As a well established coach with a reputation for getting results, I get approached by all sorts of potential clients. Most of the challenges that the engagements focus on deal with the personal limitations of my client. It’s rare that we focus on the technology underlying an entrepreneurs core idea. That may sound a bit strange to some of you but an example might help you understand what I am getting at.
A ‘serial entrepreneur’ approached me several months back. I use the description guardedly. He was indeed a serial entrepreneur but none of his business ventures had gone anywhere. In two cases he had received angel funding. In both of those cases the money was spent without generating significant revenues. Both companies were eventually closed. He came to me to try to figure out what he was doing wrong.
Nothing is New
When I asked him to describe his past attempts at building a business, several descriptive terms kept showing up. ‘New idea’, ‘never been done before’, ‘game changing’, ‘disruptive’ and ‘the next Google’ are some examples. But the ideas behind his companies were not remotely in those categories. In fact, when I drilled down into his knowledge of the competitive landscape or the evolution of the business space, I found next to no knowledge of either. His justification for the use of those dog eared terms was that he had never thought of it before.
The result was that, when he launched a company, the team found themselves pushing an outdated or poorly focused value proposition. The lack of sufficient vetting, testing and refinement limited the potential from the very beginning. One of his tendencies was to have conversations with himself about an idea for a new business. The lack of critical review allowed him to proceed with untested ideas. A mild paranoia drove the process. He was afraid that, should he discuss his ideas with someone else, they would steal them. But the fact was that his ideas were not unique nor did they truly merit the adjectives that he routinely attached to them.
After several difficult conversations, he finally came to realize that his tendency to accept his own initial judgments uncritically was one of the major mistakes he was making.
Its the Execution Stupid
As second problem that we surfaced was his tendency to see himself as an ‘idea man’. In a recent article, a very successful venture capitalist put it this way. “As a venture capitalist, I’m constantly looking for great entrepreneurs who have amazing ideas. But I don’t value the ideas. I value the entrepreneurs’ execution of the ideas.” That distinction is, in my experience, the most effective way to separate the real entrepreneurs from the entrepreneurial wannabees. Most investors that I deal with use the term ‘idea man’ derisively. successful entrepreneurs execute successfully and with a vengeance.
My client’s tendency was to ‘develop his idea’ and then find a team to execute it. The result was that he hired a bunch of mercenaries each time who were more interested in the salaries and equity received than in building the business. When we took apart each of his failures, the pattern was common and clear. An initial flush of enthusiasm was followed by an attenuating engagement in the business. The teams went through the motions. Bankruptcy quickly followed.
Over the years he had developed a reputation for not executing. His brand was established with the local investment community.
Another mantra that my client followed was that of the early adopter. He wanted his company to be on the cutting edge. Often this was a delusion founded on an inadequate understanding of the actual state of the market and competition. But in two cases, he had moved so close to the bleeding edge of technology that the company’s value proposition was far ahead of the market’s acceptance. Both companies died before the market caught up. I introduced him to the accounting term FIFO – first in, first out. Few successful companies are actually first – or even early – adopters. Its the effective imperilmenters who generate the successes.
A collateral negative from this tendency was a pretentiousness that did not pass even the most cursory review. What he failed to take into consideration was both the investment community and the market had a much deeper understanding of the value of his value proposition than he did. The reason why most investors will not sign non-disclosure agreements has nothing to do with tendencies towards larceny. If they have been in the business for any length of time, they have seen almost every variation multiple times. The markets are the same. Every potential customer gets a steady rain of propositions from companies looking to sell to them. They have a very sophisticated knowledge of what is available. Ignorance or naivete stand out like a bagel in a bucket of grits.
My principal contribution in this particular coaching engagement was to help my client decide whether he had what it takes and could make the commitment necessary to be a successful entrepreneur. To his credit, he came to realize that, given his current level of experience and discipline, he did not have what it takes for build a company. But he still wanted to be involved in early-stage companies. We ended up getting him onto an experienced team that is building a very interesting business. He is not sitting in the front chair but he is learning what it takes to do so successfully.
© Dr Earl R Smith II