It’s generally believed for entrepreneurship to be a risky endeavor. After all, 9 out of 10 startups fail and are never heard from again.
I’d like to suggest the opposite.
Startups are risky, but successful entrepreneurs are not risk-tolerant, they’re risk-adverse. Startups have way too many moving parts and challenges for someone to simply take a risk and hope they get lucky. If you simply take risks, you’re bound to fail.
Successful entrepreneurs take the time to think about all the different moving parts, and know how to mitigate the risks.
The naive entrepreneur simply builds a product and launches it hoping that people will come to them and begin using their product. The successful entrepreneur, more often than not, already has done market research and knows exactly how many people will use his product before even launching it.
And when it comes to dealing with the unknown, they have an ability to calculate exactly what the risk is, and understand all the implications of the risks. Successful entrepreneurs might launch things as a test, but often already have plans for what to do in the likely case that their experiment fails.
It’s easy to think of successful entrepreneurs as people who just got lucky and made it, but it’s rarely the case that one swing knocks the ball out of the park.
If being an entrepreneur isn’t about taking risks, it leads to the conclusion that entrepreneurship can be learned and systematically achieved.
It boils down to an understanding of your product and of the market that you are in. If you truly love your product and have taken the time to get to know your customer and the space you are in, you’ll be able to quickly pinpoint your customer’s dreams, hopes, and aspirations.
So don’t just take a huge risk. Think it through, test it, but be unapologetically brave and don’t second guess yourself.
The other day, a friend pitched me his idea for a startup.
In fact, I hear many ideas from friends all the time. Some of them are great ideas, others not so much. But in the spirit of being truly helpful, I’ll never outright state that an idea is a “good” idea or a “bad” idea. It’s much more helpful to analyze and take a stab at predicting challenges and strengths of that particular idea.
In my experience, this are the most recurring challenges that come up in other people’s ideas.
- Not understanding the difference between features and value – I’ve found that many people often think of products or services with a ton of features without really thinking about what value it adds to the customer. For example, a feature for a service can be a lower price, faster process, etc while the value is something along the lines of helping people be more efficient, introducing them to the people they want to meet, etc. When looking at a product or service from the angle of understanding value, you can much better identify your target audience and segment the market.
- Not using the pay-certainty technique – In order for a business to be sustainable, it has to be profitable. (unless you’re doing a labor of love out of the goodness of your heart) Profitability is a big challenge, especially in a world where everything is accessible online and online is free. As Ramit coaches, the pay certainty technique is nothing more than looking at your audience and asking 1. does this person have the willingness to pay and 2. does this person have the ability to pay. Those two questions, combined with pricing psychology and market size determines how much revenue and profit an idea can generate.
- Not knowing why they are uniquely equipped to solve this problem – Anyone can come up with an idea for a product. I think of multiple ideas everyday. But the reason I don’t pursue 99% of my ideas is that I know that someone else can do it better or someone else is doing it better. In order to build a successful business or product, it helps for the entrepreneur to have the right credentials, meaning the combination of experiences, connections, or otherwise that will propel them to success.
- Not being practical enough and knowing how to test their ideas – Generally, I have not found that people have a hard time dreaming big enough for the vision of the endeavor. However, much more common is not being practical on a day to day basis and focusing on the things that truly matter. There are a million different things that startups can spend their time on, but there are very few things that ultimately is worth a startup’s time. The core thing that a successful startup needs to do extremely well is building a product that adds immense value to the customer. I like to ask myself what I’m doing on a regular basis improves the customer’s experience.
- Not being clear with what they want – Fuzzy goals breeds fuzzy results. If you aren’t clear with exactly what market you want to be in, exactly what value you’re adding, and exactly how you want to grow, it’s hard to know which opportunities to take when they present themselves. It’s easy to get caught up doing a million different things that don’t really matter, and it helps to identify the exact things and opportunities that a company will take before they even present themselves.
- Not understanding the challenges of scale – There are many things that don’t scale. For example, personally emailing every single customer that buys your product. This may be okay in the beginning, but quickly begin consuming way too much of your time as your product becomes more popular. Knowing how and when to scale is crucial to tapping into exponential growth.
Just a couple thoughts. Many of these are challenges of my own, and as I ask others these questions, it often helps me solidify the answers when it comes to my own ventures.
For the first time in my existence, I boarded a plane for New York City. I was headed for Student Voice Live! 2014, a convening of education stakeholders from all across the United States.
As I was struggling to stay awake during the board meeting, one of my colleagues shared about how the work that Student Voice does should be actionable and foster tangible change.
I hesitantly wholeheartedly agree with that statement. Hesitant because I know that making a tangible dent in the face of global education is not only a daunting task, but an extremely difficult one. The education system is one of the largest systems in the world, interconnected with just about everything else and encapsulating over a million different issues. And it’s challenging to even imagine how a small team of students could even make a difference in such a space.
