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Tis’ the season for graduations. Tis’ the season for new embarkations. Tis’ the season for filling minds young and old with myths and superstitions. The following is an excerpt from my original book, under the heading "self-confidence":
I run into plenty of people who are timid, lacking self-confidence – but not successful entrepreneurs. Many parents tell their kids, “You can do anything you put your mind to.” The entrepreneurs are the kids who believed them.
Entrepreneurial self-confidence isn’t a simple quality. It refers to a combination of courage, optimism, self-esteem, and self-reliance. One reason most entrepreneurs rarely use consultants is that they trust themselves. As a result, they sometimes err, but the smartest among them are usually quick to know when they are wrong and correct their mistakes.
I said that entrepreneurial self-confidence includes optimism. While entrepreneurs hold a wide variety of views about the future of society in general, they must be hopeful about themselves, their own organizations, and their industry. Pessimists usually don’t build anything. Why invest in a bleak future? Entrepreneurial optimists are not blind to the problems around them, but they see them as opportunities.
You might think that most business leaders would have high self-confidence. They often appear self-confident on the surface. But look at these common traps of thinking that people fall into every day:
“We don’t have enough money to achieve our dream—we need a partner with deep pockets.”
Influenced by the thinking of investors and investment bankers, many would-be entrepreneurs get caught in the trap of equating money with the power to effect change. There are plenty of cases where deep pockets accomplished nothing. Giants IBM and Sears joined to form the ill-fated Internet portal Prodigy, while the undercapitalized outsider with passion and vision on its side – AOL – struggled and won. In 1970, Sears had a lot deeper pockets than Wal-Mart. No more.
Yes, there are times when you need money to do the right thing and to accomplish your goals. And when necessary, the entrepreneur finds the money. But for every such example, there are a dozen cases where people were needlessly frightened away from pursuing their goals by the deep-pockets myth.
“The big competitors will steal our ideas and demolish us.”
This argument is just as familiar as the deep-pockets myth – and just as frequently wrong. Did Hilton demolish Holiday Inn? Did Howard Johnson destroy McDonald’s? Did Waldenbooks crush BOOKSTOP? The fear of entrenched competitors is often overblown.
So is the fear that some other business person will steal your idea. Many would-be entrepreneurs have their lawyers create NDAs – Non-Disclosure Agreements – they insist on having signed before they’ll talk about their ideas. In reality, no real entrepreneur wants to steal someone else’s idea – they have way too many ideas of their own.
I’m far from being the world’s most prolific entrepreneur, but I’ve kept a list of promising business ideas ever since I was a teenager. At the moment it contains about seventy active ideas. The last thing I need is another new idea for my list. A real entrepreneur would no more want to borrow your idea that he would your underwear.
“Everyone says my idea is silly – maybe they’re right.”
This is just pouring gasoline on the entrepreneur’s fire. Proving the doubters wrong is one of the most powerful motivators of the entrepreneurial spirit. Nevertheless, I have many times heard people say, “I want to create a business idea so that when people hear it, they all say, ‘of course that will work, what a great idea, I wish I had thought of that.’” If your idea is that straightforward, maybe it is too simple, maybe it is too easy to copy. When you study most of the true breakthrough ideas, you usually find that people’s response was not like that. It was “what a stupid idea, it will never work.” This is how the movie studios felt about sound in the movies, this is how the railroads felt about airlines, this is how B. Dalton felt about BOOKSTOP.
Robert Galvin of Motorola said that every great idea at his company started out as a minority position, originated by a person on the edge, often laughed at. The originator had to be thick-skinned and persistent to be heard. That’s the way entrepreneurship works.
And centuries ago Italian Renaissance thinker Machiavelli said, “ … and it ought to be remembered that there is nothing more difficult to bring to hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things.
Because the innovator has for enemies all those who have done well under the old conditions and lukewarm defenders in those who may do well under the new.”
“We’ve got to move fast—the window of opportunity will soon be closing.”
Once in a while, this is true. Back in the 1920s, when AT&T tried to sell the movie studios on the use of sound, Warner Brothers woke up a year before everyone else. Starting with The Jazz Singer (1927), they made hay with the new technology, and were transformed from a secondary studio into one of the biggest, a position they retain to this day. But for every instance in which there really is a rapidly-closing window of opportunity, there are hundreds of imagined windows. Three years ago, friends were telling me, “If you want to start an Internet company, do it this year before all the spaces are taken.” The truth is that many of the leading Internet companies of 2010 have yet to be founded.
