Entrepreneurs can be more successful…much more successful
– Ram V. IyerHeroic stories of successful entrepreneurs like Elon Musk and Sergey Brin make many entrepreneurs and wannabe entrepreneur to believe (mistakenly) that they too can succeed like Elon and Sergey. It appears to be a trick our brain plays on us – making us believe that information, knowledge or the first step is a near-win and that success is imminent. That belief is very far from the truth for a majority of people. I know because I was one of those. I’m on my fifth startup. My third startup served clients in 16 countries and included marquee clients like Cargill, Pfizer, DuPont and Sony. The next one imploded and wiped me out. I’m a serial entrepreneur, former VC and MIT grad. None of those really mattered when it came to failure. The failure rate of startups has not dropped much in decades while access to capital, technology and talent have improved dramatically. The number and quality of ecosystems for startups have increased across the world. Logically, the startup failure rate should be declining and trending down. It is not. One big cause of failure is the ignorance of the entrepreneurs themselves – whether unintentional or deliberate.
Starting a StartupJust because you have an idea, launch a bootstrapped startup and print up a business card with a CEO title does not make you an entrepreneur. Depending on who you ask, the failure rate of startups is anywhere from 60% to 80%. Here’s a good list of reasons why startups failed, according to a postmortem by CB Insights in 2018 – https://www.cbinsights.com/research/startup-failure-reasons-top/. The #1 reason for failure is a lack of market need. Checking to see if the market needs whatever you are building is fundamental. If that is so ‘basic’, why is it the #1 reason for failure? It either smacks of ignorance or deliberate indifference. Either way, these ‘entrepreneurs’ need help and guidance. Fundamentally, they need to develop and practice business thinking – that business is an exchange of value between two parties. You wanting to make money is not reason enough for somebody to hand it to you. Read this article I wrote about the need for business thinking – https://mitramiyer.com/blog-why-business-thinking-is-important-for-techies-and-their-employers/. While this is focused on techies, it applies everybody who receives compensation in return for some value provided – that is literally everybody.
Easy to start does not mean easy to succeedThe cost of starting a company these days, particularly services and online businesses, is very low. Almost anybody can start a business. Once you start a company, have a website and a business card that says CEO and Founder, the success of the startup becomes wedded to your ego. Commitment and persistence are essential for startup success, but they cannot replace the need to knowledge, skills and good decisions, along with an empowering mindset.
Most people mistakenly believe that success is imminent. Our brains consider the launch of a company as a near-win. Instead, most are at the back of the pack. If success was so easy, we would have millions of successful people like Elon Musk, Bill Gates and Sergey Brin. How many million Elons do you know?
“Our brains consider the launch of a company as a near-win as if success is imminent.”
“Easy to start does not mean easy to succeed.”
Celebrating FailureThe message of “learn from failures” has mistakenly changed to “failures are good”. According to a 2015 study, 18% of first-time founders fail and 20% of repeat founders fail. Neither credentials nor past experience with startups are sufficient to ensure success. The ecosystem for startups – consultants, venture capital firms, vendors and talent finders – are focused on each player benefiting, often at the expense of the entrepreneur. If you are an entrepreneur, most consultants will help you put together a business plan even if your idea sucks – they get paid. Investors foster risk-taking to see who rises to the top. Savvy investors look at ten or more deals before investing in one. If you happen to be among the ones they don’t invest in, it’s your problem to fix. If your startup needs technology, vendors will sell you technology as long as you get money from somebody or somewhere. If your venture fails, they don’t help you fix it either. The same goes for people who help you get talent or provide services (like lawyers, accountants, etc.) – they get paid whether your venture succeeds or not. Each one of them is in business for themselves and wants to minimize risk while maximizing revenues. This is not an indictment of the people in the startup ecosystem. It is actually an indictment of entrepreneurs. Listen to this video clip of a talk I gave at the Pasadena Civic Auditorium to 2,000+ Hispanic entrepreneurs and business owners about the problems with the startup ecosystem.
Celebrating failure (wrongly) conceals the truth, misleads entrepreneurs and wannabe entrepreneur into jumping into the fray, whether they are prepared or not. If you show up in New York City in the middle of winter wearing shorts and a t-shirt, it is your ignorance that will hurt you. People who sell you the boots, clothes and winter jacket benefit from your ignorance. In startup terms, you could easily waste years of your life failing repeatedly when you could have succeeded sooner by eliminating your ignorance and causes of failure. I could go on with the issues. The simple insights is,
“Failure is often a choice, not a law. “
So, how do you ensure you are prepared to be in business and increase your odds of success? The answer, from my experience, is three-fold:
“Many people in business have no business being in business (yet).”
- Identify and eliminate the inhibitors of success – I call them the ‘silent killers of success’
- Develop an empowering mindset from highly successful people to achieve greater success.
- Develop and practice business thinking to maximize the value you provide and receive.
What I Have LearntWhen we seek to succeed, we focus on the external enablers of success while failing to examine the inhibitors of success within us. After two Fortune100 companies and 4 startups, including one spectacular failure, I’ve figured that there are three things that can help more business owners and employees succeed. 1. I figured out that many people do not achieve success because they fail before they get a chance to succeed. I have validated data and personal experience to back this up – a survey of about 400 people, including 100 multi-millionaires. I call these the ‘silent killers of success’. These are some reasons why smart and previously successful people fail. These were some of the reasons why my last venture failed. It will be the subject of a book I will write with Dr. Marshall Goldsmith. Avoiding failure is the first step towards achieving success.
“Many people do not achieve success because they fail before they get a chance to succeed.”
- I figured out that many people are not successful because they have the wrong mindset – the programs that run within each of us, and that they can be changed. I’ve developed a methodology for surfacing one’s current mindset and embracing certain elements of the mindset of successful people – by interviewing over 100 people, including Nobel Prize winners, CEOs, entrepreneurs and business owners. I’m even writing a book on this topic with the world-renowned Dr. Marshall Goldsmith (ramviyer.com/books/immigrant-mindset). Here are some relevant articles I published on LinkedIn about the importance of one’s mindset – https://www.linkedin.com/pulse/success-easy-ram-v-iyer/?; and https://www.linkedin.com/pulse/you-did-choose-who-today-ram-v-iyer/?
“Change your mindset, change your life.”
- I figured out that many people in business lack business thinking. I figured out what it is and how to teach and develop it. The #1 reason why startups fail is because there is no market need for the product or service. That may sound basic but many people do not have or practice business thinking – the exchange of value wherein both parties acknowledge the value provided by the other. That is why I started the Business Thinking Institute. I developed a unique ‘business thinking canvas’ from first principles and interviews with successful business people. If one completes the canvas – whether an employee, entrepreneur, business owner or even non-profits – the individual and the business will become more effective at providing and receiving value.