Entrepreneur Myths (4 page)

Why, why, why, why, why?

Ohno taught that you had to ask “why” at least
five
times to get to the bottom of the question or issue.

You must also ask, “How?”

How can we make a product better or different? How can we improve the process but use fewer resources? How can we finance our venture with little or no money? How do we create effective branding? How do we get distribution in a retail store? How do we create a viral marketing campaign? How do we develop hardware products more quickly and in half the time? How do I build an app in three days? How do I launch a venture more quickly than through accelerators?

Great entrepreneurs are curious entrepreneurs. They ask a lot of questions. Combining “why” and “how” puts your mind into the ideation stage. Asking simple questions helps you see the world through the eyes of a child, and perhaps see the next big wave coming around the corner.

The “why” and “how” — a powerful combination. Just combine them into “whyhow”

Why do we need to use a specific type of packaging, and how can we make it cooler, more noticeable and different from competition? Why use Twitter, and how do I make money using Twitter? Why can’t I make products or services with the collaboration of the consumer (crowdsourcing), and how do I set up the processes? Why can’t I compete indirectly or directly with Google or Facebook, and how do I develop a better social platform? Why can’t I develop a bigger film company than Disney, and how do I go about doing it?

You don’t have to be a domain expert when you start a venture, but by asking why and how, you will become one quickly.

Brain Candy: questions to consider and ponder

(Q1)
Do you ask yourself and others why, why, why, why, why?

(Q2)
Why do entrepreneurs believe in so many entrepreneur myths?

(Q3)
Why do entrepreneur myths continue to propagate?

(Q4)
Why do entrepreneurs rarely discuss failure?

(Q5)
Why do entrepreneurs fail? Why do they succeed?

Entrepreneur
Myth 5
| The best time to start a venture is when you’re young

Are you over 25? Then you’re too old to start a social technology business according to some Silicon Valley investors. You see, that motherfucker Zuckerberg ruined it for older people like me — anyone over 30.

I’m exaggerating a little but that mentality is propagating in Silicon Valley. Let’s not be fooled. The founders of Twitter and Groupon were in their late 20s or early 30s when they started their respective companies.

Age should not matter. The best time to start a venture is when you’re psychologically and emotionally ready — although those two things don’t always coincide. Some entrepreneurs have no choice but to become entrepreneurs, such as after being laid off or fired. Other entrepreneurs start companies because they can’t or won’t work for others — they need to lead.

You’re as young as you feel. Young entrepreneurs have different priorities and responsibilities. One 20-something entrepreneur pitched me for money while he was still living with his parents. Another entrepreneur, in his 40s, pitched me for money — and he was also living with his parents.

Psychological and physiological conditioning is what matters. In my junior year at Southern Methodist University, I took a course called Entrepreneurship 101. The professors, Jerry White and John Welsh, got me so excited about entrepreneurship that I quit college the following year and became an entrepreneur. Who says your teacher can’t influence you to drop out of college?

Those SMU professors wrote a seminal book 20 years ago called
The Entrepreneur Master Planning Guide
. I still have that fucking
great
book. One chapter talks about the “entrepreneur window,” when the entrepreneur is psychologically and physically ready to start a venture. At 20 years old, I didn’t understand why I had to be physically ready but I sure understand it today.

The professors were right. Along with a great idea, you must be psychologically and physically prepared to handle the stresses and the long hours required in a startup. I have funded entrepreneurs age 20 to 60s. I look for diversity in the management team of a startup, in terms of age, demographics and experience. For some sectors like social media, younger is better but age doesn’t matter for the alternative energy sector, for example.

I funded a 50-year-old entrepreneur in the transportation sector. This dude had more energy than any 20 year old I know. I funded a 30 year old in the software sector, and she could outwork most people. And I funded a 25 year old in the hardware sector; he moved slower than my grandpa.

If you’re starting a venture, prepare yourself psychologically and physically. You must be mentally fit because you will come across naysayers, armchair quarterback investors, or tough economic conditions — especially during a recession. Protect your brain from negative influences by keeping a positive mental attitude and working with positive-minded people. You must be physically fit to work long hours. You don’t need to be a triathlon athlete, but I’ve seen entrepreneurs start ventures then become physically ill, causing the venture to suffer. One guy I funded was so out of shape I thought he was having a heart attack when his venture hit a major roadblock. Mental and physical fitness intertwine. They feed on each other, and the easiest way to keep them in balance is to think positively, exercise and eat healthful food. This is all common sense, but you’d be surprised how many entrepreneurs are overweight, eating like rhinos and drinking like fish.

