learn about other solutions that may not have been evident without our increased knowledge. Startups are magnificent learning environments.
For example, I was involved in a business where we were trying to build an online marketplace that involved matching buyers of services to potential sellers. One of our first challenges was driving traffic to the site. We initially focused a big part of our business on building an attractive marketplace for buyers, but quickly realized that buyers would only be driven to our site by the quality and currency of the things we had to sell.
It made sense for us to change our focus to sellers by building one of the best seller-support applications in the market and then giving it out for next to nothing. Our strategy paid off and we soon captured a strong pool of sellers who were putting their events up for sale on our site. This in turn drove more buyers to our site to purchase events. By discarding our initial perceptions of the problem, we were able to reassess the situation and develop an innovative solution that resulted in positive financial returns for our startup.
If you follow lean start up methodology, this process is called “Pivoting” and for an early stage startup, expect it to happen frequently!
2. Historical hindsight: In this era of “almost” perfect and timely knowledge, competitive advantage in the stock market is measured by nanoseconds, and disruptive ideas are few and far between. While many investors (including myself) shudder at the Entrepreneur standing at the podium pitching his or her disruptive idea, most of us understand that a disruptive event is not really that frequent.
What surprises me then, is that little thought is placed in the media on Contextual Porting. By contextual porting, I refer to the act of taking an idea that works fabulously well in one industry and transferring that idea over to a separate context. It turns out that throughout history there have been numerous cases where the eminent success of a military leader (such as Napoleon or Patton) or an artist (Picaso) involved “taking inspiration” from another artist or strategist. William Duggan is probably one of the most humble academics I have ever met and he has written and lectured extensively about this phenomenon.
1. Ca$h-flow focused: The concept of lengthening the runway is an important one for many Entrepreneurs. Frugality is not about being cheap, it’s about knowing where your dollars count the most and allocating them accordingly.
I co-founded a training school over 10 years ago in the States. One of the hallmarks of our early success was that the founders made it a point to not draw any salaries. We worked full time jobs and invested our personal time teaching and growing the business. We chose not to borrow from banks and rented a small facility, paying virtually no rent. We built the furniture in the classrooms on our own and I even remember climbing up the rafters to pull cables.
Many startups make hasty decisions that lead to failure because they’re running low on operating capital. This is the cash required to pay monthly rent, utilities and other important expenses like salaries and marketing. By staying financially lean and keeping only essential personnel on payroll, the startup is less likely to have to borrow or give away significant amounts of equity to early investors, just in order to stay afloat.