Category Archives: Entrepreneurship

Last year I sat in on a speech by an entrepreneur friend who told the young people in the room, "Money can be the main motivation to start a business." I admired that he said this. Most entrepreneurial spiels obsess about the need to have "passion" about the mission of the business — they say money isn’t enough.

So: can making money be the prime motivator when starting a business?

My take is that in the short-term (0-2 years after founding): Yes. In the long term: it’s not enough and a genuine passion for what the business is doing and the customers it’s serving is a necessary additive.

If your business survives until the long-term, generating the passion shouldn’t be hard. If you start a trash pick-up service, maybe at first you see it as just a cash cow business. After all, who can get fired up about waste management? But eventually, as the business grows, and you start to serve tens of thousands of customers, you can get passionate about the idea of impact on a large scale.

Impact is the entrepreneur’s drug of choice and if a company gets to a point where it is impacting a significant number of people I would argue any founder / executive can find a way to become genuniely excited about the mission above and beyond simply making money (which is an acceptable if not ideal driver for the founders at the outset).

(thanks to Stan James for helping brainstorm this post)

Marc Andreesen’s post about the psychology of entrepreneurial mis-judgment made the rounds awhile ago. I re-read it recently and want to highlight the following graf because of its eminent logic:

In my view, entrepreneurial judgment is the ability to tell the difference between a situation that’s not working but persistence and iteration will ultimately prove it out, versus a situation that’s not working and additional effort is a destructive waste of time and radical change is necessary.

I don’t believe there are any good rules for being able to tell the difference between the two. Which is one of the main reasons starting a company is so hard.

Well put.

(And yes, I know Seth Godin wrote a whole book on this topic.)

Maintaining a core value of "listening to our customers" is trendy among companies big and small. But it’s harder than it seems. Albert Wenger absolutely nails it in this post about why listening to customers is hard, hard, hard. Key excerpt below, bold font my own. I want to highlight point #2 — it is often the case that customers do not know what they want, or actually don’t want what they say they want.

First, which customers should you listen to? Is it the early adopters or should you try to identify what you believe to be “mainstream” customers? This turns out to be very hard to answer. If you don’t keep the early adopters at least somewhat happy you may never make it to the mainstream. Or it could be that there is no real mainstream for your product, so looking for it might make you neglect the early adopters you already have. Conversely, if you only cater to early adopters you might build something that fills their generally more advanced needs but is too complicated for the mainstream.

Second, how should you listen to customers? Is it what they are saying about the product/site/service or what they are doing? Here too are conflicting pieces of advice. On one hand is the theory that for every one customer complaining about a particular problem there is a silent group of 100 or more having the same problem but not bothering to complain. On the other is the view that verbal complaints and even more so feature requests tend to be what users “think” they want as opposed to what they actually want need (thanks to tweetip for pointing this out). The latter can only be learned, the theory goes, by observing their actual use. Often what customers say and what they do conflicts.

Third, how should you reconcile listening to your customers with your strategy? This is often the hardest part. You have a strategy that you believe in. It’s difficult enough to not outright ignore any customer feedback that’s not on strategy. After all, you don’t want to be a flag waving in the wind and shifting with every breeze. But how can you tell that apart from your customers telling you that your strategy is actually wrong? What if you are trying to solve too hard a problem, when the customers really need something much simpler?

On point #1, I think you have to develop for the early adopters and just accept that you will probably over-develop and need to modify the product for the mainstream. This is a frustrating cost but an unavoidable one since capturing the early adopters, winning their support, and leveraging their testimonial into mainstream accounts is critical. In my experience many mainstream customers fancy themselves early adopters and hence won’t discount the early adopter’s testimonial as much as they should (in the sense that a product working in an early adopter won’t necessarily work in a mainstream inasmuch as the needs and cultures are different) allowing the company to really leverage an early adopter’s success to potential clients who actually look and act different.

My friend Cal Newport is a great guy who stimulates my brain. In his latest post, I’m guessing he has yours truly in mind when he writes:

Attend any talk given by an entrepreneur and you’ll hear some variation of the following:

    The most important thing you can do is to get started!

This advice has percolated from its origin in business self-help to the wider productivity blogging community. You’ve heard it before: Do you want to become a writer? Start writing! Do you want to become fit? Join a gym today! Do you want to become a big-time blogger? Start posting ASAP! If you don’t start, you’re weak! You’re afraid of success!

Cal goes on to say that he’s mainly arguing against the attitude where "every twinge of momentary enthusiasm is translated into action that consumes a non-trivial amount of time and attention." Cal says that instead of just leaping into action mode, we ought to contemplate our choices, analyze the situation, and "develop rigorous thresholds that any pursuit must overcome" before acting.

I agree to an extent that the very real benefits of planning and not acting can be lost among the "pro-action" hoopla. But the hoopla exists for a reason: many people talk about things they’d like to do but never get around to actually doing them. Cal, a doctoral student who has no problem executing on goals, naturally favors a more academic approach to the inaction problem (analyze, list options, pick best option, track success) rather than an experimental approach (jump into things as soon as possible, figure out if it’s worth it, back out if it’s not, etc). For some though, I think his wait-and-analyze approach might exacerbate paralysis — all smart people can create more detailed Excel spreadsheets instead of actually picking up the phone and take tangible steps in the desired direction.

In the end, the worthiness of the "just get started" advice depends on the task. Some tasks give feedback faster if undertaken right away in a small dose as opposed to analyzing it from afar. Take Cal’s examples: If you want to become a writer, sure you can talk to writers and study the profession, but is there a better way to understand whether writing girds your loins than actually putting pen to paper? If you want to become a big-time blogger, is there a better way to understand the blogosphere than to start a blog yourself? If fitness is your goal, what’s better than spending an hour a day in the gym for two weeks and seeing how you feel?

Starting a company is a much larger type of task and therefore more deserving of the kind of restraint Cal outlines. For the record, if someone tells me, "I want to start a company," I do say, "Get started!" But get started doesn’t mean taking out a $100,000 loan from Fat Vinnie, quitting your day job, and betting the family farm on your venture. Rather it means doing some preliminary research, maybe developing a prototype by night, and developing mini-experiments that can quickly give you a sense of the viability of the idea. Low risk actions.

Cal also says this on successful people:

They have built an exhaustive understanding of the relevant world, why some succeed and others don’t, and exactly what type of action is required. This takes time. Often it requires a long period of saturation, in which the person returns again and again to the world, meeting people and reading about it and trying little experiments to get a feel for its reality. This period will be at least a month. It might last years.

I’m frankly a little skeptical and would be interested in some specific examples. Did this saturation happen on the job or beforehand? Did they build an exhaustive understanding of the relevant world from afar, before getting started, or during? Most of the success stories I’ve been exposed to have been accidental and the person ended in place that was unexpected — for example, starting a business and then it becoming something totally different in the process of building it. Methodological, comprehensive saturation to the industry before jumping in? Not really.

Bottom Line: There are plenty of cases where not acting and analyzing options is preferable to jumping right in and getting started. It depends on the task (smaller tasks are good for immediate action) and the person (do you learn quickly from experimental feedback?).

That’s what a friend told me recently, and it’s a great point. He said a big and growing market will support a million mistakes as you build your start-up.

It’s similar to what Jonathan Rosenberg said a few months ago: better to be a smaller slice of a big pie than a bigger slice of a small pie.