This entry originally appeared at Live Your Legend.
“It is difficult to see the picture when you are inside the frame.”
Eugene Kleiner, Co-founder Kleiner, Perkins, Caufield & Byers
A small percentage of people in each free-market society generate the jobs for everyone else. These entrepreneurs do not risk everything, work outrageous hours and put themselves under extreme pressure because they want to. They certainly do not do it for the promise of riches. They do it because they have to, because they are driven to create something from nothing.
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Entrepreneurship is not a choice. It is a compulsion. It is not rational to put oneself into the uncertain, stress-filled environment of a startup. It is far more logical to take a 9-to-5 job with little stress and a lot of holidays. If it were a decision to be an entrepreneur, then most right-minded individuals would decide to turn back when they encountered the first inevitable startup crises. As noted in Your Startup Ideas Should Not Be Charming, most successful entrepreneurs are haunted by their ideas and feel they must execute them before someone else beats them to the punch.
Entrepreneurs want to matter. They do not want a job, they want a purpose. They want to make a difference and they know that if they do not show up for work, important accomplishments will not be achieved. In the early stages of their adVentures, entrepreneurs often sleep like babies, waking up every couple hours crying. Despite the stress and restless nights, most entrepreneurs would have it no other way.
Safety in Numbers
Most people choose to live in the midst of The Herd. They seek jobs created by others, allow their destiny to be controlled by exogenous factors and are quite happy to punch the clock at 5:30, Monday through Friday.
Milling about in The Herd may be safe, but the job security comes at the cost of controlling your destiny. Yes, you can moo loudly and hope for change, but this is akin to honking your horn while sitting in bumper-to-bumper traffic. Lashing out in this futile manner may temporarily relieve your frustrations, but it will not serve to improve your position within The Herd. Once you realize that no one heeds your plaintive mooing, you face a choice. Either give up and settle into a quiet, uneventful life within The Herd or take command your destiny; by departing The Herd and founding or joining a startup.
You might rationalize remaining in The Herd with the hope that you will lead it someday. Leading The Herd is certainly more fun than milling about its midst. However, even as a leader, you will be limited by The Herd’s collective lack of speed and flexibility.
Waiting to be anointed a Herd leader is a high-risk strategy. It generally takes an oppressively long time to work your way to the front of The Herd, just as it takes many years to rise to the top of most Big Dumb Companies (BDCs). Throughout this process, the possibility exists that a capricious factor, outside of your control, will preclude you from attaining a leadership position.
Should You Stay or Should You Go Now?
If like the Clash’s Joe Strummer, “the indecision bugging you”, then you may be ready to leave The Herd and follow your entrepreneurial yearnings. The longer you remain in The Herd, the harder it will be to eventually depart.
To avoid waiting too long, pick an age or a specific life event (marriage, having a child, graduation, etc.) and use this milestone as the catalyst to jettison from The Herd. This approach will give you adequate time to plan your exit, allowing you to leave The Herd with no regrets, no misgivings and without looking back. If you amorphously assume that you will strike out on your own someday, you may find that John Fogerty was right – someday never comes.
The Herd University
Before you leave The Herd, learn as much as can from its leaders. Master how to cross rivers, defeat predators, survive blizzards, etc. Do not leave The Herd as a calf. Work for a BDC before you jump into your first adVenture. As described in Advice For Emerging Entrepreneurs, let the BDC train you and grant you opportunities to make mistakes on their time, on their dime.
Most successful entrepreneurs cut their teeth within The Herd before starting their own adVentures. For instance, P. Diddy worked as an intern for Uptown Records before creating his own Bad Boy label. Ray Kroc worked with the McDonald brothers for years before taking over McDonald’s and transforming it from a loose affiliation of regional franchises to an international corporation. In both cases, these famous entrepreneurs learned their industries within a safe environment before striking out on their own.
Enhance Your IQ
“It is hard to see the opportunities all around you when you are standing in the middle of a crowd. However, if you lift yourself a few inches above the crowd, you instantly can see the opportunities that stretch from horizon to horizon.”
Ed Moldt, Wharton Professor
Point of view is worth 30-IQ points. You can greatly enhance your point of view, and thus your entrepreneurial IQ, by stepping out of The Herd.
Even when you are still part of The Herd, the view from its fringes is more expansive than from its bowels. By staying on the periphery of The Herd, you are in optimal position to first see and then take advantage of an upcoming prime grazing ground. The first step in leaving The Herd is to mosey over to its fringes, so you can gain a more informed point of view of the opportunities beyond The Herd’s reach. Joining a smaller herd might also make sense, as discussed in Make Yourself Irresistible To A Startup.
Cold Turkey Not Required
Begin your departure from The Heard by initially leaving for day trips. You can always come back to the safety of The Herd at night. Such short excursions will allow you to experience the challenges you will face once you depart from The Herd for good. In this way, you will build your confidence, contacts, and experiences incrementally. Each trip can last a little longer until eventually you are confident enough to undertake an overnight excursion. Such mini-ventures, as described in Small Ideas, Big Benefits, will not only educate you, but will reduce your risk when you exit the Herd.
Your smaller, more nimble part-time startup can outperform BDCs. You can will get to the waterhole first and sustain yourself on smaller grass patches. Thus, you can pursue new markets that are further from the mainstream and too small to interest a BDC.
You will work hard to stay in The Herd and sustain your part-time startup, but nothing will limit the amount of grass or fresh water available to you – your upside is boundless. In your own startup, you might experience lean times, but you never will be crushed in a stampede, like a middle-manager in a corporate layoff. In your startup, you control your destiny.
