Great Entrepreneurs Are Fast Learners
The journey of an entrepreneur is one of constant experimentation. Some experiments will succeed and some will fail. Regardless of the outcome, entrepreneurs will have many learning opportunities along the way. When I think about it, what propelled my founder friends to success was learning. Not the ability to learn, but the speed at which they learned from experiments and applied those learnings going forward.
A close friend had a marketing business focused on small businesses in a particular niche. He worked closely with his clients to learn their challenges in acquiring customers. Soon, he realized that one of their specific problems was shared by tons of other small and medium-sized businesses. He experimented with solutions until he found one his customers valued. The rest is history. Today that company is valued at hundreds of millions of dollars.
Everyone can learn, but great founders learn quickly and apply their new knowledge quickly. The next time you wrap up a project (whether the outcome was good or bad), make it a point to look for takeaways and think about how you can apply them in the future. If you do this regularly, you’ll learn rapidly and increase your chances of success.
Mindset Matters to Outsize Success
In my post yesterday, I shared my thoughts about success requiring not only luck (preparation + opportunity) but also the ability to recognize an opportunity and the willingness to act on it despite the risks inherent in doing so.
Today I had a chat with a close friend about people’s mindsets. We talked about how important mindset is to outsize success. Your mindset can prevent you from taking action when you get a lucky break—even when it’s staring you in the face.
I’ve noticed a pattern in the mindsets of people who’ve achieved big successes. They realize they could fail. The time and energy—not to mention money—they put into something could be all for nothing. Yet they don’t dwell on that. They accept it and focus on the upside potential. If everything goes right, how big could this be? They look for opportunities that have massive upside.
The next time you get a lucky break or evaluate an opportunity, be aware of your mindset. (In other words, think about how you’re thinking . . . something, it’s believed, humans are uniquely able to do.) Take a second to ask yourself: if everything goes right, how big could the upside on this opportunity be? The change in mindset could lead you to outsize success!
Outsize Success Takes More Than Luck
Someone made a point in a debate I listened to today that gave me pause. He said luck is what happens when preparation meets opportunity. The Roman philosopher Seneca said that first, and I agree with him. The debater took this one step further, though. He said you have to be willing to take risks to capitalize on luck. He gave the example of a backup quarterback who practices hard and is ready when the starting QB is hurt. The backup gets a lucky (for him) break to show what he can do on the field. But playing involves risks that he must accept to take advantage of his luck. He could fail by performing poorly (this trips a lot of people up) or being injured.
I spent more time thinking about this and I generally agree with what was said today, but think they missed something. In speaking with entrepreneurs (not just techies) and investors who’ve had outsize success, I’ve noticed a distinct pattern. They all have the ability to recognize when they’re in a lucky situation and take action—rapidly, if they’re among the best. (Most lucky situations aren’t as obvious as the backup QB’s was.) Sure, things can go wrong, but they mentally set that possibility to the side, focus on the upside, and accept the risk.
When I think about what it takes to succeed, I view it as a two-step process:
· Preparation + Opportunity = Luck
· Luck + Recognition + Action (i.e., accepting risk) = Success
Following this two-step process doesn’t mean you’re guaranteed to be successful. But being aware of it will make success more likely.
If an athlete practices hard and finally gets the chance to play, that’s not enough. He has to jump at the opportunity, play his best, and risk failing or being injured. Otherwise, his luck isn’t going to lead to success.
Being Everything to Everyone Is Tough
This week I caught up with an entrepreneur working on an interesting problem. When we first met months ago, he had just launched his MVP and was targeting both corporations and consumers. This immediately stood out to me. He was trying to serve multiple masters.
Corporations and consumers are totally different types of customers. Their needs are different and the sales processes used with them are different (if the solution isn’t self-serve). It’s certainly possible to have both as customers—if a company has adequate resources. Early founders should use limited resources wisely and efficiently.
This founder shared his 2021 plans with me. His team developed annual goals and strategized on how to achieve them. The data told them that targeting a specific consumer profile would likely be their best path. The founder also got feedback from his team that to provide an ideal experience to a broader customer base, they would need more resources. The founder listened. He narrowly defined the company’s target customer for 2021. His team rejoiced!
It’s hard for companies to be everything to everyone, especially in their early days. If you’re an early founder, consider focusing on one type of customer and one solution first. You don’t hear about many companies failing because they solved their customer’s problems too well or exceeded their expectations.
Weekly Reflection: Week Forty-One
Today marks the end of my forty-first week of working from home (mostly). Here are my takeaways from week forty-one:
- Weekly reflection – These weekly posts were originally intended to document my experience of working from home during the COVID-19 pandemic. They’ve done that and more. They’re now a way for me to reflect on the week, which I really enjoy. I’m renaming them to reflect this evolution.
- 2021 – This year is off to a crazy start. I was mentally exhausted from all the extremes in 2020. I hope these first five business days aren’t an indication of what we can expect for the rest of the year.
- More deals – This week Salesloft raised $100M at a $1.1B valuation. Another great Atlanta company doing a huge deal! I expect we’ll see more deals in the first quarter.
- Slow start – I had almost two weeks off and it was hard to get back into the swing of things this week for a variety of reasons.
Week forty-one was a crazy busy week. I’m hopeful that it will turn out to be the exception rather than the norm.
I’ll continue to learn from this unique situation, adjust as necessary, and share my experience.
For the Next Billion-Dollar Idea, Think about Workflow Management
I’ve seen founder friends build massive companies that started with a simple goal: to improve workflow. They took a manual process and developed software that made it simpler, more visible, and more conducive to collaboration. This great startup approach for nontechnical founders can be the secret sauce that propels a company to success.
