We already know that you are a technical superstar, with a passion for creating an innovative product that will be a paradigm shift in the technology you love. This is a necessary capability, but not a sufficient one, to be an entrepreneur. According to Wikipedia, entrepreneurs are people who create new and innovative businesses. Innovative products do not necessarily lead to innovative businesses. However, obviously, people who can do both are the most likely to be successful and happy.
Most experts agree that creating an innovative business is at least equal in difficulty to creating an innovative product or service. It requires a unique set of skills, personal attributes, and a mindset that many people don't have or don't choose to learn. In fact, just like many don't choose to build and nurture their technical skills, you might not want to develop the business and personal attributes associated with entrepreneurs.
Technical entrepreneurs often believe that great products will ultimately lead to a successful company, and good business skills only accelerate this process. In fact, there are tradeoffs involved between a focus on the technical aspects and a focus on the business aspects. The best entrepreneurs are able to find the right balance—technical perfectionism will kill you, just like minimal focus on building the business will kill you, even with a strong product.
Let's take a look at the personal attributes that differentiate non-entrepreneurs from the great ones, and help you achieve that balance!
A while back, when a technical startup founder mentioned to me that he wasn't sure he had the personality to be an entrepreneur, I realized how important this insight was. My first thought is that if you are more annoyed than energized by expert advice, team suggestions, and customer input, then you should probably avoid this line of work.
Actually, it's more complicated than that, but that's a good start. After working with entrepreneurs for more than a decade, I have developed a good "radar" to quickly recognize the mentalities that will likely pass the test of investors, employees, and customers.
However, it's easier for me to look in from the outside than it is for you to look out. So, here is a list of mentality characteristics, which I believe are absolutely necessary for you to see in yourself as an entrepreneur. On the other hand, if any of these characteristics cause you stress and discomfort, you probably won't be happy in the role of an entrepreneur:
You enjoy being the visionary leader: Being able to envision what the business and industry will be like in years to come is a skill that can guarantee that you will be around for the long haul. What makes most success stories in business is not totally reinventing the wheel, but leading the charge to make the current wheel better or applying the existing wheel to a new market opportunity.
Sometimes you are creative, sometimes logical: A successful entrepreneur has to come up with innovative ideas but also turn them into a value-creating profitable business. This requires a good amount of both left-brain and right-brain activities, with enough common sense to find the balance.
Risk energizes you: To really enjoy the ride in the world of entrepreneurship, you need to be able to sustain yourself outside of your comfort zone and have a sense of adventure. Startups never go as you anticipated. This is why you need to be ready to go "off the script" and improvise, and enjoy the thrill of victory when it works.
Actively seek others' input: The quicker you learn not to take it personally (and it's hard when it's your business and your creation), the more successful you will be. You will always come across people who will criticize you, no matter how great or valuable your product or service may be.
Motivated yet patient: When you start a business, you need to have the frame of mind that this is what you want to do for the foreseeable future or at least until your current goals are achieved. Most people want financial freedom, but they want results immediately, and this is not the case 99 percent of the time. Most successful entrepreneurs understand that success does not come overnight; it takes years.
Jack of all trades: When running a business, you'll be doing a little bit of everything. You have to be good but not an expert at everything you do, and you have to know when to be flexible and when to ask for help. If you want to specialize in just one thing, then running a business might not be for you.
If you don't fit into everyone's personal view of an entrepreneur's mentality, don't be totally discouraged, and don't worry about someone else's view. Winning businesses have been started by people of every type. Yet, overall, the facts are that about two-thirds of startups fail as a business (which means they are not sustainable financially), so think hard before you ignore warning signs.
I'm convinced that if entrepreneurs spent half as much time evaluating themselves and what makes them happy, as they do writing business plans and visiting attorneys and accountants, they would be winners far more often.
Finally, don't forget that the most important thing is to always do something that you enjoy. Life is too short to be going to work every day unhappy. Beyond that, I believe success is a state of mind derived from confidence, self-esteem, and what you really want in life. How strongly do you really want to manage a startup versus continuing to build great products for someone else to manage and sell?
Some people assert that technical entrepreneurs with the personal attributes discussed earlier have to be "natural-born," and you either are one or you aren't. I concede that good, natural-born entrepreneurs do exist, but more often, I tend to agree with Peter Drucker, who said "It's not magic, it's not mysterious, and it has nothing to do with genes. It's a discipline, and like any discipline, it can be learned."
On the natural-born side, some entrepreneurs seem to have a strong vision and the ability to inspirationally lead others based on their background, upbringing, and early experiences. It is this vision that is the beacon to drive the right people behavior, leading to the success of the business. If you don't have a vision in your heart or if you don't have the strength to inspire people, entrepreneurship is probably the wrong road for you.
