What do entrepreneurs and The Galapagos Islands have in common? Hint: the answer is not “sticking their necks out”
Successful entrepreneurs will be those who adapt best. Entrepreneurs are “doers.” They live to get things done, accomplish something, and have a healthy disdain for those who spend more time talking about doing something than actually doing it.
Entrepreneurs are an impatient bunch. They don’t like to stand in lines and they want it now. Entrepreneurs are innovative, creative, outside-the-box/outside-the-lines types, and are more inclined to risk it all on their dream ideas than take the routine, safe route-du-jour.
Now that we know a bit about the beast we are dealing with, let’s see how they think.
Often entrepreneurs think governmental, municipal, administrative, and academia types are too slow, too bureaucratic, and too enamored with minutia to work with. At times they lump valuable resources like the SBA, MI-SBTDC, SCORE, and business incubators/accelerators into one category, thinking they take too long and they require too much paperwork. They don’t understand and they can’t really help.
This couldn’t be farther from the truth, but the impatient doer perceives it otherwise.
Many entrepreneurs downplay the importance of key items, key steps, and key disciplines, often leading to future disappointments. Examples include “we don’t need insurance” or “we don’t need a formal contract or PO” or “we don’t need to get legal involved.”
We all know business owners who have suffered the consequences of this short-sighted thinking. The most common complaints I hear are:
• Banks (including institutional lenders and investment partners) that say they are lending/investing. I have to admit there is some truth to this complaint, but it requires deeper exploration. Banks, lenders, and investors are lending / investing today, but the majority of early, growth-stage and second-stage businesses won’t meet all of the requirements needed to secure funding, so I will deem this complaint legitimate.
>Loosening the lending and investing guidelines would resolve this complaint.
• It takes too long and too much red tape. I’ll lump these together because they can be resolved by exercising a bit of patience and setting more realistic expectations. Entrepreneurs need to realize the resources they need have their own business models and objectives. They have their own disciplined process and timelines established that may not match the entrepreneur’s, but are equally important.
• Not enough money. I need more.
• Not enough funding sources are available.
>More money and sources would help, along with loosening the credit.
• The money is too expensive, too costly. Investors and lenders want too much.
Entrepreneurs, as well as the rest of the business world, tend to think of interest rates in terms of “prime plus”, but in reality this only applies to higher- grade credits. Entrepreneurial businesses are rarely in this class and, as such, must recognize the risks and the rates will be higher. The same goes for investors looking for a return and a piece of the pie. The popular television show Shark Tank is exaggerated a bit for entertainment purposes but the risk/reward valuation is real.
>Expectations need to be set accordingly.
I see and hear these complaints way too often to ignore the reality that there is some truth to each of them. Many have to do with unrealistic expectations. Entrepreneurs think the rest of the world should have the same sense of urgency they do and govern their actions to synchronize with their needs. Shallow thinking I am afraid.
The Midwest Dilemma
We here in the Midwest could learn a thing or two from our counterparts in Silicon Valley. My venture capital, angel investor, and private equity colleagues who have experience in both regions maintain the mentality is different.
Entrepreneurs (and related players) here in the Midwest operate with a succeed/fail or win/ lose mentality that is not well suited for entrepreneurial success. They tell me entrepreneurs and investors in Silicon Valley are not afraid to fail. They embrace failure differently than we do and think of it as more of a learning opportunity to pivot their business model. They employ a fail fast mentality, looking to get through the learning curve as fast as possible to get to their final version.
This difference in mentality, as tech entrepreneur W. David Tarver describes, should not focus on winning or losing, increasing sales, profitability, or on the potential personal riches. It needs to be more long-term and non-transactional in nature. It is about learning from our experiences. Tarver maintains we need 100,000 experiments to learn from. The easiest thing to do is to “not to take that first step.” Entrepreneurs in Detroit need to reject passivity in favor of relentless experimentation.
David was founder and CEO of Telecom Analysis Systems, Inc., a New Jersey company started in his basement with two colleagues that sold for $30 million. His book, “Proving Ground,” is scheduled for release this year. As I interpret David’s story, he kept adapting his product/business as he wove through his experiments until the final version came to be. This reminded me of a distinction Darwin made in The Origin of Species in 1859.
―“It is not the strongest of the species that survives, nor the most intelligent, but the one most responsive to change.” Charles Darwin