Really well written Mike. So many quotes in here that are memorable and accurate. Thank you.
I just wrote a similar blog on BuiltInChicago.org. My concern is the opposite in that the start-up community is so focused on quickly making a buck that the idea of standing your ground and holding onto your vision is frowned upon. http://www.builtinchicago.org/profiles/blogs/persevering-in-a-fund-or-fail-quickly-start-up-culture
Great article. I think Dharmesh is a genius, we are always looking at his writings here at http://launchleads.com as we are growing our start up
Great article! We all need to assess our execution strategy on a fairly regular basis. Liked the comment on there being a "fine line between being the captain of your destiny and the prisoner of your own wishful thinking."
As entrepreneurs there will be times when self doubt, and being discouraged control our thinking. The successful ones are those that can get out of that mindset and persevere.
Patrick Zazueta | Founder
Huntington Coast Capital, Inc.
@Mike - Excellent questions, definitely this can make or break the entrepreneur.
Great points being made in this article. There seems to be so many different factors into starting a business. To break it down into 5 specific topics is excellent.
Nice, pertinent article for all entrepreneurs Mike. Clearly identifying and articulating the 'objective opportunity' mentioned in #5 is key!
Co-Founder @ BioFuel Caffeinated Popcorn
Leave the poor entrepreneurs alone.
They get enough discouragement; I don't think lack of more is their key problem.
Next we'll hear again that engineers start with solutions instead of problems. Or they see marketing and sales as costs instead of revenue generators. Or that 99 in 100 business plans are atrocious. Or that presentations are so much more critical than we think, and must be done a lot better than the dozens you just sat through.
All of these may be true. But good lord, how many successful entrepreneurs do we need looking back at the next wave telling us, essentially, that from a position of knowledge and success it's pretty clear none of us knows what we are doing or has a chance. Is this how you would recommend making a presentation designed to bring your audience to buy into the next step?
When clear-eyed thinking, being able to face up to hard truths others simply cannot, starts becoming inordinately self-satisfying and sounds like complaining, it's a loud warning bell. You're human. But you're not helping.
Unless your advice is within pitching distance of "Here's five proven ways to find early customer validators, the most important factor in building a business, and to get them to pay for the development of your product to boot", then please go have a nap to sleep off whatever is bothering you instead of succumbing to the temptation to rail from your front porch on the nearest keyboard.
CEO Cirrus Computing
Great questions. Insightful article. As entrepreneurs, we are only as good as the last gig and we are always in a sales mode. It keeps us always in a start-up mindset where we are constantly re-inventing ourselves. I've been at this for almost 5 years now and I'm still having fun!!
You are both! However given choices we need to find creative ways to make the best ones. Our initiative is helping Entrepreneurs discover and focus on their unique zone of Genius - EZOG so that they tune their wishful thinking towards maximizing their talent and in doing so become captain of their destiny. cheers
As much as I understood, Mike, I think you have definitely painted a nice picture.
I have had numerous comments in my lifetime about my persistence; my standard response is: I'm persistent when I know it's the right thing to do... Mike, I will be quoting you on one of my daily YouTube/SmallBizDavid tomorrow
True entrepreneurs always have a tough time walking away from a dream. Tesla spent several years digging ditches after quiting Edison. When Tesla met Westinghouse he proved once and for all that he was right and Edison was wrong. All Tesla ever needed was the capital to show people what he could do. Sometimes when I pitch my project, I feel like I am displaying a Magic Eye picture. Very few people are able to see it. My project is basic manufacturing of a game changing product. Absolutely everyone who has seen it, agrees that it will change the industry. The problem is, very few have any interest in manufacturing products in the USA anymore. I want to build this product here because it can be. This is a low volume high margin product that can provide the margins that will allow it to be built here.
This is a very insightful post. Entrepreneurs walk a fine line of believing in an idea to the point of irrationality and just plain being irrational. I think a large part of this comes from the mentality you have to take on knowing that you have to work extremely hard to accomplish something great and that you cannot be deflated by obstacles. It's hard not to lose sight of what is an obstacle and what is fighting against basic logic.
