My latest book on entrepreneurship, The Entrepreneurial Attitude, opens with: “What do Mark Cuban, Steve Case, Sanjay Gupta, Donna Shalala, and Christina Aguilera all have in common? They are all Junior Achievement alumni who developed an entrepreneurial attitude about their life’s work!” The book updates our three decades of research on the practices of the world’s greatest entrepreneurs – and then brings those proven practices to life through interviews with seventy hi-achieving JA alumni across 35 countries, such as those named above. It’s all backed up by The Farrell Company’s experience in teaching entrepreneurship to over six million people worldwide — more than all universities and training organizations around the world combined!
The Dark Side Of Entrepreneurship
Given our decades of worldwide experience, and my continuing enthusiasm, it’s not so surprising that I’ve occasionally been accused of ‘over-selling’ the virtues of the entrepreneurial spirit: That having an entrepreneurial attitude is the answer to every problem facing the world. That it’s the only way all seven billion people inhabiting that world can make a decent living. And that it’s something everyone can do. Hmmmm – maybe my critics have a point. So, in the interest of objectivity, here’s my humble effort to devote a couple of words to the dark side of entrepreneurship.
The rule of thumb is that about two out of every three entrepreneurial start-ups fail. I have devoted my life to researching, writing and teaching about the one third of the world’s aspiring entrepreneurs who succeed. So, what about the two thirds who don’t make it? Where do they go wrong? What are the behaviors or characteristics that cause so many entrepreneur wannabes to fail – or never even get around to trying? Actually they’re mostly factors which are fairly manageable. Warren Buffett said it best:
“Everybody here has the ability absolutely to do anything I do and much beyond. Some of
you will, and some of you won’t. For the ones who won’t, it will be because
you get in your own way, not because the world doesn’t allow you.”
Warren Buffett, Founder, Berkshire Hathaway, Inc.
(addressing Stanford University students)
The Seven Deadly Sins Of Entrepreneurship
So here’s a short list of how aspiring entrepreneurs get in their own way. If you recognize a lot of these characteristics in yourself, my advice is don’t quit your day job until you get some behavior modification therapy – or better yet, forget your entrepreneurial dreams and find another way to spend your life.
1. You’re (just) a dreamer. You’ve always dreamed of starting your own company, but you just can’t come up with a business idea. Or the timing is never right. Or the financial risk is always too high. You’ve had this fantasy for years; you drive your family and friends nuts talking about it all the time. But nothing specific ever pops out at you that sounds all that promising. The corrective action here is blunt; stop daydreaming and start doing some serious planning about the next point below.
2. You’re not an expert at anything. The number one reason for entrepreneurial failure is you just don’t know how to create, produce or deliver anything the world needs or wants to buy. It’s absolutely essential that you figure out, in very practical terms, how you’re going to come up with a product or service that someone, somewhere, needs and will buy. To get you started, here are the three most important questions all entrepreneurs have to answer: First, what do I really love to do – what things and activities do I have a passion for? Second, what am I really good at doing – what product or service can I expertly make and deliver? And finally, what unmet needs, or poorly met needs, do I see in the marketplace – is there a need in the market for the products or services I have a passion for and would be great at making and delivering? If you can’t answer these three questions, do yourself a big favor and go to work for IBM or Citibank.
3. Moving quickly is not your thing. Let’s be optimistic and imagine that you’ve invented something the world needs and wants to buy. So, you can’t be stopped – or can you? Unfortunately, the entrepreneurial landscape is littered with stories of brilliant ideas simply being stolen, or modified a bit, by others who figured out how to get your idea to market first. It’s an old trick – just ask Nicolaus Otto, who invented the world’s first internal combustion engine in 1877 which Karl Benz adopted in 1885 – and Daimler-Benz has never looked back. Or consider poor Xerox Corporation which had the misfortune of letting an unknown, but very entrepreneurial, Steve Jobs look at the Alto – the world’s first personal computer – right down to its most prized invention the ‘mouse.’ Of course, Xerox never got around to selling a single computer. Or pity the two Dartmouth professors whose early work on computer programming language, known as BASIC, was copied and commercialized by two Harvard undergraduates, Bill Gates and Paul Allen. The entrepreneurial lesson to be learned from all this? While it’s still true you have to come up with something the world wants to buy – the trick is to understand you’re in a horse race and the winners are the ones who get to the finish line first.
4. You really want to be a manager. You’ve studied management and you’re really turned on by the most recent theories and fads concocted by business school professors and management consultants — and you can’t wait to put them into practice in your own business. You obviously haven’t heard Steve Jobs’ most profound piece of advice on creating and growing a business: “Managing is the easy part. Inventing the world’s next great product is what’s hard.” Of course, once you get beyond the high risk early years, you might consider hiring some managerial types. Who knows, by that stage you may need a few of them. But even then, remember Jobs’ other piece of advice as Apple grew larger and started hiring MBA style managers: “So we hired a bunch of managers – sure, they knew how to manage – but they couldn’t do anything.” So, if you still want to be an entrepreneur, or a do’er as Jobs calls it, but managing is really your thing, the one perfect fit for you could be to start up your own management consulting firm!
5. You’ll make a great employee. Starting a business can be a very solitary endeavor! But you like group activities, working on teams, attending meetings and even going to company picnics. If you need a lot of camaraderie and team support, the standard advice would be to work for a good company or even the government. But here’s an alternative solution. If you really hate working alone, but still yearn to own your own business, the great compromise could be to become a franchisee of a large, established company – with plenty of people to talk to. The added advantage – you don’t even have to come up with a great product or service that the world needs. The franchisor has already done that for you. This could be the best of both worlds – being an owner but still part of a big organization.
6. You were born rich. Being born with a silver spoon in your mouth often leads to behaviors that are not all that helpful in forging your own successful career. This can be particularly painful if your parents created a successful family business themselves – and you are expected to take it over. The Chinese have a wonderful proverb that says it better than I can: “Beware the third generation.” It means that the first generation creates the family wealth, the second generation lives on it and the third generation loses it. The sure way to avoid all this is to go off by yourself, and start up your own entrepreneurial venture, as far from home as possible. That way, if you screw up, at least your parent’s business will still be intact, and they may even offer you a job!
7. You weren’t born rich but you sure want to get rich. The thing that really turns you on is making a lot of money and you’re not particularly choosy about how you do that. Welcome to that very large group of future entrepreneur failures whose driving force in life is becoming a multi-millionaire – and who read somewhere that the best way to do that is to start their own company! The fact is, the successful entrepreneur’s real obsession is to pursue his or her own sense of mission, driven by a product or service they created. Money is simply the necessary fuel to do this. Venture capitalists, those shrewd evaluators of the entrepreneurial quotient in people, claim they can spot the “get rich quick” types in a minute and avoid them like the plague. The best advice I can give to all those afflicted with this rather unpleasant characteristic – is to forget about entrepreneurship and go to work for a hedge fund!
The Farrell Company is the world’s leading firm for researching and teaching entrepreneurship. Over six million people have attended the company’s programs. The Entrepreneurial Attitude is Larry’s fifth book. Peace Corps, Harvard Business School, columnist for The Conference Board Review in NY, advisor to Cambridge University’s Enterprise Solutions to Poverty project – Larry has personally taught entrepreneurship to more people than anyone in the world