If you feel you do have the right characteristics, you can still benefit from learning some skills and disciplines that improve the success and the impact of every technical entrepreneur. Here are some of the key ones, assembled from an old interview with Herb Kelleher (http://searchcio.techtarget.com/news/924412/Entrepreneurs-Born-or-made-A-conversation-with-Herb-Kelleher-of-Southwest-Airlines) of Southwest Airlines and other executives:
Ability to set priorities and focus on goals: Many people allow themselves to be driven by the crisis of the moment. Personal discipline is the key word here. Set yourself some priorities and goals, and live by them.
Ability to identify important issues: Some people call this common sense; others call it 'street smarts.' In the normal startup environment, there are multiple forces that compete for your attention every day, and you need to learn to delegate or ignore many. It relates back to experience and knowledge, more than genes.
Conviction to be a passionate advocate: When you believe in something enough to turn your passion into action, you have become an advocate. This power and voice is then used to persuade others to make the correct decision. An effective advocate requires conviction, usually acquired during related first-hand experience or training.
Broad knowledge and experience: Experience allows one to tackle challenges with confidence, in a given area. Broad knowledge facilitates the same success in other business areas. Entrepreneurs need this, because their challenges are across the spectrum, from technical to legal, operational, financial, and organizational.
Active listening skills: Above all, the ability to listen and understand the real meaning of what people are saying (and not saying) is paramount, because the most important information never arrives in reports or via e-mails. Some people pick this up from experience, and others find classroom courses most helpful in setting the focus. The best experience is getting outside the building and talking to real customers.
Sound judgment: I don't think anyone is born with sound judgment; it has to be learned but can be started at a very early age. Every entrepreneur must have the capacity to assess situations or circumstances shrewdly and to draw proper conclusions.
Pleasant skepticism: Skepticism is not doubting but applying reason and critical thinking to determine validity. It's the process of searching for a supportable conclusion opposed to justifying a preconceived conclusion. It is a learned skill.
All these characteristics revolve around the larger theme of team building. In short, to succeed, the entrepreneur must see and articulate a vision in order to attract and motivate a team and then be able to identify the key issues, challenge the views held within the team, and make judgments from among the varying perspectives in the team.
Every technical entrepreneur enters the game with a unique combination of genes and skills. If the things mentioned here feel natural to you and if you are young at heart (optimistic and fun loving) and have a healthy curiosity and zest for life, the entrepreneurial world may have a place for you too. Give it a try. If you start having fun, you probably have what it takes.
Whether natural-born or learned, the best technical entrepreneurs have a range of skills and insights across many fronts, from business to technical to interpersonal. I used to call this range of insights 'street smarts', but recently, I found a better explanation called multiple intelligences. Successful entrepreneurs always seem to be adept in several of these areas.
The theory of multiple intelligences was developed way back in 1983 by Dr. Howard Gardner (http://www.amazon.com/Multiple-Intelligences-Theory-Practice-Reader/dp/046501822X), at Harvard University. He suggests that the traditional notion of intelligence, called the Intelligent Quotient (IQ), is far too limited. Instead, he now accepts at least eight different intelligences that cover a broad range of human potential. These include the following:
Linguistic intelligence (word smart): Linguistic intelligence is the ability to think in words and use language to express complex meanings. Linguistic intelligence is the most widely shared human competence, most evident in poets and novelists. It is also evident in entrepreneurs writing good business plans and convincing investors.
Interpersonal intelligence (people smart): Interpersonal intelligence is the ability to understand and interact effectively with others. It involves effective verbal and nonverbal communication, sensitivity to moods and temperaments, and the ability to understand multiple perspectives. Entrepreneurs, particularly, need interpersonal intelligence.
Intrapersonal intelligence (self-smart): Intrapersonal intelligence is the capacity to understand oneself and to use such knowledge in planning and strategy. Intrapersonal intelligence involves not only an appreciation of the self, but also of the human condition. It is evident in psychologists, spiritual leaders, and business leaders.
Bodily kinesthetic intelligence (body smart): Bodily kinesthetic intelligence is the capacity to manipulate objects and use a variety of physical skills. This intelligence also involves a sense of timing and the perfection of skills through mind–body union. Inventors and people who provide mechanical products need this intelligence.
Logical-mathematical intelligence (number/reasoning smart): Logical-mathematical intelligence is the ability to calculate, quantify, and think logically. This intelligence is usually well developed in mathematicians, technologists, and computer programmers, and it is usually associated with traditional IQ.
Naturalist intelligence (nature smart): Naturalist intelligence designates the human ability to discriminate among living things as well as sensitivity to other features of the natural world. I believe that good entrepreneurs use this to discriminate among consumer needs and pick the most marketable products to offer.
Musical intelligence (musical smart): Musical intelligence is the capacity to discern pitch, rhythm, timbre, and tone. This intelligence enables us to recognize, create, reproduce, and reflect on music interests and needs, as demonstrated by composers, conductors, musicians, vocalists, and sensitive listeners. There is a known correlation between engineers, software developers, and those with strong musical smarts.
