Timeless advice for entrepreneurs
Yesterday, I attended a mini-conference at Princeton University, which explored entrepreneurship opportunities in the India-US corridor. TiE, the organizers of the event, had assembled an extraordinary roster of speakers, all of whom were engaging and made many thought-provoking points. One of the speakers was Ken Morse, the Director of the MIT Entrepreneurship Center, who was especially entertaining. One of his quips:
As an entrepreneur, you have to work 24 hours a day, but you get to choose which 24.
Almost simultaneously, the doom and gloom from the convulsions of the financial sector has found its way to the Silicon Valley crowd. Warnings from investment stalwarts such as Sequoia Capital and Ron Conway have almost single-handedly ended the exuberant atmosphere among the entrepreneurial set. Several VC firms have held come-to-Jesus meetings evaluating the impact of the credit crisis on the health of their portfolios. No doubt, it’s never a bad time to be an entrepreneur. Now is especially a good time for those just starting out to hunker down and build a company that will be in the right place when the economic headwinds turn. In his talk, Ken Morse gave some advice that applies to entrepreneurs no matter what the economic climate is like:
- Business people are essential. Ken said 80 percent of startups consisting only of technical founders (the ‘geeks’) fail. Conceiving an idea is less than half the battle. Assuming competent execution of the idea, getting the word out and selling to customers are a lot more important to the success of any venture. Ken exhorted entrepreneurs not to view salespeople as ‘lower life forms’.
- CFIMITYM. Cash Flow Is More Important Than Your Mother. Even if you are not the business person in your venture and even if you are lucky enough to be well-funded, get to know how your business model generates recurring revenue at a basic level. Make basic financial projections for your own reference that will guide your thinking for several months ahead.
- Selling skills are important. Ken said there is a real shortage of sales skills among entrepreneurs. By sales skills, we are not necessarily referring to dealing with prospective and current customers. Selling people on ideas and strategies is just as important.
- Do the homework. Regardless of whether you’re a lone business-minded founder looking for your technical soulmate/co-founder or vice-versa, you have to do the early market development yourself. Validate your ideas early by talking to prospective customers. Defining the scope of what you will do with real outside input is an experience that will refine your idea and potentially lead to new directions.
- Customers are the best source of funding. Rather than chase 4F (Friends, Family, Founders and Fools), angel or venture capital money, see if you can’t get customers to fund your development. Customers provide validation to your business model and can act as external champions of your product or service. What’s more, in return for their money they just want their problem solved and pain points removed; they don’t want any of your equity.
Ken made the above points alongside a great presentation detailing success factors for an entrepreneurial venture. Perhaps these success factors will change even as the nature of entrepreneurship itself is changing. But the points of advice above are truly timeless.
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[...] I attended a event organized by TiE on US-India entrepreneurship (the same one I talked about in my other post) and came home with my mind racing. Of the many great speakers at this event, one was Navjot Singh, [...]