Here are the 7 Deadly Sins Of Young Entrepreneurs
Entrepreneur's New Year’s Guide
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Entrepreneurship is a noble activity; one is following one’s passions, giving life to ideas, and generating employment. Increasingly, young professionals are rejecting traditional corporate jobs for the joy of creating something valuable from scratch.
There is a lot to be admired about the initiative of start-up entrepreneurs who are changing the world for the better. However, one also needs to be mindful of the risks they run and the challenges they face.
The Catholic Church used the concept of the seven deadly sins to keep people away from evil and its consequences. Here is my adaptation to alert young founders to some of the familiar and dangerous pitfalls that they are most susceptible to.
Pride – Reluctance to accept advice
Confidence is a prerequisite to be a successful entrepreneur and one of the most admirable qualities the present generation possesses. However, founders occasionally tend to blur the line between self-confidence and bullheadedness, thereby hurting their business. Many start-ups have advisory board members that established corporates would love to have access to - senior professionals, bureaucrats, businesspeople and the like, who are also playing the role of angel investors. They are all, with their wealth of collective wisdom, accessible to the companies they have invested in, but many founders just don’t leverage them enough. Their ideas are jotted down, recommendations noted, but then forgotten till the next board meeting, when the cycle repeats. Entrepreneurs likely know their business the best, but there’s one critical element missing in their repertoire of skills, and that is experience. External investors and advisors bring more than deep pockets – they bring maturity, groundedness, and credibility, which can make all the difference to the venture. The smartest leaders leverage that.
Lust – Over-investing in technology
I recently met a very talented team with a fantastic platform in a sector I was extremely interested in. They were close to exhausting their initial funding and were raising their next round. I was extremely interested, but as most investors would, I drilled down into the usage of their initial capital. Most of their funds were invested in technology; they had succumbed to the desire of continuing to make their platform sexier even when it was not really required. And by the time they had perfected the user interface, they had run out of money to drive actual clients to use it. It is a common occurrence – founders getting too attached to their product, overinvesting in bells and whistles and ignoring the core revenue generating levers of sales and marketing. It’s also a red flag for investors - there is no proof of concept and little surety that mistakes won’t be repeated. So even if it is the key pillar of your business, remember that it'll be a pity to build the perfect platform but have to shut down before the world discovers it.
Sloth – Aversion to being externally focused
There are rarely any lazy entrepreneurs; running a business requires tremendous hard work, and anyone without that energy will quickly fail. That said, entrepreneurs can have a limited scope of vision, which invariably makes them slothful in terms of external focus. Many young founders tend to be inward-looking - they do not spend enough time in the field, engaging with customers for feedback and inputs, seeking new alliances, or monitoring competition and industry trends. It is a very optimistic, “if we build it, they will come” mindset and at times dissociated from market realities. It doesn’t matter which business one is in, but its leaders have to be pounding the streets. Out there is where the action is.
Gluttony – Trying to do too much
A typical bias of early-stage entrepreneurs is to take on too much on their plate (no pun intended!). They are continually brainstorming new ideas and adding tasks to their overflowing to-do list. Smart entrepreneurs follow a strategy of refusal – in addition to whatever they have to do, they are also clear about what they won’t – however attractive it might seem. Focus, especially in the formative stages, is crucial and one of the best ways to stay focused is to follow a detailed business plan that clearly articulates one’s strategy, drivers, milestones, and execution plan. Unfortunately, this is again something that many entrepreneurs delay preparing until absolutely required, usually for fundraising. So they stay stuck in the pool of gluttony – biting off more than they can chew.
Greed – Attachment to equity and control
Until they raise significant funds, equity and stock options are the primary currency available to early-stage founders. In a risk-averse environment, it is challenging enough to find stakeholders who will accept intangible pay in equity in return for their valuable time and effort. Which is why it is surprising to see some founders loathe to part with equity, even though that might help them get complementary co-founders, great employees or strike profitable alliances. 10% of 100 is higher than 100% of Zero - being a part owner of a valuable business is far better than having full ownership of a venture that is bust. So if one has a better shot of success by spreading the potential upside, by all means, one should do so.
Wrath – Not managing emotions
Entrepreneurship is a lonely activity – one experiences more lows than highs, is frequently ridden with self-doubt, and is never really switched off. It is these uncontrolled feelings of disappointment, frustration, and anger that I classify under wrath. And one of the best ways to manage such emotions is to have co-founders with balancing temperaments. If you are hasty and impatient, find a partner who is steady and strategic. If you are conservative, ally with someone who can take risks. It is important that you have someone who counters rather than mirrors you. Balance is one of the hardest attributes to gauge, but also one of the most important predictors of success. Because while the timing and quantum are uncertain, a well-balanced team with the right attitude and temperament will certainly achieve success.
Envy – Comparing oneself to others
Finally, and this is applicable not just to young entrepreneurs but everyone, is the tendency to compare oneself to others. It is human nature to compete with peers – who got promoted faster, who got the next round of funding, who got the larger bonus and so on. Our measure of success and satisfaction is somehow dictated not as much by what we achieve but rather by what others do. I advocate never comparing oneself to anyone living - once you eliminate 7.4 billion people from your consideration set, you are left with only yourself to focus on. So you start concentrating on your strengths, weaknesses, and goals rather than spending valuable time and energy grudging others. That is far more productive.
The current generation possesses a level of confidence and creativity, the likes of which we have not witnessed before. And if young start-up founders can simply keep themselves from succumbing to the pleasures and pressures of the seven cardinal sins, the future of entrepreneurship is exceptionally bright.