Spatial intelligence (picture smart): Spatial intelligence is the ability to think in three dimensions. Core capacities include mental imagery, spatial reasoning, graphic and artistic skills, and an active imagination. Sailors, pilots, sculptors, painters, and architects all exhibit spatial intelligence. It's easy to see how this is important to entrepreneurs who design and build physical products (nonsoftware).
Robert L Schwarz once said, "The entrepreneur is essentially a visualizer and an actualizer. He can visualize something, and when he visualizes it, he sees exactly how to make it happen." This is a combination of intelligences many people don't have. If you have it, flaunt it and enjoy your foray into the entrepreneurial lifestyle.
Over the years, I've had the privilege of working with some of the best technical entrepreneurs in Silicon Valley and elsewhere. On the average, the entrepreneurs I know are living on Ramen noodles. However, one thing they all seem to have in common is a love for learning and change. They rush in with a passion to better the world, and money is just an indication of their progress.
The successful ones then invest their time and money in furthering their knowledge base. I'm not talking about academic classes, because at best, these only teach you how to learn. In these days of rapid change, I believe that most of the facts that college students learn as a sophomore are obsolete before they exit their senior year.
Learning should be viewed as an ongoing part of everything you do and as one of the most important things. It's an unfortunate artifact of our educational system that young people spend a dozen years focused more on memorizing facts than the learning process and then thinking that they will have all they need to know for the rest of their lives by the time they graduate.
In business, as in most other disciplines, there are practical steps towards learning what you need for the next stage of your company and your life. These include the following:
Networking with people who know: A question I sometimes get from startup founders is, "What do I talk to these guys about?" I say you can't learn much if you are doing all the talking. Just ask investors what they look for in successful companies. I've never known any successful entrepreneurs or investors who were not happy to share their insights.
Read entrepreneur stories: Most successful entrepreneurs have been written about on the Internet, in magazines, or books. Spend some time with these biographies, and soak up the insights offered and take inspiration from them. Follow-up online with social networking to make contacts, dig deeper, and maybe even line them up a mentor.
Adopt a mentor: Boomers and other former executives who have "been there and done that" make great mentors. They have the time and interest in "giving back" some of what they have learned to the next generation. Gen-X executives may be too busy running their own companies to be mentors. A mentor is someone who doesn't let ego or money get in the way of helping.
Formal learning: Some formal learning is always advisable, but go beyond university MBA courses to professional seminars and case studies. Formal courses work best for basics, such as a business startup course or financial accounting. Go with topics you are interested in and need now.
Volunteering with local organizations: This type of work is highly valuable in any environment, including universities and professional organizations. The payback is that you can get experience for free while working on real stuff. I've done business plan judging at local universities and learned more than I contributed.
Just start a business: There is no better way to learn about being entrepreneurial than starting a business. No matter how much advice and counsel you have been given, I guarantee that you will encounter new challenges daily to enhance your learning opportunities.
If you are one of those people who likes structured classes to learn and counts on spending at least 2 weeks per year in the classroom to "catch up," this is laudable, but don't try to start a business at the same time. It won't happen.
If you have decided to become a technical entrepreneur solely to make more money, you are also likely to be disappointed. It's that double challenge of learning to overcome all obstacles while still surviving on the financial front that keeps a good entrepreneur motivated to face a new day.
I would recommend business networking as the most effective way for a technical startup founder to find investors, advisors, and even key executive candidates. However, what if you are an introvert or new to this game and don't know where or how to start?
The answer is still the same, but I have learned over the years that there is etiquette to this process, just like there is for social networking. Here are a few of the "do's":
Post your profile on LinkedIn and Twitter, and join in startup discussions: Of the 200 or so social networks that are now recognized by Wikipedia, there are other social networks, such as Orkut, Netlog, and Sina Weibo, that entrepreneurs use for networking, depending on where you are in the world. Talking to friends on Facebook probably won't help you. Reading and posting on Hacker News is popular, especially in the San Francisco Bay Area.
Join and actively participate in local business organizations: Business groups such as TiE-The Indus Entrepreneurs (https://www.tie.org/) and EO-Entrepreneurs Organization (http://www.eonetwork.org/Pages/welcome.aspx) are places to meet people you can help as well as people who can help you. Remember that it helps to give a little to get something back. Another place to start is the local Chamber of Commerce.
Get introductions from existing business contacts: Start with the people you know, who know your work, and would recommend you to others. It isn't always the first introduction but the friend of a friend who may be the one that pays dividends.
Volunteer to help out with entrepreneur activities at your local university: All universities love and need to get help from people in the "real world" to coach and judge activities in their Entrepreneurship and MBA programs. In return, you will meet or be connected to many people who can help you.
Attend an investment conference: These events are swarming with potential investors, and this is the forum where they are actively soliciting new opportunities. So, don't be shy about handing out your business card at breaks, lunch, mixers, or scheduled activities.
