Secrets to STARTUP SUCCESS

Introduction

“If passion drives you, let reason hold the reins."

—Benjamin Franklin, American statesman and entrepreneur

You have always dreamed of skydiving, imagining yourself in a free fall, high above the earth, parachute ready to open with the pull of a rip cord.

One day you decide to give it a try. You drive to the local airport and quickly spot the skydiving center at the edge of a wide airfield, far across a parking lot packed with cars. Along the facility’s roof are towering letters of blinking red and yellow neon: Skydive Today. You Can Do It. Do Not Delay!

You follow a throng of people into the center, where a clerk ex­plains the two options available. The “Basic Option” includes a train­ing program where you will pack your own parachute, with instructor oversight, and learn safety and operational procedures before board­ing a plane for your maiden jump. The fee is $250, and there will be a two-hour wait before the training begins. The clerk points to a thin line of customers who are checking cell phones, reading newspapers, and talking quietly among themselves.

But there is also an “Express Option,” priced at only $75. For this price, you can grab a pre-packed parachute assembly and hop aboard one of the many express flights without delay. The clerk says that you “should have time” during the plane’s ascent to figure out how to op­

Erate your equipment before the pilot requires you to make your leap. “You’ll have a lot of company,” he says, “and you’re free to copy what others are doing.” He points to a fast-moving line of eager customers, high-fiving each other and congratulating themselves on the thrills ahead.

You hand over $75, grab a pack, and join the crowd in the belly of a massive transport plane just as it begins to taxi toward the airport’s central runway. Within minutes, the plane is airborne.

You are on your way.

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The above tale may seem far-fetched, especially to anyone familiar with skydiving safety procedures. But the storyline is common in the world of entrepreneurship, where enthusiastic founders often plunge ahead in pursuit of big ideas without adequate awareness or prepa­ration, where unexamined assumptions and unnecessary risks are widespread, and where the personal, financial, and professional stakes of launching a new venture are often exceedingly high. All in a hyped up, do-it-now atmosphere, fed by startup success stories and a sup­port industry eager to sell products and services to aspiring entre­preneurs.

If you are considering your own entrepreneurial leap or have al­ready taken the plunge, you understand the roller coaster of emotions and the powerful pull of freedom and excitement that comes with the commitment to launch a business. For all the challenges faced by new ventures, a lack of passion is not one of them. Entrepreneurs are true believers, famously inspired and optimistic. These qualities are criti­cal, because getting a healthy venture off the ground can be extraor­dinarily difficult. Successful founders draw from deep wells of conviction and faith to sustain themselves through long days and un­expected challenges.

Entrepreneurial passion is more than an internal emotional state. It is a booming industry, as evidenced by the many books, magazines, websites, products, and services that cater to the natural connection Between passion and entrepreneurship, cheering would-be founders to follow their dreams. With enough passion, anything seems possi­ble.

Disenchantment with large employers further fuels startup aspi­rations. The comic strip Dilbert and the hit TV show The Office are only two iconic examples of entertainment products poking fun at the absurdity of corporate life. Pamela Slim, author of the best-selling book Escape from Cubicle Nation, touched an eon-sized nerve in 2004 when she launched her blog of the same name, aimed at the tens of millions of people desperate to leave corporate jobs to do their own thing. Historically, these disgruntled souls have hung in there because of the relative stability offered by large employers. But this safety net has vaporized over the past two decades as economic upheavals have created wave on wave of layoffs. The once-praised security of corpo­rate America has gone the way of the rotary phone.

Unfortunately, a significant gap exists between this high level of desire and what entrepreneurs actually achieve. Most new businesses fail within a few years of launch. Even investor-backed startups—pre­sumably led by talented founders with better-than-average ideas— fall short at remarkably high rates. And entrepreneurs who survive their first few years aren’t necessarily swimming in bliss. The typical new business owner works longer hours, endures greater stress, and earns significantly less over a ten-year period than if he or she had re­mained in a previous job. Clearly, this is not the world of the fabled 4-Hour Workweek.

Why This Book?

The purpose of this book is to dramatically improve your odds of en­trepreneurial success and enjoyment whether you aim to build a thousand-person venture or a solo consulting practice. It springs from my quest to understand what differentiates successful ventures from the large percentage of startups that disappoint.

In 2007, I set aside my work with large corporate clients to un­dertake a study of entrepreneurial success factors and work exclu­sively with early-stage companies, in which I took an ownership stake. I had solid experience to draw upon, having launched a successful consulting business, helped a favorite client turn a blank sheet of paper into a $100 million company, and worked to improve the performance of scores of management teams and a thousand executives over two decades.

As I closely studied the entrepreneurial process, I came to under­stand that the “secrets” of startup success are not so secret, and not difficult to grasp. The fundamentals that distinguish healthy ven - tures—principles such as understand your market, know your num­bers, get adequate funding, stay flexible, and manage by fact rather than assumption—are well understood by shopkeepers all over the world. But for some reason, many entrepreneurs overlook one or more of these fundamentals, severely undercutting their odds of success.

So I turned to a deeper set of questions: Why do so many entre­preneurs fail to take care of the basics? Why do extremely smart peo­ple rush to risk everything on untested business ideas? Why do so many founders underestimate their money needs, adopt pie-in-the - sky sales projections, or miss early signs that things are off track?

Most ventures are driven by passion and belief Most fail.

Taken together, these statements are hard to reconcile, until we consider the possibility that entrepreneurial passion and startup fail­ure are somehow tightly linked. Could the legendary commitment that drives and energizes so many entrepreneurs be the very thing that leads many of them astray? The more closely I observed the early challenges and choices of would-be business owners, the more clearly I understood how passion plays a powerful and central role in venture success and failure.

Drive, determination, fire, belief optimism, courage, confidence, commit­ment, certainty, and faith—these are the forces that animate a new busi­Ness and fuel and sustain entrepreneurs through the ups and downs of the new venture pathway. Each of these qualities, however, when magnified or misdirected, can lead to unhealthy business behaviors— to rose-colored forecasts, to unwise commitments, to inflexibility in the face of new data, or to a catastrophically bad fit between a founder’s skill set and the needs of the new business.

It doesn’t have to be this way. The good news is that you, as a founder, do not have to choose between passion and reason. You can do what you love and put the full force of your commitment behind your idea, while successfully navigating well-known startup chal­lenges and minimizing inherent risks. This book is designed to help you do just that.