When asked to boil down my experience to seven things every entrepreneur should know, I am tempted to just remember the “glory days” and the great triumphs. I want to talk about taking Entropic public, being named Entrepreneur of the Year by Ernst & Young, and being on the Deloitt Fast500 List of fastest growing companies three years in a row, but it would be irresponsible to do this when relaying my experience to other entrepreneurs.
After running three product companies, starting my own consulting business, navigating through difficult product launches, ramping major customers, winning & losing designs, navigating times of economic booms & busts, and having some great experience with some really terrific people, these seven things come to mind. Keep in mind that I am an eternal optimist.
1. Being an Entrepreneur and Running a Company is Really Hard Work
I see a trend in the business guru world these days that talks a lot about life balance, working smart, and having it all. In my personal experience and the experience of countless other successful entrepreneurs, I think this idea is a myth (and that is using rated G language.)
Building a company from the ground up requires a lot of time, dedication and enormous sacrifice. There will be times when you have to miss a special family event. There will be times when you have to travel instead of spending time with your family. There will be times when you will miss workouts because you have an important project to complete or an important customer to visit. Running a startup will put a strain on your marriage and your relationship with your children. If you start a company with the idea that you will have more control over your own life and your time, then you are doing it for the wrong reason.
Let me be clear, I am assuming that you want to build a great company that changes the world. If you want to have a “lifestyle” business, and you don’t want to work for “the man”, then you can possibly have a comfortable life and a reasonable amount of life balance.
The right reason for starting and running an entrepreneurial venture, something that you think can grow into something big and change the world, is that you have a passion and drive to change the world, and a belief that you have an idea and emotional fortitude and commitment to make your dream into a reality. If you don’t have this, then your chances of success are extremely low.
2. There is No Guarantee of Success in Starting and Running a Business, Even if You do Nearly Everything Right
his is a message that entrepreneurs don’t want to hear. It kinda sucks. It reminds me of the line in the movie The Matrix, where the character Neo says, “I like to think that I’m in control of my own destiny.”
I would not dwell on this point. You are way more “in control” of your own destiny running a startup that you are working for a big company. You can directly see how your efforts “move the needle”. Your effort and ideas will be the primary elements of success and failure. But you do need a little luck. I also like what Earl Nightingale, the famous personal development coach said, “Luck is when preparedness meets opportunity.” If you rely solely on luck, your chances of success are about as good as winning in Las Vegas. You might win a few times, but ultimately the odds are so stacked against you, you will lose. That is how they are able to build all those big casinos and why they call it gambling for the patrons and gaming for the casino owners.
3. It will be Challenging and Time intensive to Build a Great Team, but It is Essential for Success
Hiring is one of the most strategic activities you have to do in a startup company. You cannot build a great company on your own. You need to build a stellar team. I don’t care how brilliant and talented you are. You need to have a team behind you to accomplish great things and build a great company. Like championship sports teams, a huge amount of time and effort is spent on building the team. You need to do scouting, recruiting, closing, and on-boarding effectively. Hiring the key people in your company is as much a top priority as building the product and winning the customers.
In hiring the first 30 to 80 people into the company, you should be directly involved in the selection and recruiting process. I am not saying that you cannot delegate parts of this process. I am saying that I would not allow a new hire into a company unless I met that person. This includes the receptionist and the VP of engineering. This is critically important because you are establishing the corporate culture at this early and formative stage of your company. You also want the candidates to know that the CEO cares enough about them that they are willing to meet with them as part of the selection process. It is powerful.
4. The Proverbial “Shit Will Hit the Fan”, Multiple Times, so You’ll Need to Develop Excellent Crisis Management Skills
As they say, “Success has many fathers, but failure is an orphan.” Event driven setbacks may appear as ultimate failure, but they are not. As the leader, you need to keep this in mind, and put things in the proper perspective, while not appearing “Pollyanna”. You will need to have a thick skin, because tons of criticism will be directed at you, regardless of who or what is at fault. The reality is that you are the leader, and the bulk of the criticism comes to you. In fact, you want this so that you can shield your team, and recover from the setback.