Offer to give back where you can: Ask every potential investor and mentor how you can help them. You may be able to contribute services, provide connections, or generally support their efforts in some way. It's a great way to generate goodwill.
Join a local investment group. If you can meet the SEC "accredited investor" criteria ($1M net worth or $200K annual income), this is a great way to be seen by potential investors as peers before you need money. In addition to this, you will see how the process really works from the other side of the table—the best preparation you could have for your own approach later. In most cases, these groups don't require that you invest in others, as a condition of membership.
If all of these are obvious to you, then you are already on the right track, and you probably wouldn't consider doing any of the "don'ts":
Don't do cold calls or e-mail blasts of your resume and business plan to potential investors. It's a waste of their time as well as yours and is an annoyance to many.
Don't corner and barrage that heavy hitter you heard about with your life history at a social gathering.
Don't send your unfinished business plan unsolicited to every VC or investment group you can find on the Internet just to see whether they like the concept.
Don't hand out your business cards to everyone in the room in the hope that one will be impressed with how unique and expensive it looks.
On LinkedIn, don't complain to everyone that you are limited to only 3,000 invitations and request them to send you an invitation to become friends. LinkedIn only allows you to send 3,000 new invites per membership. (How many friends do you need?)
Back on the positive side, I like to say, especially for us introverts, that networking is more about listening than it is about talking. Believe it or not, most successful investors have big egos and will probably remember you better if they do most of the talking at first. Nevertheless, have your 30-second pitch honed, and don't be shy about giving it. Don't forget your enthusiasm, and have fun, but remember your manners!
You can't win as a technical entrepreneur working alone. You need to have business relationships with team members, investors, customers, and a myriad of other people. This doesn't mean you have to be a social butterfly to succeed or introverts need not apply.
It does mean that you need to look, listen, and participate in the business world around you and network through all available channels such as business-oriented social networks online, local business organizations, and events or conferences in your domain.
I hope all this seems obvious to you, but I still get a good number of notes from "entrepreneurs" who have been busy inventing things all their life but can't find a partner to start their first business, and others trying to find an executive, an investor, or a lawyer.
What these people need is more relationships, not more experts, more blogs, or more books. So, I thought I would explore some essentials in building and nurturing business relationships (most of these apply to personal relationships as well):
Build your network: These are people of all levels who have been there and done that, which means people who know something that you need to know. See the previous section on how and where to get started. You don't need a thousand friends, but a few real ones can make all the difference.
Give and you will receive: Relationships need to be two-way and can't be just all about you. If you are active in helping others with what you know, they will be much more open to help you when you need it. The more you give, the more you get in return, both literally and figuratively.
Work on your elevator pitch: This is a concise, well-practiced description of your idea or your startup, delivered with conviction to start a relationship in the time it takes to ride up an elevator. It should end by asking for something to start the relationship.
Don't skip all business social settings: Face time is critical, even with the current rage on social networks, phone texting, and e-mail. Studies show that the majority of communication is body language. This is usually the important part of the relationship.
Nominate someone as your mentor: Build a two-way relationship with several people who can help you, and then kick it up a notch with one or more by asking them to be your mentor. Most entrepreneurs love to help others and will be honored to help you.
Cultivate existing allies: These are people who already know and believe in you but might not be able to help you directly in your new endeavors. However, don't forget that each of these allies also has their own network, which can be an extension of yours if you treat them well.
Nurture existing relationships: We all know someone who claims to be a "close friend" but never initiates anything. They never call, never write, and wait for you to make the first move. If you don't follow-up on a regular basis with someone, then there is no relationship, only a former acquaintance.
On the positive side, many attributes of an introvert lead to better business decisions, such as thinking before speaking, building deep relationships, and researching problems more thoroughly. Mark Zuckerberg, Facebook founder, is currently the most famous introvert entrepreneur, so don't let anyone tell you it can't be done.
One of Mark's secrets seems to have been to surround himself by extroverts such as COO Sheryl Sandberg and people who have a complementary energy. However, working alone doesn't get you very far. It takes a team to win the game of business, so take a look around you to see how you are doing so far.
In my experience, it always helps to look at both sides of every coin. So far, we have primarily highlighted the positive attributes that an aspiring technical entrepreneur needs to look for in himself or herself and in the people around them. Now, let's focus on the other side of the coin; we need to identify the negatives for potential entrepreneurs.
First of all, people who find it a struggle to manage their own lives don't make good entrepreneurs, and they won't enjoy the challenges. Small businesses require multitasking, work prioritization, and decision-making, with no entourage of assistants and specialists. That's why Fortune 500 executives usually don't survive as startup CEOs.
In all cases, you have to learn to accept total responsibility for things that happen to your business, just like you are responsible for everything in your personal life. Maybe you are comfortable with having a spouse in control of your personal life, but couples running a business are high risk.