We hear much about the so-called first-mover advantage. But history shows that being best is more important than being first. If you can be first and best, like Federal Express or Home Depot, great. But Microsoft, Wal-Mart, and IBM often have been followers – really excellent, and very profitable, followers.
“We need the right team—a group that has done it before.”
Recently I was sitting amongst a group of bright young MBA’s who had gathered to talk about current trends in venture capital. One of the brightest remarked, “You can usually tell which venture ideas are going to work and which ones won’t. It’s the management team. If a company is run by a group of talented executives who have created a successful business before, you know they can do it.”
In contrast, just a few months later, I heard that one of the biggest VC firms had decided never to back second-time entrepreneurs – because so many had failed them. They had come to believe that someone who has done it once before often assumes – incorrectly – that he (or she) can do it again without much effort. (By the way, this firm does back third-timers. They figure that, when an entrepreneur goes back to the well for the third time, he’s beyond any such delusions).
The bottom line is that what matters isn’t how many times you’ve done it, it’s how badly you want to do it. Alfred Sloan had never built an auto company before he created GM. Bill Gates never had a real job before he founded Microsoft. Starting Dell Computer was Michael Dell’s first real job, too. Fred Smith’s experience in the airline business (before launching FedEx) was as tiny as Ted Turner’s in broadcasting. And many of these entrepreneurs got very little big-time venture capital backing in the early stages.
There’s another problem with the we-need-a-great-team myth. Most great teams follow the idea, not the other way around. I met one fellow who was certain he was going to start a great company. “What’s your business idea?” I asked.
“I don’t know yet,” he said, “But I’ve gathered the smartest group of people, and we work together like clockwork, so I know we can do anything.”
Unfortunately, the truth is that they won’t do anything without a shared vision that they really believe in. This dream team may find out the hard way that nothing can break up friendships faster than trying to build an enterprise together – except, they tell me, remodeling an old house together.
Another form of this myth is the widespread tendency to hire people based on their resumes alone rather than their hearts. Smart companies know better. A Nordstrom executive was asked, “How do you train your people to give such great service?” He answered, “We don’t. Their parents do.”
Of course, a resume can tell you a lot about a person, but no more than the look in his eye, the sincerity of her smile. Great companies are not built by hiring a bunch of warm bodies with the right skill sets. They are built by hiring people with the right skills and a passion for what they are doing.
“We’ve got to know the right people if we want to get ahead.”
Of course, this is the myth most favored among “the right people.” It’s true that, once in a while, some useless person makes it to the top because of their daddy’s friends, where they went to school, or the money they inherited. But these are not often the people who build lasting enterprises. How many powerful people did Michael Dell know when he began? How many of the right people did Sam Walton know?
True entrepreneurs understand that working with the best people is critically important, but they do what it takes to find them. Some are deep inside their own organizations, some are new hires right out of school, and some even are “the right people” – working for big established companies or Wall Street firms. It’s the connections you create – not the ones you are given – that are the most powerful.
“Let’s build a business that the venture capitalists and institutional investors will love.”
If you can find me a venture capitalist who is looking for the same thing today that they were six months ago, I’d like to meet them. If you manage your business based on what Wall Street tells you, you are probably going down a dead-end street. Note that this is different from you telling Wall Street what to expect: those promises you must deliver on, unless you want to be spanked by the market and sent out behind the woodshed.
But using the theories of venture capitalists, Wall Street investors, or any other group of experts to guide your enterprise rarely works. It does not have a good track record. The experts are usually enamored of the last big thing, not the next big thing. They will ask, “If this is such a good idea, why hasn’t someone else done it?” They will say, “What other business can I look at to understand what you are doing? Who has proven this concept?” They might even say, “You don’t have enough money, you don’t have the right team, and the window is about to close.”
Don’t listen to them. Listen to yourself and listen to your customers.
Entrepreneurs believe the following:
In my travels, I meet with many people who dream of starting their own enterprise. Once in a while, I meet someone who is timid, who says, I would love to do it but I don’t think I can. Well, they are right. For whatever silly reason they don’t think they can do it, they have made it true by thinking it.
Most any excuse is adequate to stop the creation of a new business: not enough time, not enough money, not the right skills. Just as often as I meet people like this, I meet folks who say, “I want to start a business and I know I can do it.” They are equally right. I don’t have to ask about their time, money, or skills. All of these will of course be needed, but they are tools that will never be picked up unless you, in your heart, know that you can do it.
If you have this entrepreneurial self-confidence, you will be more decisive, more prepared to act.
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Hey, cool post. My son and I were discussing this the other day, and he had some weird ideas! lol Are you going to extend this? I would love to learn more 🙂
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