20 things I have noticed on entrepreneurship
1. You will fail. It will not help you to think about it, but ultimately most ventures are not there anymore five years from starting them. Also you run a major risk of entering entrepreneurial coma, where you neither grow nor make any substantial money. You might have a few employees, some users, some cash coming in, some cash going out and you can make a living, but nothing ever happens — what I would refer to as entrepreneurial limbo. That is the worst nightmare in my opinion, I’d rather fail and go down in flames than not taking enough risks to succeed. Anyway, since you will probably fail, you should plan your life accordingly.
2. You must have a lot of luck. Sure, in arrears, all you did was according to plan, but really, without a major component of luck you will not succeed. However, most venture people are exposed to luck, but they may not seize the moment. Opportunity knocks, but you must respond. The first, second and even third time around you may not be experienced enough to understand this. Which brings me to number 3:
3. Bring help. Also: make sure the help is diverse in ages, experience and approach. You need both risk averts and risk takers. You need financiers and hands-on marketeers. Even Mark Zuckerberg had help, and he got help from the best. Larry and Sergey had a lot of help. MySQL’s Marten Mickos is a fantastic guy, but without Benchmark capital and Index Ventures, the exit would not have been so great. And probably Mr John Wattin was a very large part in the success (he was also important in Betsson, Cherry and several other major corporations with Swedish origin).
4. Don’t postpone happiness nor health. You can not wait until your exit until you start exercising or take that walk in the woods with your dog or family. Read number 1 again. Your venture may very well fail. Or you might end up in entrepreneurial limbo. Therefore you need to make sure that your life works well in all aspects even during your most pressing entrepreneurial times. Exercise regularly — you will make better decisions. Also, take care of what you eat (pizza, cola and hamburgers are not recommended food). Finally, make sure that you sleep at night.
5. Plan cash-flow. This is your most important task. What happens if banks hold payments, customers are late, invoices arrive early, you get unexpected costs because of a server failure?
6. Don’t live your business in email, Twitter or blogs. Picking up the phone or having meetings over Skype or physical saves you a lot of time, really.
7. Be prepared to make serious mistakes. It is not possible to make perfect investments (ever). You might invest in a technology, computer, software that really is not doing what it should. You need to be able to make mistakes also from a cash perspective.
8. Be prepared to exchange individuals. This is in my opinion the toughest thing. If you are a startup you really can not afford having people onboard not delivering as you have planned. I am not talking about the salary as such, sure you can afford that, but a stellar person might deliver 8–10 more than an average person. In the starting phase, you really need to make sure your team is spick and span.
9. Be prepared to upset and annoy customers, competition and your friends. No one will really understand what you are doing and you might be doing it too wildly or pursuing your results too aggressively. Well, that’s why your disruptive new business model works, right?
10. Measure everything. You might not analyze what you measure, but when you start out you have no idea what you really need to be looking at six months from the start. Hence, make sure you measure more than you think you need. Google Analytics is a start, but also make sure you track all the business side of things. I use Excel and hard, tiresome, boring manual work. It might work for you as well, who knows.
11. Your service might make a scandal and actually hurt someone. If you have a social network, someone will be tarnished. If you have a dating service, someone might get raped. If you offer discussions on psychology, someone might try to kill himself. If you offer diet tips, someone might get anorexia. If you offer storage, you might lose someone’s content. Think about the consequences of your actions and services and try to do what you can to limit the bad effects. It is really only a matter of time until the worst case scenario is what you call Monday .-(
12. Don’t mix your personal finances with the company’s. It is the road to hell, just don’t do it! So your neighbor has a new boat that he bought “through his company”? That is his problem, not yours.
14. Yes, I skipped number 13. Read number 2 again .-)
15. Don’t use consulting as a mean of financing your venture (Sw: “grötkapital”). It will slow you down and destroy your focus. Rather give away more of your company and make sure you can focus. Why? Well, read number 1 again, will you? .-)
16. Be very certain that you do your accounting and file all official papers. Get help! Being an entrepreneur you are probably lousy at these things. Plus — you need to focus on the business. Let’s keep yourself out of jail and the tax authorities, shall we? Read number 12 again, will you? Stop thinking about that boat!
17. Keep an active dialogue with your key investors. They know all about number 1 above and expect you to fail so keep them in the loop at all times and tell it like it is. If you have good investors and advisers they might actually know what to do about a certain bad situation. Think of them as well-meaning parents. And just as parents they might eventually throw you out, but that’s part of the game .-)
18. You need more money than you can possibly fathom. Maybe it’s just me being lousy at calculus (I’m not, by the way) but every venture I have been involved in needed more money than specified in the original business plan. If you multiply your original figure by five you might be more correct.
19. Don’t boast your success in advance in the media. Really, read number 1 again and please redraft that press release stating you will overtake Facebook and Google in 2 years.
20. Have fun! If you are in this for the money, don’t! Please read number 1 again. You will most probably fail and not make any money from this. If you want to make money, have a real career instead, climb the corporate ladders somewhere. Be a stellar consultant. But don’t start a venture. If you think that starting your own venture, making your idea and dream come true is more important than money — then do it. But have fun doing it. If you are not having fun when you do this, please do something else. Life is short, and remember, you will fail anyway .-)
All the best,