If you recognize yourself in the following points and don't believe you will change, you probably won't have as much fun running a startup as serial entrepreneur Sir Richard Branson always seems to be having. You don't even have to try the entrepreneur lifestyle to know whether these points are likely to be a problem for you:
You often feel overwhelmed and out of control: There is always more to do than the time to do it. Usually, the stress people feel does not really come from having too much to do but from having to make decisions on what to do first and not setting reasonable targets.
Starting many things, but completing few: Productivity is all about the ability to complete tasks. It requires tradeoffs and decisions to declare that something is finished. Get in the habit of finishing what you start. Perfectionists are often frustrated in startups, since nothing is ever perfect enough for them.
You like to defer big things until later: If you catch yourself deferring important tasks in favor of smaller, easy things, that's a management problem. Adopt a "do it now" motto, and tackle your to-do list in order of priority.
Over-thinking and second-guessing: If you spend more time thinking and worrying about a task than doing the task, then you are not managing yourself. Don't waste your precious creative energy. Finish items, and get them off your mind.
You get defensive at the slightest criticism: Some people feel pain and high stress with any negative feedback or suggestions for improvement. They react quickly and emotionally with rationalizations and justifications for their actions and find active listening very difficult. You need a thick skin to be an entrepreneur.
Avoiding new opportunities due to fear of failure: Real entrepreneurs look at every new opportunity as an exciting and new life experience. They are energized by the risk and learn from every failure.
Always counting your weaknesses: Good business leaders never criticize themselves for their weaknesses. Smart ones recognize their undeveloped skills and higher potential, but they are confident that they can change and constantly work at it.
Lack of confidence and enthusiasm: If you have a "downer" day at least once a week and can't remember the last time you were truly enthusiastic about something in your life or work, you are not ready to manage a business. Self-confidence is the key to success.
You like to work alone: Every business and every relationship is a team effort. Loners tend to hide from others to be more comfortable, or because working alone gives them more control. Make an effort to network with others to stay informed and contribute, but not dominate.
Admit to being a control freak: Believe it or not, many people who don't manage themselves very well are control freaks when it comes to their business and other people. Practice the art of delegating and the joy of being spontaneous.
Managing yourself effectively is the best form of preparation for managing a new business. It means you understand yourself and are likely able to read other people and understand them. This leads to a trusting relationship with your team and customers.
People with a "victim" mentality should never be entrepreneurs until they overcome their fear. We all know that the role of starting and running a business is unpredictable and has a high risk of failure. For people with a "victim" mentality, this fear of failure alone will almost certainly make it a self-fulfilling prophecy.
I'm sure you all know someone who is the perennial victim. The problem is that most of these people aren't likely to accept your assessment, so it's hard to help them. They don't see themselves as others see them, and many simply refuse to accept the reality of the world in general.
According to an article by Karl Perera, called Victim Mentality - You Don't Have to Suffer! (http://www.more-selfesteem.com/victim_mentality.htm), there are many indications of a "victim" mentality in a person's thought process. Here are some key ones he mentioned, applied to the technical entrepreneur environment:
"When things don't work, I secretly believe I'm the cause": Victims act as though each business setback is a catastrophe and create stress for themselves. These people feel more importance and ego when relating problems rather than successes.
A survivor believes that bad things are an anomaly to be brushed off or just another challenge to overcome. In fact, they look forward to the challenges and get most of their satisfaction from declaring success.
"When I talk to myself, I never have a positive discussion" : Second-guessing every decision affects mood, behavior, and happiness and is likely to cause or intensify a "victim" mentality. If you are negative, you cannot see reality. This leads to more bad decisions, confirming that you are indeed a victim.
Survivors continually relive their positives and see themselves as miracle workers. They live in the present or the future and rarely dwell on mistakes of the past. They have faith in themselves and life as a whole.
"When others put me down, I'm wounded to the soul" : Negative comments from others are devastating to a victim. Offensive behavior towards you actually says more about the other person. However, if you have a negative mentality, you will just take what they say or do at face value and believe that you deserve to be the victim.
The survivor always stands up and fights negative comments, and usually turns the blame back on the deliverer. They are quick to counter with all their positives. They build boundaries around negative or toxic people and avoid them at all costs.
"I believe in fate, even though it's unfair" : If you succumb to fate, then you think you are responsible for all the bad things that happen to your business. The victim feels that he or she has been treated unfairly but is trapped. There seems to be no way out.
Survivors believe that they can make things happen rather than let things happen to them. They accept random turns in their life as new opportunities rather than unfair punishment.
"Everyone is punished for a reason" : Religious beliefs can have a positive or negative effect on your life. If you believe in a supreme being who is responsible for everything, it's easy to believe that your pain and misery is punishment for something you did wrong.
Survivors obviously take it the other way. They enjoy a personal relationship with the supreme being of their understanding and feel gratitude for everything positive in their life. They may ask their supreme being for help but rely on themselves for results.
