What It Takes To Be An Entrepreneur
Entrepreneurial Formulas for Success
Are there tried and true formulas for success that can help you in building up a new company? If there's one thing I've learned, it's that an important key to entrepreneurial success is having a good memory.
Is there a formula for entrepreneurial success?
Well, kind of.
Everyone has an opinion on what you need to do to grow your business but the reality is that there often is no single right answer.
Here's an example. Should you promote your product before it's done or wait until it's complete?
Some have been successful promoting early and often; others have used the same strategy and have fallen flat on their face.
Similarly, some have been successful waiting to promote until their product was rock solid; others have used this same approach and have failed miserably.
There are many similar questions where there are no right answers and one can succeed by taking either of two mutually exclusive paths. Should you bootstrap the company or should you bring in investors? Should you do extensive market research prior to starting product development or should you prototype rapidly and adjust to customer feedback?
Many consultants say they know the right way to achieve entrepreneurial success stories but the reality is that there is no right way!
Having said that, there is some empirical evidence that certain entrepreneurial techniques are effective. For example, it's widely accepted that a business started by multiple partners will be more successful than a business started by a single individual. Some smart person did their doctorate on the subject, collected all the data, and showed that this was the case. There was a strong correlation between having multiple partners and being successful.
But, as we all learned in Statistics 101, correlation does not equal causation. There are tons of multiple-founding-partner examples where the companies have failed. Similarly, there are tons of companies founded by a lone individual that have gone on to become household-name success stories.
What's funny is that these formula-for-success myths, which are often based on loose correlation, do tend to self-perpetuate into truisms. Humans have a herd mentality and we buy into the popular wisdom (despite some smart guy's having said that what everybody knows isn't worth knowing). So, based on that study concerning having multiple partners in a startup, guess what has happened? VCs frequently won't fund a company that has a single founder because they think it is more likely to fail. So, in that case, correlation has transformed itself into causation and perhaps it's true that not having partners may hurt you in the market.
These truisms should not be placed up high on the alter of entrepreneurial wisdom. What works today, may not work tomorrow. Times change. You can do exactly what Successful Company X did that allowed them to get to their grand-slam IPO months ago but if the economy tanks or market dynamics shift dramatically, that formula won't work anymore.
Ultimately, all of this stuff boils down to good common sense. Formulas are not going to help you. You need to have a "sixth sense" as to what the right thing to do is in any given situation. You need to have a breadth of experience and great peripheral vision to pick up on what's happening out there, what the patterns are, and how you can turn it all to your advantage.
That sixth sense is maybe partly genetic in nature but certainly from Age Zero on, you hone that ability through the process of learning from your mistakes and, more importantly, learning from other people's mistakes by talking to people who have "been there, done that" and are willing to share their experiences with you or by simply gathering a knowledge base from all of the lessons learned that are documented in the "open source" that is out there -- articles in publications, speakers at conferences, etc.
So, to be sure, if you don't have that basic ability, that sixth sense, you are screwed. But then there's also the ability to execute after you make a decision. It has nothing to do with formulas or with intuitive decision-making. This is basically good old operational excellence that's required. For example, if you decide to pre-promote your products before they are finished, you can do that very well or you can do that very poorly. To be successful, obviously, you need to do things well.
Here are some final thoughts on success and key success factors for entrepreneurs.
Recognize that life is a random walk. If a billion people flip a coin thirty times, one of them is going to get heads thirty times in a row. It will seem amazing to them, but a statistician will tell you that it was likely to happen to at least one of the billion people.
I remember some number of years ago a woman won a big state lottery jackpot twice. This was incredible and became front-page news. What were the odds of that happening?!
Well, as it turned out, a statistician showed that the odds of it happening to *someone* were actually pretty high. The odds of it happening to me or you specifically? Extremely small. But there was a reasonable chance that across all 50 states over many years, given the number of jackpots per year and the number of people who seriously play the lottery, it would eventually happen to someone.
The same phenomenon happens in business. Should we bow down to Bill Gates because he is the be-all end-all of business and technological acumen? Or is he just lucky?
Are there others who might have become Bill Gates had they not had the misfortune of failing at one or two tasks along the critical path that it takes to become a Bill Gates? Without a doubt.
I, for one, don't hold celebrities in nearly as much esteem as most do. Bill Gates is largely a phenomenon of luck. Having said that, I acknowledge that the guy is extremely talented and that most celebrities gain their status through a right-side-of-the-bell-curve level of determination and talent that mere mortals can't even understand. Perhaps, more importantly, they are in the game in the first place.
Could the woman who won the lottery twice have won the lottery even once if she didn't buy a lottery ticket? Obviously not. In the same sense, Bill Gates could not have become BILL GATES if he didn't play the entrepreneurial game and if didn't have the intuitive sixth sense I mentioned above and a ton of business, technial, managerial, and operational smarts.
Sure, you can increase your odds in the probability game of life. Being smart helps. Working hard helps. Growing your personal network helps. Having good role models helps. Having wealthy relatives helps. So there are many things that affect your "luck" and, family wealth aside, many of them are in your control.
Some professional golfer said it best -- "The more I practice, the luckier I get". To be successful as an entrepreneur, you first and foremost need to be willing to get in the game, to take the risk of being a failure (which, by the way, is what the odds say you will likely be). Then through hard work, some smarts, and determination, you can minimize your risk of entrepreneurial failure.
But, despite acknowledging that the odds can be altered slighlty in your favor through your own effort, my point is basically this. If you fail, you shouldn't necessarily take it personally. There are many things that are outside of your control and sometimes you just don't get the breaks. You should only take it personally if you failed because you were dumb (lacking the aforementioned sixth sense) or executed poorly. If that's the case, then by all means pile on the shame and guilt.
Outside observers who are tracking your progress --- the smart ones anyway -- view your failure the same way. Indeed, in this terrible economy, many companies are failing and in many cases it has little to do with managerial capabilities.
I met with a local venture capitalist and asked him if he holds it against entrepreneurs when they fail. He explained that as long as they execute their agreed-upon plan and hit their milestones, he never holds it against them. It's when they deviate from the plan or fail to execute that he harbors a grudge against them.
For those who do fail, there's some good news. Failure isn't so bad. It's actually a good thing in some respects. The beauty of failure is that you learn a lot of lessons along the way. The good entrepreneurs bank those lessons deep within their consciousness and intuitively, as if by reflex, use those lessons in the future to avoid making the same mistake twice.
So I don't believe in magic formulas for success but I do believe that one thing is very important to being successful.
I learned it when I once had the pleasure of meeting with Leon Hirsch, founder and CEO of U.S. Surgical. Looking for formulas, I asked him what was the most important attribute for success. He told me "Son, make sure you have a good memory."
I must confess that initially I just thought he meant that he was growing old and that, to his dismay, his memory was failing him, but later I've come to realize what he meant.
He was trying to tell me first and foremost that there are no easy formulas for success. Rather, your ability to succeed is based on your ability to transform countless "lessons learned" that you are exposed to over the course of your lifetime into the ability to make good decisions that increase your chances of success in a world where failure is always possible. To do this, you have to have a good memory.
So, now, I would agree that while there are no magic formulas for success, a key success factor for would-be entrepreneurs is to have a good memory.
I'd also add one other thing: don't forget to buy a lottery ticket.
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