I am a founding member of an active startup founders group. We started with a dozen or so entrepreneurs and I appreciated it because being a startup founder without a partner can be a lonely endeavor. I’ve seen a lot of fellow entrepreneurs walk in and out of the doors over many years. I can now tell if someone is going to “make it” after about three meetings. Here are my observations of why they eventually don’t succeed:
1. They don’t show up. If you want to be successful, you have to show up. I mean that literally and figuratively. You have to show up on a consistent and regular basis. Even if you are tired and can’t seem to find your customers, you are not booking sales, you are getting rejected and you know deep inside your gut that you probably have to pivot your plan, even though you are exhausted. You must keep going — putting one foot in front of the other, executing the marketing plan, calling on customers, pivoting if necessary — you just keep at it. Do they show up on time? If you can’t show up at our meetings on time, what about their business meetings? What if you have a meeting with a venture capitalist? Are you going to be late? Are you going to flake and not show up? Because you and your husband had a fight? Being a C.E.O. of your own startup company is being a self-starter in the truest sense. If you aren’t 100% committed to this, you just won’t make it.
2. They aren’t willing to sacrifice. There is a lot of inherent sacrifice in starting a company. Generally, you have to work long hours, drain your savings, if you’re lucky enough to have some, borrow from friends and family to get started, if you’re lucky enough to have some, give up the money you would make in another job which is called “opportunity cost” and give up time with your family and loved ones. Whenever I see that members aren’t willing to make sacrifices, I know that they are finished. And it has happened with regularity. Usually they will take a job and not come back. Prepare yourself for a lot of sacrifice and if you’re not willing to accept that, you won’t make it.
3. They don’t accept the fact that it’s most likely going to take a long time. This is closely related to sacrifice, but it’s more than that. There is a perseverance factor to it and a necessity of faith. A major problem that I’ve noticed is what I call, “The Spouse Factor.” It’s when the spouses, usually women because most founders are men, I’m sorry to say, think it’s taking too long and give up on their husband’s dream. It is sometimes accompanied by ultimatums and all kinds of bad behavior that I won’t go into here. And it’s sad, really. Because you have this person who is putting it on the line every day working as hard as they can. They are trying to have faith in themselves. Some spouses won’t even get a job. Sometimes the lack of support is breathtaking. My advice is to talk to your spouse before you start a company and make sure they are completely on board. For a long time. And make sure you are, too. The myth of starting a company and selling it to Facebook in three years is just that. It’s a myth. If you don’t know this going into it, you won’t make it.
4. They can’t, or won’t sell what they are making. My first job out of college (Penn State) was selling encyclopedias. I generated my own warm leads by doing magic shows at pre-schools and elementary schools. Yes, I became sort of a magician, and I was good. My low point in the job of selling encyclopedias was going into apartments, in the Housing Projects in Washington D.C., where the rats were as big as possums and the cockroaches ran along the kitchen walls with impunity like it was the Capital Beltway - at a time when my potential customers and I were sitting there talking with the lights on! That year, in between undergrad and grad school, I made over $40,000.00 (almost $119,000.00 in today’s dollars) and I was able to start paying for my first year of grad school at Georgetown University. Moreover, I learned how to sell. Steve Blank, the famed Silicon Valley entrepreneur and Stanford University professor says, “you will find no answers inside your office”. You have to “get out of the building and knock on doors”. I believe that is something very few people are comfortable with, but one that every entrepreneur must learn. I don’t care what you end up doing in life, and I don’t care how you do it, but learn to sell. If you don’t, you won’t make it.
5. They don’t take advice. In our group, members present the most pressing issue that they are dealing with that month, and we have a methodology to “process” that issue. It includes a lot of questions and a lot of feedback. When someone is taking the time to give you advice, especially if it is in a group and collective intelligence is at work, you should listen. Try not to be defensive. And you should take action on that advice. After every processing session, that person is given a Call to Action, or CTA. If they come back without seeing their CTA through, that does not bode well for them. As a startup founder, you are going to need advice from other people because there is no way you can know everything you need to know to do this. I’m not saying you have to listen to everything everyone tells you, but I am saying that if you have smart advisors, or paid professionals, you need to be able to evaluate their advice and act on it. If you can’t, you won’t make it.
6. They aren’t willing to change. Are they so entrenched in their vision that they can’t accept that the world doesn’t want their exact product or service, or that there is something wrong with their product, service, or business model and it needs to be changed? Almost every startup business has to pivot. What is a pivot? It’s when you change your business model in some way because your current model isn’t working. In my latest business, Bloomers Island, I’ve pivoted four times. I know it can be exhausting after your first try and it’s difficult to start over. If that’s the case, take a couple weeks off. I got so burned out after my first couple of years and first couple of pivots, that I went to South America for six months. It was the best thing I ever did. At the end of the day, if you’re not willing to make changes, you won’t make it.
7. They aren’t comfortable crunching numbers. I have seen many people start a business without knowing how to construct a basic income statement let alone a balance sheet. They try to make decisions based on imperfect information. In our group meeting, if a member is presenting an issue to the rest of us, looking for us to help them decide between two alternatives, I always ask: “What are the numbers?” I’m not saying you have to be a CPA, but it wouldn’t hurt to take a basic financial course, or sit down with a friend who knows numbers and cook them a dinner to show you how to construct a set of financial projections. If you look at the numbers — the cost of doing one thing with a projected outcome versus the cost of doing another with that projected outcome (otherwise known as a Cost Benefit Analysis), the answer usually becomes clear: crystal clear. The truth is in the numbers. Get comfortable with numbers or you won’t make it.
8. They are overly emotional. My favorite line in the motion picture “The Godfather” is when Sonny, Michael and Tom are talking about killing the bad cop. That is when Michael says, “It’s not personal, Sonny, it’s strictly business.” Of course, Sonny was made vulnerable because he was too emotional. His enemies knew that and they were able to kill him. Don’t be overly emotional. In A League of Their Own, Tom Hanks’ character says, “There’s no crying in baseball!” Well, that applies to business, too. You’re going to get rejected and criticized and insulted. Save your crying for the shower. Take solace in the fact that the more you are rejected, the easier it gets. Develop a tough skin. If you don’t, you just won’t make it.
What is an honest appraisal of my weaknesses? Number three and number six. I was unrealistic about how long it would take. I was too invested in what I wanted to do and took too long and wasted too much time and money before pivoting. I kept going though, because I do the other things really well. Now, it is finally paying off.
Several years ago, during a family vacation to North Carolina, a small contingent of us visited The Wright Brothers Museum at Kitty Hawk. Etched around the base of the memorial on the hill where the first flight was made were the immutable words, “In commemoration of the conquest of the air by the brothers Wilbur and Orville Wright. Conceived by genius. Achieved by dauntless resolution and unconquerable faith.” Numbers 1 through 8 on my list? Check, check and check.
In closing, “Ladies and Gentleman, start up your engines and good luck.”