This "victim" mentality is not a good thing under any circumstances, but it's particularly lethal when applied to an entrepreneur. If you would like to be an entrepreneur, remember that you don't have to be a victim. Take a good look in the mirror. Truly, the only one who makes you feel like one is the same person who can make you a survivor—you!
A lifestyle entrepreneur is an individual who creates a business with the purpose of altering their personal lifestyle and not for the sole purpose of making profits. A lifestyle entrepreneur focuses more on the life rewards provided to people who enjoy and have a passion for what they are doing. By definition, a lifestyle entrepreneur truly enjoys the startup lifestyle.
Until the recent recession, market research (http://ecopreneurist.com/2008/08/14/operating-a-small-sustainable-business-resources-for-ecopreneurs/) indicated that as many as 90 percent of the roughly 20 million American small-business owners were motivated more by lifestyle than growth and money. Since 2008, the desire for profits has trumped passion in 54 percent of new startups according to a more recent study (http://www.symantec.com/about/news/release/article.jsp?prid=20120613_01). It seems that everyone wants to make a quick buck these days.
Being called a technical entrepreneur should be a compliment, not an insult. The term applies to anyone who places passion before profit and intends to combine personal interests and talent with the ability to earn a living. This usually means not taking money from equity investors, as investors want fast growth, high profits, and a public offering or sale strategy to allow investments to be recouped.
Of course, even lifestyle entrepreneurs want to be happy and want their business to be successful. According to William R. Cobb and M. L. Johnson, in their book, Business Alchemy: Turning Ideas Into Gold, these different success expectations are what separate a lifestyle entrepreneur from a growth entrepreneur:
The owner is the only one "in charge": Every lifestyle entrepreneur starts their business to be their own boss and follow their passion, so they don't even think about having investors, a board of directors, or going public. If you think corporate bosses are tough, wait till you start spending investor money or try satisfying Wall Street and stockholders.
Insist on being engaged at the transaction level: If you are living your passion, you want to interact with customers and "touch and feel" the product every day. Growth entrepreneurs find that this fun world quickly changes to managing personnel problems, tuning organizational structures, and dealing with testy investors.
The income generated is part of the owner's personal income: The legal structure of these startups is usually a sole proprietorship, a Limited Liability Corporation (LLC), or a subchapter "S" Corporation. Under all of these, net income flows easily into your personal income. Corporate versus personal growth really becomes a lifestyle decision.
Startup funding comes from personal savings and family: There is no free money from any source. Nonequity funding has to come from personal sources, government grants, or bank loans. This doesn't dilute the owner's equity, but it might well limit you to organic growth versus international rollouts and acquisition options. Grants have their own price in time and effort for complex applications.
Business model to maintain the lifestyle is the primary driver: The lifestyle entrepreneur chooses a business model to make a long-term, sustainable, and viable living, working in a field where they have a particular interest, passion, and talent. They operate the business to sustain a minimal level of cash flow necessary to support the lifestyle.
Maximizes the owner's personal tax privileges: This means that owners can look for every opportunity to get a personal tax advantage from the business, such as charging vehicle operating costs to the business, renting facilities from themselves, or managing business and personal travel.
Enjoy being visible and active in the local community: Lifestyle business owners usually benefit and enjoy being a part of the local Chamber of Commerce, Rotary, and other civic organizations. These can become part of balancing your lifestyle rather than part of the stress of business-driven networking.
No exit planned until retirement: A lifestyle business becomes an integral part of an entrepreneur's identity and their life. If, and when, the time should come to "exit" from the business, they will often seek to transfer it to a family member or simply close it down.
In my view, lifestyle entrepreneurship should be growing in popularity rather than shrinking, as technology provides startups with the cheap digital platforms needed to reach a large global market. Also, more women have been jumping into entrepreneurship, and they have long wanted to make their business and personal lives and aspirations work more in harmony.
Younger Gen-Y entrepreneurs also tend to be more passionate, idealistic, and not driven by money, so I would expect to see them trend up in lifestyle entrepreneurship. I'm told that Mark Zuckerberg of Facebook started out as a lifestyle entrepreneur. Obviously, he has now graduated to corporate executive status in a large public company. That's a totally different role, about as far away from the entrepreneur lifestyle as you can get. Except for the money, I suspect he liked the previous role better. What do you think?
Many people, especially those who have spent years struggling up the corporate ladder, dream of jumping ship as a technical professional and becoming an entrepreneur. However, every job move is fraught with risk, and the move from technical employee to entrepreneur is on the high end of the risk curve. This is a big jump, especially in an unstable economy, so do your homework first on this one.
According to an article in the Harvard Business Review, Five Ways to Bungle a Job Change, there are at least five common missteps that professionals make when moving to a new job. I will assert that each of these has a comparable relevance for those of you contemplating leaving a company employee role to create or join an entrepreneurial startup. They are as follows:
Not doing enough research: When moving to a new company, you need to ask questions about expectations, financial stability, cultural fit, and role responsibilities. All of these apply directly to starting your own company. Test your "dream" startup plans on some experienced entrepreneurs to get a reality check before you leave your current job.
