So what are my tips for entrepreneurs?
1. People are more important than strategy.
If you focus on finding people you want to be with and who you think are talented, chances are you’ll come up with great ideas together that will work. If you start with an idea and then try and find the talent, chances are you will be putting a square peg in a round hole. If you are familiar with Jim Collins’s books, it is what he describes as the “who” rather than the “what.”
2. Know what customers really want.
Business school teaches the importance of listening to customers. That’s great if you know what to listen for. Sometimes customers don’t know what they need but can describe what they really want or what they hate. For example, people don’t want to buy gasoline, but they do want to be able to drive to the beach. Henry Ford has often been quoted as saying, “If I’d asked my customers what they wanted they’d have said faster horses.” Whether he said it or not, the point is a good one. What business you are in is driven by your ability to know what people really want, not what they say they want.
3. Market size is everything.
When VCs look at any investment, they will try to forecast the potential market. If the market is big enough, even a half decent company could get to be a decent size. Dominating a really small market may take ten times the effort. Work out how big your opportunity is and what piece of that market you think you could own.
4. Be the customer.
How many times have you seen employees acting against the interest of their company, because the rules of the company made them act that way? Billions of dollars are lost every year because employees do what they’ve been told to do, not what they think they should do. If you are constantly putting yourself in the shoes of the customer and listening to your staff, you will eliminate the craziness.
5. Don’t chase bad revenue.
When starting out, you want customers, but be wary of taking just anyone’s money. Some customers can be bad for business, especially in the services sector. If you take on customers that pay well but make your employees’ life hell, they’ll rightly quit and then you won’t have a business.
6. Understand your culture.
Businesses are like families; they have values and a way of being. These are often a function of the leader or founder’s values. As you grow, you need to be sure to involve people who share those values. For example, if your company has a laid-back, fun culture where you empower people and don’t take yourselves too seriously, then don’t hire people who want a corner office and an assistant.
7. Timing is everything.
One of the biggest reasons businesses succeed or fail is a function of timing. Being in the right place at the right time matters. All of which goes to my first point about not fearing failure; in life, you don’t always know until you try.
8. Think about growth.
We have all wondered what we’d do if we won the lottery. When starting a business, you need to think about what happens if it actually takes off. How will you scale? Who would you hire tomorrow? Would you open up in another city? Would you franchise the business? If you are trying to build the airplane while flying it, don’t be surprised if you crash.