Staying grounded: Beware of Carpetbaggers and False Prophets
Karl R. LaPan, President & CEO, The NIIC
Photo by Shannon Rowies on Unsplash
What does science say might separate effective founders and business builders from mediocre ones? The answer may surprise you: a healthy dose of pessimism.
While it might not be the first trait that comes to mind (or at all) when you think of entrepreneurial greatness, the data provides a compelling argument as it relates to monetary success. According to one study published in the European Economic Review last fall, founders with above-average optimism earned 30 percent less than their pessimistic peers.
While I am not advocating for a glass-is-half-empty mindset per se, I do believe business builders and aspiring entrepreneurs would benefit from checking entrepreneurial mythology at the front door and “face the brutal realities.” As Good to Great author Jim Collins reminds us (which I recommend you read each year as one of the best business books), “Every good-to-great company embraced what we came to call ‘The Stockdale Paradox’: you must maintain unwavering faith that you can and will prevail in the end, regardless of the difficulties, and at the same time, have the discipline to confront the most brutal facts of your current reality, whatever they might be.”
This is the paradox of entrepreneurship – entrepreneurship has long survived on the basis of mythology and storytelling passing through the generations. We all want to see Steve Jobs in ourselves; yet, the reality is he is part of the 2.5% club. Only 2.5% of the population has the rare and special talent to build and grow a very large business on their own. The rest of us need to account for the entrepreneurial talents we don’t have.
Here’s how you can confront your brutal realities:
1. Iterate, iterate, iterate, and pivot when necessary.
Enthusiasm and overconfidence can be a recipe for disaster without a clear road map. Ground your business model in reality (and data, evidence and facts), rather than emotion. You don’t want to launch and then discover there’s no market for your product or service. Talk to potential customers early and often. Pivots are over-rated. The goal is not to have a lot of them. The goal is to learn from them and to get smarter in the execution of the core building blocks of your business model. Investors are not overly excited for you to learn over and over again from your mistakes and false starts on their dime.
2. Roll up your sleeves.
Hard work and long hours are part and parcel in starting or growing a business. Be prepared to invest a considerable amount of resources and make sacrifices along the way. Few legitimate entrepreneurs work 9-5 and take the weekend off. Business builders need to surround themselves with talent and people who reduce their loneliness, anxiety and isolation. This is one of the community-building benefits of locating at The NIIC.
3. Face reality—dead on and without filters and blinders.
Problems are inevitable in a startup. You need to look at the operation objectively and determine what is not working. After all, you cannot resolve any issues without first identifying them. This calls for asking the hard and uncomfortable questions at times. Don’t be afraid to invoke skepticism in the name of coming to the right solution. Be wary of carpet baggers and entrepreneurial false prophets. There is a lot of noise and reality television buzz in entrepreneurship today. When people only give or tell you good news, you should begin to worry. Remember Andy Grove and only the paranoid survive and apply the concept of strategic inflection point to your relationships with others.
4. Start small but think big.
When starting out, it doesn’t have to be a case of “go big or go home.” You will yield far more results if you break down a goal into critical milestones that will help you realize it. Then as your company expands, adjust your KPIs appropriately but size your vision for the greatness you wish to achieve. Surround yourself with people who make you better and who challenge your assumptions. Don’t undersize your vision but be realistic that it is unlikely to occur as fast as you project in the financial model.
5. Be humble, self-aware and confident.
Be grateful when things go wrong—and they invariably will. Instead of dwelling on missed opportunity or shortcoming, ask yourself what you can learn from a false start, a pivot or a train wreck. You and your company will be better off for it. Resilience and recovery are key dimensions of a fully capable business builder.
How do you stay grounded while building your business?