Today I met with a founder who’s pursuing an idea about improving a very specific and highly technical process involving lots of parties (internal and external to the company). The costs of errors to many stakeholders are high. He’s spent over a decade learning the space and has deep relationships (his unfair advantage). He has a unique insight that differentiates his solution from that of competitors. And he’s built an early version of his product to test with customers. This founder is well positioned to build a large software company by making a specific process easier for his target customers.
I’m not an idea person, nor are many other founders. Fortunately, you don’t have to be brimming with creative ideas to be a successful founder. Aspiring founders can easily find ideas that could lead to terrific companies by looking around for inefficient processes that take tons of time or cost lots of money to execute. The more painful the better! The next time someone is complaining about something that annoys them about their job, listen. It could be the seed you need to grow the next billion-dollar workflow management company.
Compete Using Your Unique Insight into Your Competition!
I’ve previously shared my thoughts on founders feeling like they have to come up with an Amazon-caliber idea to start a company. That’s a path, but there are others. I often meet with entrepreneurs who aren’t idea people but still make it work. They find (or stumble upon) a problem they want to solve. They research who else is solving the problem and learn how effective their solutions are in the eyes of customers. If customers are only partially satisfied, they set out to close the gap. These entrepreneurs don’t dream up a completely new solution; they make a better iteration of what’s already out there. They know what customers like and don’t like about it, so it makes sense. There are countless examples of companies like Facebook, Zoom, and others who used a similar playbook, and for good reason . . . it works.
If you take this path, you need to acknowledge that’s what you’re doing. When you explain your solution and vision, your pitch will go over much better with investors and recruits if you acknowledge that you have competition and articulate precisely how they fall short of customers’ expectations. You’ll be demonstrating that you have a unique insight that the market has missed. Your unique insight differentiates you from your competitors and will become the flag that others rally behind in support of you.
Unless you’re creating a new market, you have competition. Find a way to understand what your customers think of your competitors’ product or service. Being able to articulate this insight clearly could change the trajectory of your entrepreneurial journey!
Entrepreneurship and Leadership: It’s a Package Deal
When people say they want to start a company, I’m not sure they realize what they’re signing up for. Crazy hours and limited resources, yes. Less obvious but more important, perhaps, is the responsibility to lead. Your team will believe in you and your vision. They’ll be the ones who execute and turn your vision into reality. Many will walk through walls to make that happen. They do it because they have faith in their leader. They trust their leader.
As CCAW grew, so did this responsibility. In the early days, my decisions affected me and maybe a contractor. Later, they affected an entire team and the families they provided for. At times it was stressful, to say the least. But this responsibility forced me to think beyond myself so I could do right by my team and lead them in the right direction.
I’m a huge proponent of people starting companies. Entrepreneurship is a big part of how we innovate as a society. But entrepreneurial success isn’t an exercise of individual contribution. It takes a team. Aspiring founders should know that they’re taking on the serious responsibility of leading others. They’ll have an outsize impact on the lives of their team and their team’s families. It’s a responsibility that should never be taken lightly.
When the Company Outgrows the Founder’s Brain
I was recently asked how I got comfort that CCAW was moving in the right direction without being involved in everything.
A little context: Founders often build companies from scratch. They’re the glue that holds things together in the early days. Everything is in their head and they know how all the pieces work together. They’re intimately involved in most aspects of the business because they have to be. Resources are so limited that if they aren’t involved, it may not get done.
Growing businesses will reach a point where it’s no longer a good idea for the founders to be the glue. It hurts more than it helps. This often happens after a product–market fit is found.
CCAW had thousands of monthly customers and a high level of operational complexity. As we grew, it was impossible for me to be involved, but I needed to know if the business was thriving or dying. Over time we created three or four metrics, updated daily, for every functional area. For example, every morning our accounting system delivered to my inbox our net cash balance, month-to-date revenue, and month-to-date gross profit. The operations leader and I received daily reports on the number of unshipped orders, feedback from dissatisfied customers, and unresolved customer cases.
I wasn’t the only one with access to this data. The entire team got daily reports on these metrics. We further simplified each metric by using a green–yellow–red system to gauge our health. If key metrics were green, I knew all was well. If metrics were yellow or red for an extended period, I offered my support in resolving the issue to the functional leader and also communicated my expectation that we would get back to green. (A carrot and a stick, you might be thinking.)
We didn’t establish these metrics and reporting procedures overnight. It took time to figure out what mattered most in each function and how to measure it effectively. Once they were in place and visible, the team could focus on what mattered most. I didn’t need to be the glue. The team was empowered. I was always informed about the company’s direction and health. Win–win!
Too Many Priorities
Today I had a conversation with an entrepreneur about their 2020 plans, which they’d clearly spent a lot of time thinking about. One thing jumped out at me. They have six objectives in the first quarter alone. A similar number of objectives were listed for each of the other three quarters. The plan was extremely aggressive, especially considering the considerable uncertainty that characterizes the economy at the moment.
Based on my experience, it’s hard to get a team to focus on more than two or three objectives in a short time (e.g., three months). When I spread myself or my team thin with too many priorities, it usually didn’t turn out well. Either nothing was completed or a fraction of our goals were reached, which still felt like a failure. Over time I learned to distill things down to the two or three most important things and focus on those areas. The trick for me was figuring out what the two or three things were that would move the needle.
If you’re starting 2021 with a long list of priorities (or none!), consider taking time to craft a list of the two or three things that will have the biggest impact.