Entrepreneurship in a Nutshell
“A person’s success can be measured by the amount of uncomfortable conversations they’ve had.” - Tim Ferriss
Entrepreneurship is intimidating. The word itself is difficult to spell, but does it have to be a difficult process as well? Is this a rare breed of humans or is it a group of people that figured out a similar process that works? Perhaps what drives people crazy is that there isn’t a one size fits all mold of how to be successful in the entrepreneurial world. In school, we’re taught to follow analytically complicated formulas that get us to one answer. In entrepreneurship, we are taught to question things and go against the grain to understand the underlying process. Here are five things that I believe will help you become successful from my experience working with hundreds of entrepreneurs. Let’s get started!
Solve a real problem
“Treat entrepreneurship as agnostic experimentation.” - Peter Thiel
Ever think of an idea in the shower and think, “this is worth a million dollars!” The fact is, most ideas are not viable businesses and require market testing before any real time or capital should be invested. Don’t make the common mistake most entrepreneurs make by creating a solution to a problem that doesn’t really exist. Take Cisco for example, they solve the very real problem of internet access. On a very fundamental level, Cisco creates networking equipment for businesses making it possible for people to access the internet! This is an aspirin level product. In other words, focus on creating a solution to a real pain-point (aspirin) versus creating a solution to a problem that is more of a nice-to-have, known as a vitamin. Vitamin level products are relatively elastic goods and are nice-to-haves but do not create an immediate need for customers. When you have an excruciating headache, you’ll do anything you can to alleviate the pain - including driving out to your local pharmacy to get a bottle of aspirin! Focus on building an aspirin level product that solves this “headache”. Conversely, vitamins are nice-to-haves but are often trumped by aspirin level products. You may find yourself taking one-a-day vitamins for a month or two, but ultimately you forget about them. Be honest with yourself, is your company selling an aspirin or a vitamin? If it’s the latter, it might be time for a reevaluation through the form of market testing. Have fun with it, and be a little crazy.
Start small, then scale!
“Think big, start small, fail quickly, scale fast.” - anonymous
Hyperfocus on a small target market and then expand to different markets. A common mistake entrepreneurs make is feeling the need to cater to every demographic. This is the wrong approach! Look at Amazon for instance, they started as an online book-selling company and then continued to expand resulting in becoming the largest internet retailer in the world. Or PayPal for example, an initial analysis of who their customer segment would be is any person making online transactions. But instead of taking this broad approach, Peter Thiel and Elon Musk (among others) gained tremendous traction by focusing on a very specific segment of Ebay users. This approach worked and turned PayPal into one of the most successful payment processing systems in the Silicon Valley. It’s important to be aware of a larger market for future growth, but it’s even more important to focus on a very niche market and continue to expand to adjacent markets.
Be the last mover
“One of the things we overvalue in silicon valley is growth rates and we undervalue durability." - Peter thiel
Remember those archaic textbooks explaining how first-mover advantage is the most important strategy to gain customer loyalty? Well, I disagree. Look at some of the most popular technology companies out there right now. Before Apple there was BlackBerry, before Google there was Archie, and before Facebook there was Myspace. The tremendous advantage Apple, Google, and Facebook had in this scenario is in their ability to learn from their predecessors. Innovation does not equate to originality. In fact, these companies went into pre existing industries. Where they persevered and excelled is in their ability to create innovative approaches to complicated problems. All three of these companies saw what their competitors were doing wrong and capitalized on this opportunity which saved them millions in research and development costs.
Simplicity is key!
“You’ve got to start with the customer experience and work backwards to the technology.” - Steve Jobs
In the words of Richard Branson, “Keep it simple, stupid!” When have you heard a customer say, “I wish this product was more complicated” or “I wish this technology was harder to use.” The answer is, NEVER! Keep it simple, and focus on the core premise of your product before implementing specific features. Nothing is more frustrating from the consumer side when you can’t figure out how a product works or how to use it (specifically in tech). Look at Google for example (now referred to as Alphabet), a company valued at close to $500 billion and only contains a search engine and their logo. On the back-end, Google has very complicated proprietary algorithms that compose their DNA, but they found a way to make internet navigation easy and intuitive. Another great example is Uber. Remember the days when you had to call a taxi, know your location, have cash on hand (or a card), and then wait for your cab to get to you? Uber has been so successful by keeping the pressure on the services side and making it extremely intuitive on the consumer side. Now, all the customer has to do is push one button and their ride is on their way! No need to go through the logistical process that you once had to. Instead all of that pressure is put on the services side. Keep it simple and explain it like i’m five (not literally)!
“What I really want out of life is to discover something new: something mankind didn’t know was possible to do.” - Elizabeth Holmes
One of my favorite examples of opportunity creation is from Henry Ford. Henry Ford created a company called Ford Charcoal (now known as Kingsford Charcoal) in the 1920s which was built solely off of the byproduct of wood scraps from the production of Model T’s from the Ford Motor Company. He developed a process in which he could create charcoal from scraps that would have otherwise been wasted. To this day, Kingsford charcoal remains as the biggest player in the charcoal industry. The whole point of this story is to recognize opportunities and take advantage of them. You’d be surprised how often these opportunities come around without any action. Have you ever heard your friend say, “if only I had thought of the idea of Facebook, then i’d be a millionaire.” The truth is that Facebook still had to be built. Mark Zuckerberg had to recruit a team of talented software engineers to follow his vision and build something truly amazing. Many people would probably discredit his work as being lucky, or being in the right place at the right time. But in the words of Roman philosopher, Seneca, “Luck is where the crossroads of opportunity and preparation meet.” So remember to identify great opportunities and take action, you never know what can stem from them.
- Mike Maher