Benjamin Franklin was an amazing man. Not only was he one of the Founding Fathers of the United States, but he was also a successful author, political theorist, inventor, diplomat, printer, politician, postmaster, scientist, musician, satirist, civic activist and statesman. He advocated moderation in drinking and eating. I don’t care how old you are or how busy, find time to exercise. Being physically fit helps you work longer, and to think longer and more creatively.

Your decision on when to start your venture depends on being ready to act in this entrepreneur window. Colonel Sanders was in his 60s when he started Kentucky Fried Chicken. He changed how we eat chicken. I don’t know if it is for the better from a health standpoint, but it sure tastes good.

You are never too young or too old to start.

If you’re retired, this might be the best time to become an entrepreneur. Entrepreneurship can keep you young. I know one gentleman in his late 60s who acts and works like a 40 year old. This guy is an entrepreneurholic and he knows it. He’ll probably live to be 200 and die doing a deal — just like I will.

Brain Candy: questions to consider and ponder

(Q1)
Is it better to start a venture when you’re young and have fewer responsibilities?

(Q2)
If you’re over 65, how do you feel about becoming a first-time entrepreneur?

(Q3)
How important is physical fitness to entrepreneurship?

(Q4)
Do you know Sumner Redstone’s age? Warren Buffet’s? Mark Zuckerberg’s?

(Q5)
Do you know how old Steve Jobs was when he started Apple? Or Bill Gates when he started Microsoft?

(Q6)
Do you know how old Google’s founders where when they started Google?

Entrepreneur
Myth 6
| You’ll be your own boss

Being your own boss — what a fucking fantasy. I became an entrepreneur so I can (1) do what I enjoy, and (2) become filthy fucking rich. Don’t become an entrepreneur if you want to be “free” or be your own boss. Entrepreneurs are neither.

When you’re an entrepreneur, everyone is your boss. Yes, you’re in charge of the battleship, but you have to report to all kinds of people regarding your decisions and actions.

For investors, funding entrepreneurs who want to be their own boss can be a nightmare. I funded one entrepreneur who didn’t think she had to report to investors or anyone. I met with her and her team each month and offered suggestions to help them launch their products. She would jump up excitedly and say, “Yea, yeah, that’s what we should do.” When I met with them over the following months, I discovered nothing I suggested happened. They focused only on inventing more shit and more crap and left the sales to nobody. Of course, they never forgot to ask me for more investment dollars.

Let’s look at how you are
not
your own boss as an entrepreneur.

When you get a loan from a bank, whether you realize it, the banker is now one of your bosses. That’s not so bad. If you’re smart, you want to give your banker a monthly progress report — that is, if you plan to get money from the bank in the future.

If you raise capital from angels, they might turn into bosses expecting you to listen to their input and execute. That’s not so bad. You need to update your angel investors, either weekly or monthly, not only from a legal obligation, but also from a relationship-building standpoint. Why? You will need those same angel investors to put more money into your venture when your business suddenly takes off like a rocket or if your venture struggles to get sales. Plus angel investors can teach you a lot about growing a startup.

When you have employees, you are responsible for their livelihood. You’re their financial daddy, and their destiny depends on your ass. Are you still feeling free?

You might feel immune to employee responsibility if your business has thousands of employees because, at a certain point, they become just a number. However, if you have less than 100 employees, you know their lives in more detail and can see when they are affected by your actions. If you ever had to lay off employees because of a failed venture or a business slow down, then you know what the fuck I’m talking about.

When I invested into over 25 companies, we supported more than 500 families. When the fund ran out of money, I laid off employees myself. It was not a joy ride. We were sucking wind and without cash so I had to cut costs, get out of leases and deal with portfolio companies. The worst part was laying off employees and seeing how it affected their lives. It was like George Clooney’s character in the film
Up in the Air
. Employees have families, kids, college bills and dreams of their own. You may know their spouses or kids personally and have attended their weddings or birthday parties. They depend on you just as much as you depend on them to make things happen.

If you use bottom-up management, or what I call “swarm management” (where your employees help you make management decisions), your employees are your partners, and they help make decisions that affect everyone. In some twisted way, you actually report to them because they’re dependent on you to lead and manage the business, to raise the capital, to deal with investors or banks, etc.