We suck at teaching entrepreneurism, and that’s mostly because the things entrepreneurs need to learn the most can’t be taught in a classroom.
We do a fine job at what we do teach — namely, coding, finance, legal, and operations. But startup education is still mainly focused on the lemonade-stand/widget-factory approach. It’s safe. There are some core lessons: How many lemons will you need? How much should you pay for them to be able to charge a fair market price? But come on. A lemonade stand is not a startup.
What I’m talking about is what we don’t teach — the critical right-brained concepts that have less to do with the product and more to do with the process.
From the beginning of my startup career, I was always fascinated by how an entrepreneur became an entrepreneur. It wasn’t too long before I started seeing common traits and skills among the best of them. Here are the five that I believe are the most important and the most ignored.
I know. You can’t learn passion. I totally agree. But what you can learn is how important passion is in building a startup. That notion can’t be stressed, repeated, or sloganized enough.
There’s no real way to measure the amount of passion that an entrepreneur is going to have for the journey at hand, let alone the requisite level of passion needed for the venture to succeed — until the rough patches become evident.
Look, I’m passionate about music, especially loud guitar rock music. But it wasn’t until I faced long stretches of sleeping in the back of a van and carrying heavy equipment up and down narrow staircases to play on a suspect sound system in front of half-a-dozen drunk people shouting “Freebird!” that I realized I wasn’t in it for the right reasons.
Rock star isn’t a career, it’s a life choice. And startup is the same. It’s not nine-to-five, there are no clear-cut steps on the way to success and, at least as is the case today, there is no bachelor’s degree in Startup.
However, like the lure of rock-star-stardom, there are a lot of misconceptions about being an entrepreneur, and those misconceptions lead to people getting into startup for the wrong reasons, whether that’s the notion of being your own boss or the glamorization of the Silicon Valley lifestyle.
So if you’re not willing to spend a lot of time struggling to figure out why your widgets aren’t shifting units, you’re probably selling the wrong widget.
2) Risk Mitigation
Unlike passion, you can totally teach someone how to take on and manage risk. For an obvious comparison, it’s like teaching kids to swim. They learn the process, the dangers, how to avoid the dangers, and sometimes we strap inflatables to their arms.
Eventually though, we need to throw them into the deep end. Can’t teach that.
In this life, especially this modern life, we’re constantly programmed to avoid risk, especially in the career sense, but we’re never taught how to manage it.
My first job out of college was the safe choice, and I wore a suit and left my suburban apartment complex each morning to spend exactly eight hours ensconced in my muted grey cubicle.
I did this for one year, one month, and four days.
I didn’t know the huge risk I was taking leaving that job for a three-person company led by a 28-year-old quirky genius. I didn’t care at that point. And if it had blown up in my face, my life would look a lot different today, none of it likely for the better.
Although, to be honest, who knows?
Compare that to my most recent job, for which I gave up a startup I had founded that was at the time doing over $1 million in annual revenue.
It sounds crazy when I say it out loud.
However, by that point in my career I had learned risk mitigation. I had drawn up scenario after scenario for whatever those choices were going to throw at me. I knew what to do when the worst happened, I knew what to do when success kicked in, and I knew what to do if nothing happened at all.
These are the kinds of decisions and conversations that can put the stomach in knots if you’re not prepared for them. The planning, the what-if, the painful potential decisions that might need to be made down the road — this is stuff no one likes doing, and the process for working through it is never taught.
So yeah, it’s OK to follow your dream by maxing out credit cards, taking out a second mortgage, and pounding the pavement to get seed cash from friends and family. But you need to figure out what you’re going to do when all that happens and the return is nothing or next to nothing.
Otherwise you won’t be able to do it again.
3) Pivot Execution
Pivot is a great word. Sometimes it’s used in a positive context when a team finds their footing and starts to gain traction. Sometimes it’s used in a negative context when too many resources got poured into the wrong direction, and that got figured out too late. But it always means change.