Here's another way to try and bring some moderation in the quantity of these wet blanket posts.
You can say the following is rare a million times, but as long as your main mission appears to be shooting this perspective down, you are moving away rather than toward entrepreneurship:
"To succeed as an entrepreneur, you've got to focus on the product first. Forget about five-year plans and computer analysis. At Bloomberg, we began work on our first data terminal before we had our first client; we launched a news service before newspapers agreed to carry our stories; we created television shows before we had sponsors, and magazines before we
had advertisers... If you start with a good product, the rest will fall
- Michael Bloomberg, Not Always To The Swiftest, Bloomberg Personal, Oct 1997.
I'm tenacious. If your grandmother cannot understand you in 3-4 minutes, you have to rethink it. (Albert Einstein)
Query: my grandmother caught on in 2 minutes, but she listened. How do I grab an investor's curiosity to listen me out?
Son to Dad: no mon, no fun, your son.
Dad to son: damn sad, too bad, your Dad.
the telegram says it all: no mon, no project! too bad.
The hard-core entrepreneurs just don't want to give up. They don't abandon their ships. They go down with it and they reborn them self from the ashes. That's what they do. That's what they will be doing. That's why so many people have their jobs :)
Eight years and 4 million of my own money. You can't get much harder core than this.www.buckdiesel.com
Mike, You are right for every start-up there are hundreds who fail and only a few that succeed in a meaningful way. I myself am in the process of my third start-up. Just like everything else, entrepreneurship is not a black or white experience. It is a series of learning experiences paid for by lost earning opportunities.
I was born an entrepreneur. I think this way. To change would require me not to be me. It has been both a tough, miserable, thrilling, fulfilling and challenging road. Yes, I ask and have asked myself your questions over and over again… over the past years, and yes, on some level all of these questions can come back with ”wishful thinking” answers.
Being an entrepreneur is a at once a lowly position (“get a real job”) and at the same time currently heralded as a mission in this country to grow jobs.
Being an entrepreneur is a subjective experience, the value proposition judged by many. Yes, boot strapped traction out of the box is the goal. But is that the only criteria to judge value over time? It seems to me that all of a sudden entrepreneurship has become a business model unto itself, somewhat like a machine casting proven teams into think tank ideas. While I admire the accomplishments of those who have made it big, I also fundamentally believe there is a base of entrepreneurs who create solutions to real problems, maybe even based on years of experience, who are drowned by the noise. I also know (because I happen to be one) that women are under utilized in developing new technologies and businesses.
So yes, Mr. Shaw. I am unreasonable woman!
Every entrepreneur needs someone who will support him, provide good counsel and remind him of what his original vision was. That person can do a lot to help combat the inertia that seems to be fighting the company. For many of my clients, that's what I bring to them. For me, I have several people who provide it to me.
Control of thinking is the key of our success. It is easiest way to find excuse not doing right things than doing everyday steps to achieve our goal. The best way to predict future is to create it every day.
"Captain of your destiny, and the prisoner of your own wishful thinking"
I think, entrepreneurs exhibit & experience both these characteristics. It is just that those who struggle longer with latter are more likely to fail, and those cross 'prisoner thinking' & be captain of their destiny experience the Ugly Duckling.
The point #2 is quite important.
Day by day, we are building technological products that are making life our life simpler. So it has become imperative today to handhold customers/users throughout the lifecycle they are with us. And we need to make sure that our users/customer understand these values better than prospects. So that the cycle of Prospect-> becomes Customer -> becomes influence -> tells Prospect -> ... will get you extra mile. Else you just need better luck.
Btw, Great post Mike & thanks Dharmesh for sharing it.
Excellent article. Good questions to ask to stay focus.
Usually a fan of Dharmesh...but not a fan of this piece.
Can you give an example for #2?
Always enjoy reading others thoughts on the subject of "Startups" but I think it would have added value if the ideas and processes referred were simplified.
