I’m delighted to welcome Linda Rottenberg, Cofounder & CEO of Endeavor, to share some words of wisdom about the entrepreneurial journey. Linda just published her new book, Crazy Is a Compliment, which is chock full of lessons from the trenches. She has a very unique perspective, being an entrepreneur herself, and also walking alongside some of the most successful entrepreneurs around the world.
Origins of Endeavor
One day, in the mid 1990s, I hopped in a taxi in Buenos Aires, late for a meeting, and struck up a conversation with the driver. He told me he had an engineering degree but couldn’t find a job. The only employers hiring were government bureaucracies and old-school corporations, he said, neither of which had much use for someone with his skills.
“Forgive me,” I said to the driver, “but wouldn’t you rather be a–“ I paused. I didn’t know the Spanish equivalent for what I was trying to communicate. “An entrepreneur?” I asked, in English.
“A what?” he said.
“An entrepreneur,” I repeated. “You know, someone who starts a business.”
“Oh, you mean an empresario,” he said dismissively, referring to the Spanish word for “big businessman,” a term associated more with cronyism and greed than with innovation and growth.
“No, no empresario. What’s the Spanish word for ‘entrepreneur’?”
He shrugged. “I don’t think there is a word like that here.”
Suddenly, I had a vision. What if there was an organization to help entrepreneurs around the world get started and go to scale? What if we harnessed the power of individual dreamers and high-growth businesses to transform local economies? What if we created a global movement around innovation? In 1997, I cofounded an organization called Endeavor to support high-impact entrepreneurs. High-impact means individuals with the biggest ideas, the likeliest potential to build businesses that matter and the greatest ability to inspire others. In nearly two decades, Endeavor has screened forty thousand candidates and selected roughly one thousand individuals from more than six hundred fast-growing companies to be part of our network. In 2013, the entrepreneurs Endeavor supported generated close to $7B in revenues and provided more than 400,000 jobs.
Types of Entrepreneurs
I’ve spent the last two decades working to identify the common mistakes and specific stumbling blocks that innovators face as they attempt to turn their ideas into reality. After thousands of discussions with entrepreneurs across the globe, I’ve realized there are several types of entrepreneurs out there. Gazelles are the classic type of entrepreneur of myth and reality, someone who starts a new business venture and aims for it to explode into a white-hot phenomenon. Skunks are entrepreneurs who operate within large corporations. Dolphins are the contrarians in the nonprofit or public sector who are willing to buck the conventions of their professions and agitate for real change. The final group of entrepreneurs is also the most diverse. Butterflies are small-scale or lifestyle entrepreneurs.
One Decision Moments
No matter the type of entrepreneur you are or aspire to be, you have reached or will reach a crucial juncture where everything you’ve worked for up until that point is at stake. You will have to make what seems like the one decision that will determine whether your ideas go huge or fall flat. I’ve seen the fear in entrepreneurs’ eyes in these moments. Through countless talks with entrepreneurs I started noticing similarities in these moments and developed a working list of tangible actions for moving forward.
Close Doors – In the early stages of being an entrepreneur a little foot-dragging is understandable, but at some point the hedging has to stop. For an entrepreneur seeking to scale, the better path forward is to focus and to close doors.
Fire Your Mother-in-Law – Endeavor Insight, Endeavor’s research arm, examined the best-and worst-performing entrepreneurs in our network. Three-quarters had launched their business with a partner, and 70 percent of these partners were people close to them – a best friend, a family member, a spouse, an in-law. Things start off swimmingly but then it’s clear that trouble is brewing.
Half the entrepreneurs in the bottom quartile of our network shared one thing in common: They lacked a shareholder agreement among partners. You need to create what I call a “start-up prenup,” a document that puts the rights and responsibilities of each partner on paper. The best way to avoid problems is to write down in advance what happens if someone wants to leave, cash out, or spend more time at the beach.
Minnovate – Successful entrepreneurs don’t innovate; they do what Babson College professor Dan Isenberg calls “minnovate.” Minnovation mitigates risk by starting with a proven business model; it saves costs by making small adaptations instead of massive ones; it works, but make sure you don’t minnovate to the point of distraction. Two-thirds of Endeavor entrepreneurs started out by minnovating.
Be Open to Change – But Not Too Open – A 2011 study found that start-ups that pivoted once or twice raised two and a half times more money, had almost four times more user growth and were 50 percent less likely to scale prematurely than start-ups that pivoted either more than twice or not at all. Be open to change but not too open. Steve Jobs agreed, saying that “deciding what not to do is as important as deciding what to do. That’s true for companies and it’s true for products.” Many entrepreneurs make the mistake of expanding to a new region before their brands have momentum in their own neighborhoods. Don’t muddy up your brand with too many peripheral products or services. Focus on what you do well and exploit it fully.
Dream Big but Execute Small – The Startup Genome Report found that “more than 90 percent of startups fail due primarily to self-destruction rather than competition.” Premature scaling is the most common reason for start-ups to fail – Three-quarters of star-ups fail for this reason. Firms that approach going big in a step-by-step way grow twenty times faster than the norm. Don’t go from zero to sixty too fast. Dream big, but execute small.
Eat the Elephant One Bite at a Time – Entrepreneurship is about achieving daring dreams through prudent steps. In The Survivors Club, Ben Sherwood writes, the key to survival is to take it slow. “Take one small bite. Chew. Swallow. Then take another.” Don’t be overwhelmed by the path forward.
This blog was originally published on Joel Montgomery’s personal blog. The original post can be found here.
Photo Credit: Endeavor