But as the day went on, and Student Voice Live! happened, my eyes were opened to conversations and more importantly the potential of impact in a way I have never seen it before.
Even though Student Voice is a relatively vague concept that tends to spark more discussions than action or results, it still is a determining factor in how the students of today are prepared and empowered to take on the problems of tomorrow.
There’s been some research done into this idea, but the challenge today as it has always been, is figuring out how to arrive at a goal that is so seemingly abstract.
I don’t necessarily have a good answer for that at the moment, but I do know that this past weekend was an example of students coming together and using their voices to put something on that was tangible.
In kindergarten, I was the shortest kid in my class. In fact, I was so short that I was less than one percentile of males my age.
As a result, I couldn’t do what most of my peers could physically. I had difficulty shooting hoops, I ran slower than everyone else, and was usually one of the last people to be chosen for kickball matches.
And as I grew up, much of the feelings of being the shortest and slowest stuck with me. Even though I was no longer the shortest kid around in high school, I often downplayed myself and felt uncomfortable around people.
I gave myself a lot of negative self talk. I told myself that I wasn’t the smartest, fastest, or the best at any skill. In fact, I didn’t even give myself the chance to apply to more prestigious schools because I “knew” that I wouldn’t get in.
How many of us sabotage ourselves with this kind of negative self talk? We tell ourselves that we aren’t good enough, smart enough, or that we’ll take action after some magical event happens, even though deep down we all know we want to be given the opportunity. The fear is that we’ll be found out for our inadequacies.
The truth is, many of us go from our day to day lives trying to prove something, either to other people or to ourselves. I’ve been there, and in many ways still am.
I can’t say that I have it all figured out, but here are a couple things I’ve realized along the way, written out in clear bullet points because I’m not a fan of fluffy, abstract advice:
- Know Yourself – This is a comment that one of my mentors made to me, and has stuck with me ever since I heard the words come out of her mouth. Knowing and admitting your strengths and your weaknesses make for a very powerful understanding of how to be yourself.
- Be present – People who are the most uncomfortable with themselves will often focus heavily on the future or on the past. There’s nothing wrong with looking back and reflecting or looking forward and preparing, but when you’re ignoring what’s in front of you on a day to day basis and enjoying where you’re at and what’s around you, you’re likely uncomfortable.
- Watch Your Language – Instead of saying things like “I can’t” or “I’m not”, try things like “I haven’t yet” or “I’m learning to”.
- Put Yourself Out There – Post something online. Share something vulnerable. Because it’s not until you take a step to be vulnerable that you really see how people respond. I can almost guarantee you that it’ll be different than you expect.
The first thing that most people do after waking up in the morning is check their phone.
I do it too.
But after scrolling through the twittersphere and seeing yet another coffee consuming startup company raised another gazillion dollars in their series gamma, I make my bed.
I haven’t always made my bed. In fact, I only started making my bed within the last couple of months. And although it may seem like the most menial and pointless of tasks, (I mean you’re just going to mess it up again not too long later) it has strangely added a sense of structure to my life.
I’ve talked about habits on a couple different posts before, and what strikes me about making my bed is that it’s a ritual that follows another ritual every morning. (there are very few times where I forget to sleep)
That way, by the time I get up to start my day, I know that I have gotten at least one thing right. A neat bed means I can start and end my day in an organized way. No matter how good or bad my day was, it always feels good to crawl into a neatly folded bed at the end of the day.
In fact, so many things pertaining to life is just like making my bed, because most things in life can be broken down into simple routines that are executed over and over. With just a little effort, so many of the little things add up to make huge differences.
It’s the little things in life, that when done right, contribute to the bigger picture. It’s the small wins that make up the big wins. You can’t run a marathon without learning how to take the first steps, just like you can’t get a degree without going through the first day of school.
I’ve noticed that there are a few areas personally for me to regularly maintain to keep myself at my best condition.
- Food and Water
- Creative Expression
What are your most important rituals?
If there’s any age that a person is the most tolerant to risk, it’d be their twenties.
When Nick Woodman took the stage at a UCSD alumni event to talk about the company he founded in school, he talked a lot about his personal relationship to risk, and how he approached finding his “passion”.
GoPro started as nothing more than a film camera in a plastic box used to take pictures while surfing. And from those humble beginnings, Nick took risk after risk until he built out a company that has forever changed the way people do film.
But if there was anything that stood out to me during the session, it was the simple fact that taking risk gets harder the older I get. Many people tell themselves that they’ll take a risk after they earn enough money, meet the right person, get the right credentials, etc.
Of course, there is nothing wrong with being wise about the risks that you take, and mitigating risk as much as possible to increase your success. But never let yourself get in the way of dreaming as big as you possibly can.
GoPro would never have gotten to where it was today if Nick Woodman started it in his 40s.
What’s stopping you?