This is not rocket science. An exceptionally successful businessmen I know puts it very simply indeed. He suggests the whole venture is about getting customers in the door. After that you can start worrying about profit-margins etc.,
So first things first. You need to create or market a product or service that Mr and Mrs Spender out there wants. You measure that need and assess if it is a high, medium or low demand. A low demand does not necessarily mean that you cannot run with it. On the contrary, it may be just the niche you can fill. High-demand products carry with them their own problems; competitors, turn around time etc.,
My message really is to keep it simple. Avoid distraction and vague projections. Take the business seriously but do not take yourself too seriously. Life is too short.
Thank you for sharing.
I respectfully disagree. If I followed your advice with my last company I would have folded because I was swimming upstream (in your industry by the way) with crazy competition and no reason on earth why we should win. But instead I held on because I knew there was a better way, sold my heart out, and we went on to become successful, quite profitable and acquired by a large media co. Granted this was a service business but many of the same rules apply.
Even the Pinterest folks talk about how their first year was a great grind with only 10K users and now look at them.
If the entrepreneur has a solid BOA they should talk openly with them constantly. If they are told it is time to throw in the towel by trusted advisors that is a different matter. But not by general questions like these.
strong insight, presents acid tests to live by.
I've been developing automated Excel bookkeeping spreadsheets for many years now. I've tweaked them and tweaked them. Now it really hums. Does the market need this product? I think so. Do my customers love the product? Yes, they do. But how do I compete with the marketing giants? Do I give up the ship or continue trying to get the word out? That is the million dollar question. What do you think?
I have started several ventures and turned a couple around. All previous ventures were small and destined to be so (less than 5 million in annual sales). None were really marketable as companies. I think that every entrepreneur should first look at the future marketability of any venture they start. Who wants to work 16 hour days, for years, just to find that their business isn't marketable and stops when they stop. Second, they should consider the size of the market they are entering and wheather the sales they expect to generate will produce more reward than a job working for someone else would. I see so many people who rent space in the mall to start a yogurt stand, just to find that everything they make goes to rent. Try selling a business that requires you to work 70 hours a week for less than decent wages.
Someone's got to take up the notch in reply to this piece and be Dharmesh as successful an entrepreneur as he may, I will have to retort to this piece with a vehemence of optimism that I was born with. 1. Is your quality of execution sufficient to take quality of execution off the table as a variable?
A: If no, then don't just roll over and die like the article says. Believe that you can tweak something in the model to make your propositions worthwhile to the customer. Analyse the data with the belief
that you will find that crucial tweak which can take your idea to the next step of traction without relying heavily on excellent execution. Don't die. 2. Do your customers understand your offering differently than your prospects?
A : Don't roll over and die like the article says. See what do you need to sell the concept more effectively. More marketing, a better sales person, an awesome biz dev guy, simplifying the offering to the consumer, killing the add ons and keeping the money maker in the deal, whatever it takes to get the concept across. Remember Consumer products like METHOD have succeeded against FMCG giants in mature markets through sheer persistence and difference in their way of presenting the concept. 3. Are others finding success in your space?
A: This one IS simple. Whatever you do , don't give up. Mimic competitors, undercut competitors, negotitate aggressively with suppliers, conserve cash maniacally but STAY in the game. Become obsessed about the business even if it is a mature market and you will succeed. It's not you, it's just your dogged persistence. 4. Will the larger context change in some way to smooth your path to success?
A: Again, do you really want to wait for the "larger context to smooth". How about making the larger context happen. Steve jobs ( an outlier, but still) made this happen every single time. He created contexts out of thin air in which his visionary products thrived ( iTunes , iPad being very good examples). You may not be Steve Jobs yet but even Steve wasn't Steve until he moulded his context himself. Why? Not because he knew he was the greatest CEO alive but because he "needed" to succeed ( contrary to the answer to No.5 Dharmesh gives). Not because he saw a market opportunity but because HE NEEDED TO SUCCEED. He preferred being out in the field creating the Reality distortion to sitting at home to watch Shark Tank. That's why he gave Q no.5 a nice little whooping. 5. Is the source of your conviction what you need, or what actually is?