All startups pivot, sometimes in small ways, other times in large, public ways. Learning when, why, and how to pivot is one of the more subjective lessons in startup. If you don’t pivot enough, or too much, or at the wrong time, or for the wrong reasons, you’ll take two steps back for every step forward.
Some startups pivot until they go broke. Some startups pivot to avoid going broke.
A pretty simple rule for pivoting is to follow the revenue, but even that can be nuanced, especially when dealing with concepts like sacrificing long-term sustainability for short-term growth.
A much better way to get this lesson across is to pivot based on achieving growth while staying true to the original mission of the startup.
A year into ExitEvent, I pivoted from a data company to a media company, because there was a bunch of money on the table that I could access quickly. Revenue on the media side exploded immediately and fed my efforts on the data side. I grew the company ten-fold without having to stray too far from the mission.
As we went into our Series A raise with Automated Insights, we pitched what was then StatSheet, a sports-data company, as an industry agnostic Natural Language Generation company. We lost favor with most of our sports industry backers, but opened up a market that would be 100x more addressable, and less competitive, than sports. We raised $5.5 million and landed a dozen new clients before we closed the round.
4) Culture Building
Another way to think about company culture is preparation for success. Once the initial startup idea takes hold, the entrepreneur needs to define what their company is about, in everything from the mission to the way the company is perceived.
This is more than marketing or sales strategy, and it’s also more than a statement that goes up on a wall. Setting the proper tone for the company culture will help the entrepreneur make decisions, take risks, pivot the correct way at the correct time, and ultimately build on success.
When I started ExitEvent, my very first mission statement was “Change the way entrepreneurs interact.” As ExitEvent went from passion to actual startup, that mission statement remained the impetus for change as I embarked on hosting a single event to building a database of startups to integrating a media site.
Before I made big, time-consuming, expensive decisions like launching ExitEvent News, I checked those decisions against the mission. Other parts of ExitEvent never saw the light of day, like ExitEvent Office Hours, because they didn’t fit the culture that was growing around it.
Culture can pay huge dividends down the road. Automated Insights had monthly culture management meetings and fought hard to maintain our standing for a local Best Places to Work award. With an awesome culture in place, we got awesome people to come work for us, and their output made awesome customers want to do business with us.
When you’re a startup, you need every advantage you can get. There are plenty of great products out there and great solutions that solve thorny problems. The ability to build great companies around those products and solutions can sometimes be the determining factor in who gets the business and who doesn’t.
5) Failure Management
Failure is not a land mine. Entrepreneurs don’t just wake up one morning and drive their startup off a cliff. Critical failure isn’t even the result of multiple smaller failures along the way. Well, it isn’t and it is. Ultimately, that final failure has everything to do with how the entrepreneur handles the series of smaller failures.
The four preceding concepts — passion, risk, pivot, and culture — all play a large part in surviving failure, both the big and small variety. But there are additional elements of failure, from recognizing it to owning it, that can turn failure into opportunity.
And those people who turn failure into opportunity are the ones who end up becoming great entrepreneurs.
Recognizing failure is more complex than it initially sounds. It’s not so much being able to look at something and say “Yeah. That sucks,” as it is to figure out why something failed, whether it was a component or the entire unit, and whether the fix is surgical or sledgehammer.
Owning failure is much harder still. I’ll admit to one startup that I just won’t let die. It sits in stasis after stagnating for years, which happened after some immediate and, yeah, I’ll say it, fun success. It still brings in revenue, on the order of a few bucks a month. I may let it go someday, I may not, but at least I’m not spending any more time on it.
In fact, I have a graveyard of URLs, purchased somewhere between idea, execution, and stagnation, that languish, costing me hundreds of dollars per year, that I still can’t let go of because I know the idea was right, I just haven’t figured out how to succeed with it yet.
Those failures are opportunities, waiting to be realized. And that perseverance, along with the other four soft skills, is something we need to teach in order to turn good entrepreneurs into great entrepreneurs.