When you hit times of significant and concentrated adversity, it is important that you are like the captain of a ship that remains calm in the storm. You have to be very honest and transparent. You have to put a recovery plan of action into place. You need to narrow your focus and do what’s right in front of you, while also maintaining personal hope about what’s over the horizon. I both like and dislike the saying, “Hope is not a strategy.” I don’t think it is a good idea to rely totally on home versus planning. At the same time, to inspire and lead others, you need to have hope in the future, especially during times of great distress.
Knowing that these times of great adversity will occur, it is important that you have advisors and board of directors members that have a lot of experience and domain expertise in your vertical markets. If you don’t, the likelihood for panic on the board during these times is amplified significantly.
These critical moments include, but are not limited to:
- Missing a critical product deadline or key milestone that results in a significant setback on your plan
- Losing a key design with a critically important customer
- An unfavorable macroeconomic event like 9-11 or the great recession of 2009
- The departure of a key executive or technical contributor on the team
- A founder leaving the company or getting fired
- An issue with your manufacturing line that puts customers lines down
And the list goes on…
5. You WILL want to Give-Up and Quit; Don’t Do It
Because the odds are so insurmountably stacked against you, and it takes so much effort to get things off the ground, you will have days where your mind will say to you, “This just isn’t worth it.”
The established competitors and customers in your target vertical market are “content” with the status quo. They may want a new feature or new product, but the customers would like to rely on their existing supplier base to fulfill this need. You must have something that is so much significantly better than the competition that customers are willing to work with you. Even then, you will need to overcome significant inertia to establish your company on the map. This can grind you down.
This type of work requires long hours. As such, it is both physically and mentally exhausting at times. Building a great company is a marathon, not a sprint. You need to keep yourself in the proper emotional and physical shape to do this type of work.
When your mind tells you to quit, your spirit needs to say, “Shut-up mind”, and go after things with renewed energy. Maybe you need a short break, whatever it is that recharges your batteries. When successful entrepreneurs talk about passion, this is what they are talking about. Anyone can be passionate when things are going well and “rosy”. It takes a special type of character to remain passionate and enthusiastic and hopeful, even when things are tough.
6. There Will be Defining Moments When You Will Need to Make Specific Choices That Can Change the Direction and Outcome for Your Company – Get the Data, Rely on Your Gut, Be True to Yourself, and Make a Decision
As Yogi Berra says, “When there is a fork in the road, take it.” I wish it were that easy! In this case, Mr. Berra was describing how to get to his house, and either fork would take you there. This can sometimes be the case in business, but usually there is a better choice and a worse one.
One of the few advantages you have as a startup, versus the established larger players in your market, is speed of decision-making. You can just make decisions faster because you don’t have to deal with the massive amounts of process, bureaucracy, and red tape that exist in bigger companies. Bigger companies need to preserve the status quo, so they put these processes into place to keep some “bonehead” from making a decision that tanks the company. If your startup can collect data quickly, analyze it, debate it, then set a direction and execute, you can beat the established players. You will be doing things in a way that will “violate the corporate DNA” of the larger players. They cannot not do it the fast way, even if they want to!
Bigger players have smart people, more money, and more resources to throw at problems. Small players have speed of decision-making, flexibility, and very little to lose.
Use the advantages that you have. Make decisions. Have a bias toward action. Be fast, but don’t rush. If you make a suboptimal decision based on the incoming data, then “course-correct” along the way. Not making a decision is sometimes as bad as making a poor decision.
7. There is No Better Feeling than Building Something Great Out of Nothing, Making Money for Your Investors & Employees, Delighting Customers, and Leaving Your Competition Feeling Foolish and Confused
This is why you become an entrepreneur and endure all of the ridiculousness that comes with starting and running a young company. These times of great satisfaction and gratification don’t come every day, but when they do, you should savor and enjoy them. It will be the stories that you tell your grandkids. You can never rest on your laurels, but you should always celebrate your successes. It is what makes entrepreneurship so special and fun.
About the author: Patrick Henry is a business coach and Founder at QuestFusion.