Do I even need to answer this after the last answer.
My point : You are not Steve jobs yet. But like I said, even he wasn't so sure whether or not he would succeed every time he put himself on the line.
But he did one thing very very very well. HE Believed. oh! did he believe.
He believed in his idea so much that when he spoke contexts were created, markets were moulded, multitudes were subdued, fanatics were created and ideals were born.
So don't listen to naysayers. If you have had failures in the past , it's alright. But right now, make up your mind that come hell or high water you will end up as a success.
Even the stupidest of ideas have gone on to become multi-billion dollar companies because people believed, were obsessed with their vision even if such a vision were truly impossible.(ex : flying over water in a tin sheet)
Realist entrepreneurs will tell you, you won't succeed if market isn't warm to your idea. But Realists are sell-outs. They are looking to get acquired.
Only the fanatical believers go on to build multi billion dollar conglomerate.
#2 makes no sense. If your prospects have a different understanding of your product than your customers do, then your targeting and/or communications strategies are missing the mark.
The idea that your product should only really make sense to existing customers is absolute nonsense.
I totally agree with V and with Bill from Cirrus. Why discourage entrepreneurs by making them think they are not being practical or facing the hard truth? No Michelle, absolutely don't give up. If your customers love your product, take V's advice and keep on believing. I grew up with an inventor father who started more than 40 successful businesses and non-profits. Nine out of ten of his projects failed, but the ones that succeeded have become national and international successes. He always said "Don't ever evaluate a risk based on the probability of its success but rather on the worthiness of its goals."
Your article is extremely insightful and thought provoking. Provides the much needed claw back to ground zero reality check of the 'big idea'. Thank you.
I feel I've had to rebuild after the fire way too much in the last few years. Trucking/transportation is my business & I was very successful independent truck broker for many years, but the economy, foreign competition, etc. has worn me down and the big guys are eating my lunch. I lived for years on my savings and my very good credit...but both are gone now and trying to find funding..even a minimal amt...3000 to 5000...is impossible. Standard ways of borrowing no longer work for me. And grant money in my industry is practically non existent. What do you do but keep trying though? That's entrepreneurship. That's strength..and sometimes that is the key..never give up! I don't sell flowers and I don't bake cakes, but I'm a job creator with every load I put on a truck. Getting people to understand that is the difficulty.
This is a good and important article. I meet plenty of entrepreneurs out there without direction and putting the cart before the horse. If you have an idea, put it on paper and look at it, tweak it, make sense of it and work the plan. Start up entrepreneurs often won't write a business plan and this sadly allows them to run their business from emotion without clear focus that will save lots of time. A business plan also helps the owner to teach himself to explain his business or product precisely just because of repetition. Use your business plan to help you get off the ground, find investors, define products and/or services. Don't skip the process and hang on for dear life. I meet plenty of people out there who don't understand "It's hard work....but rewarding work!". Good article.
The greatest fear an entrepreneur should have is the dread of working for someone else.
Most entrepreneurs question themselves all the time -- we resort to bravado as a means of whistling in the dark. While there is merit to some of the questions, there are also gaps.
For instance, relative to point 3, there aren't always competitors. Many entrepreneurs are doing something entirely new for the precise reason that they see the gaps
and find ways to fill them.
That leaves me in agreement with other commenters who say, stay the course and with Bill, who said that it's difficult enough without someone else voicing doubts to discourage us.
If no one ever tried anything new, or a little bit nuts, where would we be?
"If people think you are crazy, you are likely on the right track." (Corie Haree, founder of Little Borrowed Dress, on Forbes.com)
Food for thought, all the way 'round and some great stuff in the comments.
Do the dogs eat the dog food?
Wow. Guess this one polarized people.
I want to make it clear that I am *NOT* suggesting that being a quitter is the path to startup success. What I'm saying is that sometimes you need to punt on an idea you've been committed to, so you can pursue another one with the potential to succeed.
