“What advice do you have for those who want to be entrepreneurs?”
Physicist Richard Feynman has two quotes that I have posted on my wall and reflect on regularly – “I’m smart enough to know that I’m dumb,” and “The first principle is that you must not fool yourself and you are the easiest person to fool.” These quotes immediately came to mind while I was being interviewed by my colleague and friend Bill Nigh recently – http://www.cdeis.com/americana13.html. He asked “What advice do you have for those who want to be entrepreneurs?” As I pondered my answer, I thought, “The easiest person to fool is yourself”. Before Bill asked me this question, I had typically applied this quote to a salesperson working through their sales cycle, but realized it applies to much more than just sales. I started thinking about the more important things an entrepreneur needs to consider when starting a company.
At its simplest, a startup is focused on the very basic questions that you’ve been asking since you were 2 years old – “When”, “What”, “Who”, “How” and “Why”? Let’s assume “When” is now. The remaining questions need to be answered before you’re going to have any success with entrepreneurship and particularly sales, creating and selling a new product into the market. At the core, your biggest challenge as an Entrepreneur is yourself. Reason being that it’s really easy to fool yourself – for example, the belief that you’re days away from that big deal, that your idea is really going to change the world. Yes, I know you’re supposed to have thick skin, be able to take rejection well, and keep fighting. If your idea is truly world-changing, then nobody will understand it and more importantly very few people will give it much a chance of success. Just like we only hear about the athlete that makes it big, very few stories are written about entrepreneurs who don’t hit the big time. The simple fact is that most startups DO, in fact, fail. And they fail because of you. So, here are the main reasons why you can fool yourself into failing:
- What – First and foremost, what are you selling? I’ve heard this from Joe Allegra so many times, and I repeat it often – “what aisle, what shelf?” If you have created something that nobody has ever used before, you better figure out where in the supermarket it’s going to go – otherwise, how will people find it? Similarly, how many grocery stores stock just one of something? There is ALWAYS competition in grocery aisles – similarly, you will ALWAYS have competition if you are working on a good idea and particularly once you become successful. Most startups don’t realize that what you thought you were building on Day 1 of your startup will not look like what you are shipping on Day 100 (if you’re successful, that is!) In this day and age, you surely know about the “pivot” that occurs (and sometimes several times) within a startup. The “What” is going to change over time as your customers drive you to a repeatable process – some of which you will never have thought about when you initially conceived your idea. Remember that if you want commercial success, you are building for the masses – so you need feedback from the masses to validate the commerciality of your ideas. I guarantee that many of your ideas are “wrong”. Wrong in that customers will not resonate with them. And something you did as a throwaway will likely be your greatest success. So, be sure to LISTEN to your customers, carefully, and realize that you WILL pivot based on what you hear. The better you listen, the better your pivot… and the better your chance of success.
- Who – what type of person/people buy your product? Is it B2B? B2C? There are opportunities and challenges with each. Make sure you know who your audience is – who is the economic buyer, the influencer, the roadblock. They will exist in any sale. For B2B sales, they are easy to find – but your sales cycle is much longer and complicated, and requires savvy enterprise sales skills to succeed. Even for B2C sales these roles will exist, but not as complicated. You are typically selling to a single person at a lower price point so the transaction time is much less than B2B. But you still have roadblocks (e.g. gotta check with the spouse!). Your pricing for B2C needs to be simple, easy and affordable so you can get quick transactions (sometimes in the same day!) Once you’ve identified your key buyer profile, you need to determine how to most effectively reach them. Social media has become the leading medium of choice, but it’s not a panacea. The good news is you can market to nearly any constituency much cheaper than ever before – but you still have cost as well as time considerations to reach success – so you have more opportunity to “pivot” if your first go-to-market strategy (or second) doesn’t work.
- How –David Skok has a fabulous blog post (required reading!) about this which you MUST read before starting your go-to-market strategy. You must answer three important questions before you can be successful – Value, Pain and Urgency. I won’t describe it here since David does such a great job (did I mention you should read his post?). The bottom line is you better have a marketing strategy that makes you money at the end of the day. The economics are simple, and yet so many people don’t do the math – If your Customer Acquisition cost is $2 and you’re selling a widget for $1, you will not be successful! If your sales cycle is 9 months, you better make sure you’re getting at least 9 months (and preferably much more) value from that deal. Every month you don’t close that deal is costing you money. And as David points out, it’s not a linear cost – I’ll oversimplify his analysis and suggest that every month a deal doesn’t close your costs go up exponentially. So, time is indeed a CRITICAL part of your go-to-market equation.
- Why – I’m going to pull a B2C example here. Another must watch is a video from Simon Sinek on the Value of Why. His primary example is Apple – and why they have become so successful from a marketing perspective. Simon’s main point is that “people don’t buy what you do, they buy why you do it”. So, going back a few paragraphs, you’ve figured out what you do (what aisle, what shelf), but in order to really succeed, you need to create an emotional connection with your customer. In today’s economy, this can be simple, but must be crisp and immediately valuable. People don’t buy “nice to have’s” much these days, so no matter how cool your product is, make sure it solves an important problem (this concept applies more to B2B sales – I’m not sure I can really argue that an iPad is a “must have” but rather a highly emotional and status-wielding purchase – this takes us back to the “Who” conversation – for individuals the Why can be more emotional, but in a business setting, it’s much less so).
I would suggest that you CONTINUALLY ask yourself these questions – and be brutally honest with the answers. If something isn’t working, don’t wait until it’s too late, and don’t FOOL yourself into thinking things are ok when they are not. This is the brutally honest question you need to ask yourself and make sure you’re taking into account ALL the information available to make an informed decision. Yes, sometimes you’ll have to ignore all the conventional wisdom and advice from people you respect because you truly see something that nobody else can see. Sometimes, you’re just being stubborn. And the beauty is nobody knows the answer but you. I try hard (some people will say not hard enough :-)) to stay humble and remind myself of a few things:
- The stuff I create is not nearly as good as I think it is – always strive to improve.
- Competition is good, don’t dismiss them they should keep you on your toes and make you better
- NAIL IT BEFORE YOU SCALE IT – Steve Blank coined this and he’s right on the money. Don’t build a massive sales force until you’ve created the playbook and know it works. Don’t hire Journeyman when you’re just starting out on the journey and really need Mavericks
- Don’t drink your own Kool-Aid.
Don’t kid yourself. Take regular and honest deep looks into your business. Make sure you can answer all the questions here (What, Who, How, Why) with authority and how you are going to do it. I’m not concerned whether people agree or disagree with your approach – if YOU believe this is the right strategy and you aren’t kidding yourself, then hold firm and enjoy the ride.
- Mavericks and Journeyman
- Should you talk to VC’s if you don’t need money?