Leaving for money: Remember, the grass always look greener on the other side of the fence. Making more money in the short term is unlikely as an entrepreneur. In fact, most startup founders pay themselves no salary for the first year or two, and investor money is hard to find. I tell new entrepreneurs not to quit their "day job" until they have real revenue.
Going "from" rather than "to": If you are desperate to get out, you may just be lurching into entrepreneurship, only to find it more stressful and unsatisfying. People who feel competent but unsatisfied or bored in their current job make better entrepreneurs than people who feel overworked, underappreciated, and over stressed.
Over-estimating yourself: Search consultants say that many job seekers have an unrealistic view of their skills, prospects, and culpability. If you have had problems with several companies, you may be part of the problem. This part will be amplified in any startup, as you are now the company, so the blame stops with you.
Thinking short term: Moving from an employee to an entrepreneur is a lifestyle change as well as a career change. Don't make the misstep of assuming it is a short-term move to riches or an escape from a problem. Starting a business is hard work, requires a lot of learning, and only pays off in the long term.
These missteps are obviously interdependent. When people overvalue themselves, they are prone to stress from job performance feedback and dissatisfaction with compensation. This leads them to jump, without real consideration of the fit and opportunity, into the entrepreneurial world, where they could be even unhappier.
Every employee needs to evaluate these challenges, as the average baby boomer will have switched jobs 10 times, according to the U.S. Bureau of Labor Statistics. The days are gone when we commit early in life to a lifetime career with one company or a lifetime of entrepreneurship. The business landscape is changing rapidly these days, so we need to be willing to change as well.
A good question to ask before finalizing a change is, "What if I'm wrong?" Be ready to cut your losses and move on. Jumping repeatedly to another bad situation is not the answer. In every case, take a hard look at your real strengths and weaknesses. Be willing to listen to an advisor or mentor on how others perceive you and be willing to work on those weaknesses. In later sections of this book, you will also find more insights on assessing and managing risks.
The most important element is to understand for yourself what elements of a job role are the most satisfying to you and what constitutes a healthy work-life balance for you. You spend most of your adult life at work. Life is too short to let career missteps make it unhappy.
Your technical idea and vision may be great, but after the idea, it's all about execution. I often hear from investors that a great idea is necessary but not sufficient. The most important thing is a proven team led by an experienced entrepreneur, which means one who has built a startup before and has experience with the execution process in this domain.
I talked earlier about the best personality traits for a good entrepreneur, but I've never talked about the importance of the process. Yes, even entrepreneurs need to follow a disciplined execution process if they want to maximize their probability for success.
Even though in his book, Awesomely Simple, John Spence was talking about larger organizations, I think his concepts adapt equally well to a startup. Here is my adaptation of the key steps to ensure a winning execution in any business:
Create a vision and instill values: The vision may be yours alone, but the communication has to include your team, potential investors, and customers. For most people, the communication is the hard part—written, verbal, over and over again.
Define a focused strategy: Limit the focus to a few critical areas that will yield the highest possible return. If your strategy has more than five elements, it's not focused. Not everything can be a priority. Do not spend any time on unimportant goals.
Get stakeholders' commitment: People who are not committed cannot be held accountable for delivering ambitious results. The guiding coalition must demonstrate 100 percent unity, or there will be a mutiny. The worst case is a silent mutiny.
Align the objectives of principals: I have seen startups implode when principals were pitted against each other on mutually exclusive objectives, such as adding more technology versus keeping costs down. Quantify time and cost goals early, make sure everyone agrees, and measure results regularly to verify alignment.
Every process needs a system: Once a process is complete and working successfully, it's time to define it formally. Then, use only well thought out systems, manual or automated, to ensure repeatable success of every key process. The most basic element of every startup system is a written, agreed, and measurable business plan or Business Model Canvas (http://en.wikipedia.org/wiki/Business_Model_Canvas).
Manage priorities: You must relentlessly communicate the current priorities to all constituents and keep the total to a manageable number. One of the biggest mistakes I see in startups is a new and larger set of priorities every week, causing the team to lose momentum and commitment.
Provide team support and training: People are your most valuable asset, so start with the right ones and make sure they have the tools and training to deliver the results you are asking for. Don't assume they know everything you know or can learn as fast as you do.
Assign and orchestrate actions: Leaders must make sure that all team members are taking the right actions (and behaviors) on a daily basis to deliver long-term performance. Even after all the previous steps, great leaders can't afford to merely be observers. Lead by action.
Measure, adapt, and innovate: Things change in a startup, and things will go wrong. You won't notice if you don't measure. Measure four or five key drivers, not 20 or 30 things. Motivate everyone with an insatiable curiosity to make things 1 percent better every day (kaizen).