A lot of great businesses have been created by people with the force of will to overcome failure in the early stages of an idea. But I'd argue that MORE great businesses have been created by entrepreneurs who had the courage to walk away from a fatally flawed idea, to pursue a new and better one informed by what they'd learned.
You know who sticks to an idea beyond the point of reason? Someone without any other ideas. Don't be a one-trick pony, folks. The suggestion that it's somehow better to "go down with the ship" than to withdraw without leaving a crater is some kind of startup macho nonsense.
Seek the truth. Stay open to it. Face it. Deal.
That's what it takes to win.
A real good article, where one find himself in such sitautions
thank you for showing us a way to check ourselves regularly .but still i feel that we have to learn everyday and tweak ourselves to grow .
Most entrepreneurs started up with garage culture.
Warm Greetings from WOLID/OMDID
We are very happy to write you, welcome to congratulate the great work carried out in the world again and again to have a harmonious world descent and a better life for everyone.
We are World Organization for the Lasting Integrated Development/Organisation Mondiale pour le Développement Intégré Durable (WOLID / OMDID).
WOLID / OMDID are a nongovernmental organization (NGO) non-profit organization involved in promoting economic and social development in Haiti.
An institution bringing together young volunteers and professional and always willing to help in all activities of the organization for the welfare of the population.
The organization is facing serious difficulties, going through a difficult situation precarious and complex especially after the earthquake of January 12, 2010 last, the needs are enormous, and the demand is increasing day by day.
Dear colleagues, on Alas, in the South like Haiti whose human development index is concerned, this major disaster occurred on 12 January2010 that has ruined so many lives, linking post-disaster situations of natural disasters.
Many large organizations will succeed in the world and speak often and always respect human rights.
How can we talk about human rights and sustainable development and without the protection of lives and property?
A country's social problems are generally identified.
Dear colleagues, we an institution, we have experienced tragic moments on the side of the Haitian people, but we are still and always supportive, as long as there are men, men of good will there is hope We have lived all disasters, pandemics, poorest hunger, all those rights may require the man, all those in the nature of man, aggravated by their systematic destruction and irresponsible.
Honorable colleague that a country like Haiti's population lives in subhuman conditions and do not see how going out.
How will he have peace and respect for human rights in Haiti as the world the living of the people this country is totally degraded, making disasters even more dramatic, more severe floods, environment more fragile, health more difficult, the food even more inaccessible, the `education even more rare, more housing is missing, more sectarian democracy, the people even more vulnerable, community development, even smaller, yet all the facilities more inadequate, the human and social life even more problematic, even more deadly droughts, the rural exodus even more massive.
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So we found it necessary to seek friendly organizations of good will not only become a member or corresponding representative, but also organizations that we can take control, we coach, advise and guide us.
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And we hope in the very near future you will be with us in Haiti, see understand and assess the situation with us.
An organization based in Haiti and involved in the socio-economic development of the country namely:
• Social welfare
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• Community Development and Leadership Training.
We are a very committed in Haiti, given the problems facing organizations in the face of major space Fefita and challenges facing the country especially the people of Haiti.
WOLID/OMDID want a corresponding member or representative member for you in Haiti ,to have a firmer and closer arrangement with you whereby we can talk together, liaise together and just do activities together in Haiti.
Attend out to our friends as your organizational membership to be of great Partnership for us to work and grow together in Haiti and elsewhere.
Looking forwards to hear from you.
World Organization for the Lasting Integrated Development / Organisation Mondiale pour le Développement Intégré Durable (WOLID/OMDID).
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Nice and informative blog, Thanks. Keep on posting like this.
Extremely well written thoughts on deciding entrepreneurship as your choice AND deciding when to call it quits!!!! (Which is equally important). "Entrepreneurs motivated by an objective opportunity have a much better hit rate than those motivated by an internal psychosis, or an external requirement."
That is so true before really judging whether you want to take the plunge.
Thanks very much, I appreciate you making this post available.