Listen… Do You Want To Know A Secret?
One of the most repeated statistics trumpeted by the popular press is that “Four out of five businesses fail”. As is true with most Conventional Wisdom, it makes a great headline, but it is misrepresentative of the facts.
When the data are viewed in light of startups established by educated and experienced entrepreneurs, the success rate of such ventures increases substantially. When sole proprietorships are removed from the statistics, the success rate of startups improves even further. Sole proprietorships, which are inexpensive to form and effortless to dissolve, come and go as the founders move to other ventures, accept positions with BDCs, leave the workforce to attend to their families, etc.
When high-tech businesses, founded by appropriately educated entrepreneurs who received money from sophisticated investors are considered, the survival rates are even more encouraging.
In a 2010 TechCrunch article, Ron Conway discusses the success and failure rates of the ~ 500 companies he had invested in during the prior 12-years. Approximately 33% fail, another third return an approximation of the capital invested and the remaining 33% generate anywhere from 2x to “Google-x return.” Mr. Conway also notes that serial entrepreneurs have a 66% success rate after their initial venture.
There Is No Try
“You just can’t beat the person who won’t give up.”
Babe Ruth, US Baseball Player
In the event that one of your adVentures fails, The Herd will always take you back. Trying and failing is just a dry run for the day when you eventually succeed. Even adVentures that do not result in a profitable exit are not without merit.
Failure is often rationalized by the expression: experience is what you get when do not get what you want. However, in the case of most startups, this adage is more than mere rationalization, because entrepreneurs invariably gain valuable experience from a failed adVenture.
By standing outside of the Herd, you can address the problem Mr. Kleiner so eloquently defined. Once you leave the Herd behind, you will gain an enhanced point of view that will increase your entrepreneurial IQ and greatly improve your adVenture’s ultimate chance of success.
Exercise I: Weekly Business Idea
Force yourself to identify at least one venture idea each day for ten-days, and then one idea per week thereafter. Looking for small ventures will help you open your eyes to the myriad of opportunities that surround you. The form at the end of this entry may help you organize your thoughts. Keep your write-ups to a single page.
Vincent Van Gogh was clearly a man who saw the world from outside the frame. In his long walks through the countryside, he would come upon a hill, a windmill or a tree and see an intrinsic beauty that compelled him to feverishly paint, even though thousands of other people had passed the same hills, windmills and trees without giving them a second thought. If you carry out the venture idea exercise for one month, you will start to see the world in a different way and eventually you will become an Entrepreneurial Van Gogh who can identify opportunities where others see nothing.
However, unlike Van Gogh, who died a pauper, your new perspective from beyond The Herd will allow you to enter life’s veritable cash booth and scoop up some cash by identifying and executing mini-ventures.
You should also watch Seth Epstein’s Guide To Uncovering Awesome Startup Ideas. This brief video reviews the simple strategy that this successful serial entrepreneur utilizes to identify and capture startup ideas.
Exercise II: Your Fortune Magazine Interview
Pick one or two of your mini-venture ideas that you are most passionate about. For each one, answer the following questions as if you were being interviewed by a writer from Fortune magazine. This will force you to thoughtfully consider the challenges that your mini-venture will face and how you might address them on a macro level. It is also just plain fun to fantasize about your success, something you should not hesitate to do often and with unabashed relish.
The scenario is that you are the Founder of a successful venture. You moved on to other interests while the venture was doing well and the venture subsequently foundered. You have just announced your plans to return to the helm of the organization and now every major business publication wants to tell its readers how you plan to right the ship.
- What three decisions did you make early on that proved vital to your success?
- How did you address the three most significant threats to your business?
- Despite your phenomenal initial success, mistakes were made. What do you view as the most significant mistake and what did you do to rectify it?
- It must have been nerve-wracking to start a business. What risks did you identify at the outset and what did you do to mitigate them?
- How did you establish and maintain your leadership position in the market?
- What happened? It seemed you were on top of the world when everything apparently fell apart.
- Knowing what you now know, what would you have done differently?
- I understand that you are again fully engaged in the business, what do you plan to do to turn the business around?
Mini-Venture Idea Worksheet
Structure each of your ideas into these six categories
- Product Name
- State the anticipated name of your product/service
- Can you get the URL? You might want to read: Lousy Product Names
- Customer Problems/ Pain Points
- State the problem/ pain points of the customers clearly.
- Are there any companies out there which already address these problems/pain points
- How do those companies do it?
- Are they successful?
- How would you be different from them?
- How will your product/service look like?
- How will your product/service address the market?
- State clearly how it will differ from existing products/services that already address the same market as yours
Use a bottom up approach to identify the size of your target market. Don’t just state “it’s huge/gigantic”!
- Who is the customer? End-User? Retailer?
- What is the market? How does it look like? How does it work?
- How can you approach the market?
- How many customers can you serve reasonably?
- Personal Applicability
- Which position will you hold in the company? Why? (Be honest)
- Which qualifications do you bring into your company?
- Which qualifications have to be fulfilled by your team members?
- Which additional intelligence do you need to start the venture?
- Is your idea feasible by you? (It’s ok to say ‘no’)
- Give reasons. It is important to state why you think it is reasonable or not. E.g. if your research has shown that the actual market for your idea is too small, then your product/service is probably not very feasible.
- Would you be able to find/hire your team?
- Can you implement your idea with personal money or do you have to raise money?