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The media and movies are filled with misconceptions of what it takes to be a successful entrepreneur. Creating legends and impossible ideals might make for good stories, but the truth is less farfetched and more achievable to those willing to put these strategies in action. Here I offer four common myths about entrepreneurship and the reality of how to succeed.
MYTH 1. LUCK Successful entrepreneurs are lucky.
REALITY Successful entrepreneurs are actively present.
While the myth makes for a good line at a cocktail party or conference, the idea of luck or even “being at the right place at the right time” simply doesn’t stand up to scrutiny. It discounts all the hard work, planning, and even strategic socializing that goes into creating that “lucky moment” when it all comes together. One of the best bosses I had at Motorola taught me the idea of showing up. He would fly from Chicago to Berlin just so he could meet face-to-face with a customer for lunch. He encouraged me to do the same: show up for lunches, meetings, conferences in person. He told me to show my face, get involved, be active, ask questions, and to follow-up. Many people don’t want to go to all of this trouble. They think they don’t have time, it’s hard, it’s not worth it. Their lack of initiative, their unwillingness to put in the hard work, is the difference between success and failure. Here’s another way to look at this from the world of sports: The best training comes when you least want to do it. When it’s cold, when you’re tired, when it’s raining… there can be tons of reasons not to train each day. When it comes time for race day, this is where the commitment to train shows up. Is the winner lucky? No.
The winner is the person who consistently trained and showed up. Neglect adds up over time and it becomes a behavior. On the other hand if you show up, consistently over time, things will happen. Invitations and opportunities and people who can advance your career will come to you as if by magic. In other words: you make your own luck. Entrepreneurs do not stand around “waiting for Godot.” Entrepreneurs make things happen.
MYTH 2. BIRTHRIGHT Entrepreneurs are born.
REALITY Entrepreneurship is a skill that must be developed by doing.
Starting and running a business requires skills that a person can only develop in the real world. Everything from dealing with many different types of people to handling the constant uncertainty that so often comes with a startup. Although this is hard to achieve in a classroom setting, there are new methods of employing simulations with unpredictable variables serve to mimic real-world decisions and their consequences. Certainly there are dynamic programs like that of Bill Aulet, who is the managing director of the Martin Trust Center for MIT Entrepreneurship, a research and teaching program. But not everyone can or wants to attend MIT to learn how to be an entrepreneur. According to the The Kauffman Foundation for Entrepreneurship, simply earning an MBA isn’t a straight-line on the path to becoming a ‘trep.
Sadly, most MBA programs teach students to be managers, not entrepreneurs. There is a big difference. It’s a mindset that comes from solving real-world problems with real-world hurdles that requires responding in real-time. In the real-world, MBA credentials don’t help you; credibility and a great track record does. So many potential entrepreneurs think all they have to do is write the perfect business plan. It’s something static, something they may have been taught to do in school. They are under the impression that the perfect plan, written in the vacuum of a college course, is all they need for success. So they write and then make one pitch after another, they develop Powerpoint presentations, they hope to “win the lottery”. It’s fairly easy to make a great presentation -that can be learned and practiced. The key is having a prototype, and even better, a first paying customer. Nobody buys Powerpoint slide, and nobody funds a plan that hasn’t been tested.
MYTH 3. RICHES It takes a lot of money to launch a startup; venture capitalists will fund it.
REALITY According to recent Babson College statistics, a typical start-up only requires about $65,000 to get going.
Entrepreneur and author Eric Ries advocates the idea of creating a “Lean Startup”, which essentially means eliminating waste and being efficient with resources, one of those of course, being money. Successful entrepreneurs, who don’t buy into this myth of needing plenty of capital, design their businesses to work with little cash. They rent instead of buying. They borrow instead of paying for things. They work on barter, they factor, they do vendor financing, they lease equipment. And they turn fixed costs into variable costs by paying people commissions instead of salaries. They discover what can be had for free, like social media marketing and open source coding. They create virtual teams of the best talents around the world, rather than pay for office space and moving expenses.
The myth that venture capitalists are a good place to go for startup money is pervasive, but isn’t reality unless you’re planning to start a computer or biotech company, and even then it’s not a sure thing. VCs only fund about 3,000 companies a year, and only a quart of those are in the seed or startup stage. Computer hardware and software, semi-conductors, communication, and biotechnology account for 81% of all venture capital dollars, and 72% of the companies that got venture capital money over the past 15 or so years. In fact, the odds that a startup will get venture capital funds are about 1 in 4,000. That’s worse than the odds that you will die from a fall in the shower. The other problem is that the moment you take someone else’s money, you have lost some control of the company. When you vote it is not democratic, either everyone want to do it or everyone does not want to do it- it’s as simple as that. Too much money is worse than too little, because when all you have is a little money, you’re more inclined to work hard. You suffer, and you think smarter.
MYTH 4. PROPRIETARY “I have to keep my great idea secret.”
REALITY Ideas are worthless without implementation, and you cannot implement an idea without sharing it and testing it.
A student may have an idea, but without the network, the resources, and the expertise to implement that idea, it’s worthless. It becomes a catch-22. It’s the model that makes the startup successful, not the idea. There were plenty of search engines around before Google. Who would have thought that Twitter would be a success when consumers already had email and SMS and even RSS feeds? It is very rare that an idea can be stolen because each of us has our own personal “ecosystem” with contacts, information, and networks. When we starts speaking to people, the ideas, and thoughts, and contacts multiply, and it becomes a kind of “connecting the dots” methodology that no one else has.
Entrepreneurs are continuously curious. Where do great ideas come from? The best ideas originate from personal experience as simple as a visit to the store. Why is it that I have to place all of my grocery items in a shopping cart, and take them out at the checkout and then place them in my bags to haul them in my car? There must be an easier way. When a solution to a problem emerges into what might be a marketable idea, then it’s time, as serial-entrepreneur Steve Blank says, to “get out of the building.” Speak to people -mentors, friends, experts- and ask them what they think. This is where business models are formed.
Sometimes people do not know what they want. Who would have thought anyone needed Twitter? An idea plus implementation equals opportunity, and there are opportunities everywhere. Wherever there is change, there is opportunity. If we know that the population is getting older and people are living longer– there are thousands of opportunities for products and services (robotics, medicine, exercise, education, entertainment).
If we know that we need to protect the environment then there are “green homes”, healthier food with less additives, clothing that sheds soil and perspiration and needs less laundering. An opportunity is a favorable set of circumstances that creates a need for a new product, skill, or service. There’s no magic, only thoughtful action.