There are founder CEO's and CEO's, this describes what I call the leader CEO, someone resting between the often times blind passion and the experineced executionist. Great post! Kathi
I owned a start-up software company during the "dot-com" era. About 18 months into the project, a very senior exec at AOL said that we had solved the problem that people would not know that they had until 10 years down the road. I heard that and cringed.
We knew that our primary market would be threatened by our product and no one had an incentive to change the rules. But, we failed to recognize that our analytic advantages were not economically compelling given the risk that we were creating to their existing analytics. If we had been both analytically better and been able to show our potential customers how to monetize that benefit with little risk to their existing service lines, we would have succeeded. We failed to put our product in front of a customer in a way that made the product desirable and unthreatening. The product was great; it was "us" who sucked.
I tell this story because there are times when it is truly impossible to know if one is being self-delusional. And, more often than not, you won't know until you get in front of customers. And, even then, it may take a while to find the right customers and present one's product or service in the right way.
My bottom line: success, and the inevitability of failure, is only obvious in hindsight.
My mantra: don't be afraid.
Point #2 -- Do your customers understand your offering differently than your prospects? -- really hit me hard. It is absolutely right, but a very subtle idea.
Every week I look at my company and consciously decide to keep it running. All other points read as my checklist: execution good enough? Check. Large market with successful companies? Double check. Bigger context that will drive growth and internal committment? Wouldn't be doing it otherwise.
Yet each week I've been getting more frustrated about how things were going. Am I missing something? If what I know still doesn't seem to be working, am I doing something wrong? So I've been searching for that missing indicator -- that test that will either give me the confidence to move on or the courage to fold up shop.
Do your customers understand your offering differently than your prospects? That was the test I was looking for. Right now we have only a handful of customers. But boy do those customers "get" it. And they get it the same way. I never considered that change in understanding as an essential proof point for customer success. But it is.
Thank you so much for that insight.
thank you forthe no nonsense way of taking personal inventory without the pain. i am working towards starting a progressive plumbing concern, and you just unlocked the thinking that had previously been hidden from me. i look forward to more.
regaurds, rob crusta sr. lmp1586
Thank you for sharing this post and I like it very much.
These are all good comments...I am just starting coming from 20 yrs of corporate / executive sales. There are a lot of opportunities out there, it is always a combination of risk vs reward as well as area need and uniqueness. Then dedication and sustainability. Lastly, can you afford to do this? In both capital as well as time.
Great!!!.Excellent piece of advices for the entrepreneur.
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I don't know if it is stupidity that drives me or perseverance. Imagine you spent all of this money to develop this rocket into outer space and then no one wants to load their free cargo into outer space. That is how I feel. I created a real estate listing website for cabins and cottages where you can have a free listing that feeds out to dozens of sites, and no one can find the site because there are so few listings. There are so few listings because no one can find the site. How do you get over the hump in terms of websites and when do you bail?
Awesome post, very motivational. Thanks for sharing.
OK...Who is motivated to find such listings? Who is motivated to list such listings? Who gets paid when lister and finder get together? You're essentially acting as a broker. So, it seems to me that your natural "partner" is real estate brokers in certain areas who don't want to specialize in listing such properties because they are small and there may be not be a lot of money in the brokerage of such properties. However, a white label service that allowed them to list such properties in their area -- particularly for clients with whom they already had a relationship -- might be attractive to them to add your service (with their logo's/look and feel) to their website.
You seem to be trying to "own" a retail relationship with the customers (i.e., listers and renters) when there are much bigger players out in the market (i.e., the real estate market) who already own that relationship. That's not a strategy that seems likely to succeed.
An alternative strategy is to think of yourself as a pilot fish swimming along with the whale in each local market. Hook up with a pre-existing broker that doesn't want to be bothered listing these properties. In effect, you want to be a small "something" for many people -- i.e., brokers.
In my humble opinion, you might ask yourself if your business is a B2B business or a B2C business. It seems to me that you might be having more success if you think of it as a B2B business.
Of course, as is always the case, I could be wrong.
Attend out to our friends as your organizational membership to be of great Partnership for us to work and grow together in Haiti and elsewhere.
Looking forwards to hear from you.