10 Lessons for Aspiring Entrepreneurs
One of my favorite web spaces is meetinnovators.com. It interviews startup entrepreneurs, people who created something new and made it successful. Through casual conversation, it investigates their thinking, mode of working, trials and tribulations, breakthroughs, and visions of the future. Just hearing these people talk gives you a real lift.
Major media don't usually cover this world, which is strange because the technologies we use and the businesses we trade with define a major part of our lives. The trouble is that most people just take it all for granted.
"Of course there's an upgrade." "Of course there's an app." "Of course I can make a video call from a wireless device to a person on the other side of the world for free!"
I recently caught up with an old history professor, and it would have made sense to talk about big ideas (about which we both really care). But actually, and very quickly, we gravitated to more interesting stuff. We talked about technologies: operating systems, smartphones, cloud vs. local software, servers and databases, tablets and laptops, moving on to social networks, email clients, download sites, and, of course, games!
This prattle had us engaged for an entire hour, and then I had to leave. I wonder if it occurred to this man, whom I recall as ideologically uninterested in economics, much less free enterprise, that all the stuff we talked about are benevolent gifts to us resulting from capitalist acts?
People love talking technology these days. And we should similarly love the world of commerce for giving technology to us through entrepreneurial drive and innovation. It does so much to better our lives. Commerce is ultimately responsible for the dramatic increases in global living standards since the world opened up after 1989.
Startup entrepreneurs deserve much of that credit. They are not only the creators of new products and services, things that improve our lives at the margin every day. They are also the major driving force of new jobs in a market environment that is otherwise rather stagnant.
Comparing startup culture to politics is a study of opposites. In politics, people promise things ("Healthcare for everyone!" "A world without immorality!") and just hope that constituents will believe that pulling a lever will bring change. It never happens, but it doesn't matter, because there is no real test, no real accountability. Politics lives on tricks coming and going.
In enterprise, you have this test-both an inspiring North Star and a wicked crucible. It's called profit and loss. Every day a business must face that test. To make it, you need to persuade people that you have something or can do something sufficiently valuable for your customer to surrender real property in exchange for your product. You must get more back in property than you surrender to make whatever you're selling. One dollar over costs and you are growing. One dollar under costs and you are sinking. The balance sheet rules the day and determines winners and losers.
Politicians and bureaucrats never face such a reality check. In this sense, they are completely unhinged from reality. Their revenue is ensured, and their jobs are based not on sales but manipulation and position.
Listening to all these interviews with techy entrepreneurs, I'm reminded of a series of books I read a few years ago about Gilded Age entrepreneurs. It was a different time and they had different tools-and they had far fewer struggles with government than we have today-but the motivations, methods, and impulses are the same.
Here is a list of 10 features of enterprise that entrepreneurs exhibit or discover in the course of their great adventures.
Business starts with the desire to do something wonderful, not just to make money. This seems to be a universal trait. But it flies in the face of nearly all propaganda you hear about capitalism, which is supposed to be based on greed and material acquisition. Actually it is rooted in the desire to make the world a better place, and you can tell it in the voices of these achievers. Profits are the sign and the seal of a job well done, but not the driving motivation. The dream is what entrepreneurs chase.
Most people will tell you a million reasons why you will fail. Before jumping in to make a business, these people will typically survey their friends. Their friends always warn against it. No one will want that product. Someone already offers that product. That's way too risky and it won't work. Why not get a regular job like everyone else?
Finally, the person realizes that he or she has to go it alone.
All businesses face the universal terror of uncertainty of the future. The only certainty we have is in looking back at history, at the stuff that already unfolded. What tomorrow will bring is guesswork. You can get close. You can make forecasts. But in the end, humanity is fickle and unpredictable.
And by the way, every single business faces the same ghastly reality of uncertainty. They are all rock climbing with blindfolds on, feeling their way up as they go.
You can't really know the market until you test the market. Of course you do market surveys. You ask friends. You look for other examples of success. You follow your own instincts. But surveys, examples, and instincts can't substitute for the live test in which you are asking people to give up their stuff for your stuff. Every success seems like a no-brainer in retrospect ("Of course people want to buy books online"), but this is wholly illusory. You never really know until you try.
All entrepreneurs are maniacally focused on serving others. This also contradicts the conventional wisdom that business is mainly self-interested. That cannot be true because the whole impetus of business is to seek out the interests, desires, and motivations of others. It's the only way to discern the path to success. The consumer is king, and the entrepreneur serves.
- Every business needs dreamers and accountants. The dreamers are
the people who imagine a future that doesn't yet exist, a configuration of
the world that is different from today. They take nothing and make something
of it. That requires a wild imagination.
But more is needed to make any project work. Your balance sheet, along with someone who can skillfully manage and interpret it, is essential. The accountant is always the one with the bad news.
Don't try to start from scratch. One of many benevolent gifts of capitalism is that it offers us examples of success. These examples are publicly available to be studied and understood. The best entrepreneurs know how to copy success and then improve the model on the margin, just enough to cause a switch in consumer loyalty or recruit new consumers. You can't be shy about this. Great business people "steal" ideas; ideas are part of the commons.
No matter how digital the service or product is, success comes only peer-to-peer. Internet successes do not think of their customers as nodes but as people who need love and care. Nor are customers cash cows; they are real people with real needs and must be treated as such. All appeals are personal appeals. All marketing speaks to individuals.
Enterprise is an incredible amount of grueling work. To be an entrepreneur means to be all in. There is no time off. Nothing takes priority, especially in the start-up period. You need fanaticism, a near-maniacal devotion to making sure that all that can go right will go right. Nothing is assumed, ever. These people know that their odds are never in their favor. So they must apply themselves as never before.
You never finally win. Enterprise is not like a board game with a beginning and an end. Every day the struggle starts anew. Every season might be your last. And it gets ever harder because the more you succeed, the more people will copy you. They let you do the test run, then copy your methods, tweaking them to enhance efficiency or reduce costs. There is no "final release" in business-not in any business that plans to stay alive.
These points are coming home to me now, having been at work on a new business venture for the past several months. The business is Liberty.Me, a complete social and publishing solution for liberty-minded individuals.
The whole focus is to provide a positive, solutions-based information and communication service for living a freer life. I see a burning need here to use every bit of advanced technology to do something wonderful for a cause I believe in. Yes, I'm sure it will be marvelous. But as a commercial service, there will be a test. It's both thrilling and terrifying. An idea is facing the crucible. As someone told me recently, you will soon be a fool or a genius.
You wonder why prosperity is such a rare feature in the history of the world? It's because merchantcraft is rarer still, attacked often and avoided by all but the craziest people in our midst-the entrepreneurs who dream and work and face the crucible of profit and loss-to bring us what we love.
If you're interested to learn from the life experiences of a successful entrepreneur, read Doug Casey's new book, Right on the Money. In his inimitable, provocative style, the well-known resource speculator provides opinions, anecdotes, and actionable advice on how to become wealthy and protect one's assets from the long arm of the government. Click here to read more.