Reward and punish: What gets measured and rewarded, gets done. Be exceedingly generous with praise, celebration, recognition, small rewards, and sometimes, money. Set high standards for performance, and use the three Ts (train, transfer, or terminate) to deal with people unable to effectively execute the plan.
I'm not suggesting that your task execution will be perfect if you follow these steps precisely. There are far too many pitfalls and risks in a startup to imply that they can all be avoided. However, if you adopt this blueprint, it's much less likely that when things get tough, your investors will be thinking of an alternate meaning for the term "execution."
Being a good technical entrepreneur is all about you, not your technology. If you expect to succeed in the thrill-a-minute, rollercoaster ride of a startup, let me assure you it takes more than a good technical idea, a rich uncle, and luck. In fact, the idea is often the least important part of the equation. Most investors tell me that they look at the people first, then at the business plan, and only then at the idea.
If you want some specific tips to beat the odds, take a look at the following concepts adapted from Richard C. Levy's book, The Complete Idiot's Guide to Cashing in On Your Inventions (http://www.amazon.com/Complete-Idiots-Guide-Cashing-Inventions/dp/0028642201). He was talking about inventions, but I think his concepts apply perfectly to any technical entrepreneur starting a business:
Don't take yourself too seriously: Don't take your idea too seriously. The world will probably survive without your idea. You may need it to survive, but no one else does. However, there is no excuse not to love and laugh at what you are doing. I'm convinced that people who love their work are more innovative as well as happier.
The race is not always for the swift, but for those who keep running: It's a mistake to think anything is made overnight other than baked goods and newspapers. You win some, you lose some, and some are rained out, but always suit up for the game and stick with it. It's not speed that separates winners from losers; it's perseverance.
You can't do it all by yourself: Entrepreneurial success is almost always the result of unselfish, highly talented, and creative partners and associates willing to face the frustrations, rejections, and seemingly open-ended time frames inherent to any business startup with you.
Keep your ego under control: Creative and inventive people, according to profile, hate to be rejected or criticized for any reason. An out-of-control ego kills more opportunities than anything else. While entrepreneurs need a healthy ego for body armor, it can quickly get out of hand and become arrogance if not tempered.
You will always miss 100 percent of the shots you don't take: Don't be afraid to make mistakes. If you don't put forth the effort, you won't fail, but you won't succeed either. Inaction will keep opportunities from coming your way.
Don't start a company just for the financial rewards: We all want to make money. That's only natural. However, you should be motivated by the opportunity to "make meaning" as well. People who do things just for the money usually come up shortchanged.
Be prepared for criticism: Not every idea or decision works. For every action, there is always someone who will challenge and second-guess you. Odds are, you'll encounter far more criticism than acceptance. Don't be defensive, learn from your mistakes, and don't blame someone else.
Learn to take rejection: Don't be turned off by the word "No," because you'll hear it often. Rejection can be positive if it's turned into constructive growth. My experience is that ideas get better the more they are presented. "No" means "not yet."
Believe in yourself: One of the first steps toward success is learning to detect and follow that gleam of light, which Emerson says flashes across the mind from within. It's critical that you learn to abide by your own spontaneous impression. Allow nothing to affect the integrity of your mind.
Sell yourself before you sell your ideas: Be concerned about how you are perceived. You may be capable of dreaming up ideas, but if you cannot command the respect and attention of associates and investors, your proposal will never get off the mark, and you may not be invited back for an encore.
As with all the other "principles of success" guidance I have seen, you should take these tenets with a grain of salt. Yet, I'm betting that every technical entrepreneur out there can relate to these principles and practices, and most of the long aspiring and unhappy entrepreneurs have broken one or more of them. Don't be afraid to learn from your mistakes, forget the past, and go for the trophy anyway.
The purpose of this chapter has been to give you an overall perspective on the personal attributes and traits that are the key to the success of every technical entrepreneur. I'm certainly not trying to characterize any of them as "good" or "bad" in general—that's for you to decide.
Before you start down a long hard road, it's worthwhile to do the introspection, based on what you have read so far, to see whether you already have the entrepreneur mindset or have the interest and desire to acquire it. In my experience, the people who don't have it and don't want to change, probably won't be happy in the role of an entrepreneur. If you are not happy in the role, you probably won't do the job well, and you will have a tough time succeeding.
I want you to succeed and to have fun doing it. In that context, all the following chapters will focus on the specifics of doing it right, avoiding the mistakes that many others before you have made, and helping you make the right decisions.
The first of these decisions is to pick the right dream to start a business from. In the next chapter, I will outline all the ways that you need to take a hard look at your idea before assuming that everyone will love it as much as you and many customers are willing and able to buy your solution. Not every good idea is a good business.
Every technical entrepreneur I know has a wealth of good ideas. This is all about picking the right one for your first step into the business world. Enjoy!