Entrepreneurship has levels of difficulty. Where should you start?
First time founders often take on more than they can handle. I love going fast. I graduated with my Bachelors Degree in Economics in 2.5 years. I started my first startup, CAN, because I didn’t want to wait—I wanted to get started. Silly me. You can’t fast forward maturity. Just like corporations, startups have career ladders….
First time founders often take on more than they can handle.
I love going fast. I graduated with my Bachelors Degree in Economics in 2.5 years. I started my first startup, CAN, because I didn’t want to wait—I wanted to get started. Silly me. You can’t fast forward maturity.
Just like corporations, startups have career ladders. Unfortunately, it isn’t defined. Hell, it took me years to realize that there was a ladder.
The ladder exists because startups are hard. You aren’t born to start companies. I know successful CEO’s of large companies who after starting-up realized they didn’t have the skills they needed to succeed as an entrepreneur. Thankfully, all skills, knowledge and resources can be acquired over time.
Each startup you create, every year you are involved with a startup, you gain knowledge, skills, wisdom, intuition, and most importantly, a reputation and connections. This provides a foundation that makes it easier to start your next company and allows you to pursue bigger ideas.
The failure rate for new entrepreneurs could be reduced if we talked about this. Admitting there is an Entrepreneurial Career Ladder helps us help other entrepreneurs, act with grace, and encourage newbies.
Everyone looks young in a t-shirt and jeans
When I started CAN I wasn’t aware of the Entrepreneurial Career Ladder. CAN was my first exposure to tech. I was 20. I had just graduated from business school and sold my landscaping business. I thought I had the skills. I was sorely overconfident.
Tech was overwhelming. Everyone looked just like me, but they could do things I couldn’t. Their presentations looked like nothing I could dream of creating. They knew everyone. They had name brand clients and investors. In addition to being entrepreneurs, they were great programmers, designers, photographers and writers.
Little did I know, creatives don’t really age. As an industry, tech lacks the “professionalism” that creates the appearance of age. Everyone looks young in a T-shirt and jeans. I didn’t realize the people I was comparing myself to were 10 years older than me. They had been involved in tech for years, and were on their second or third startup.
I should have been more careful who I compared myself to. For a newbie I was doing well. I was getting speaking engagements, newspaper articles and Fortune 500 clients. However, I wanted more. I didn’t realize that I wasn’t ready for more. I should have been more patient. I was just starting.
My experience is not unique. Many new entrepreneurs swing for the fences on their first go-around. They hold out for a big payday. The keep their idea secretive, they refuse to raise money, they don’t bring on co-founders.
They don’t realize that they are at the start of their careers. If you think of entrepreneurship as a career, your perspective changes. Instead of building one company, you are building a foundation for continued success.
The Entrepreneurial Career Ladder
For the purpose of discussion, I have broken the entrepreneurial career ladder into four rungs—each more complex than the last:
Rung 1. Simple service (e.g. dev shop, design agency, consulting company)
With a simple service you don’t have to build the market. People already know they need your service. If you and/or your employees can do they work ,you can generate revenue. All that is left is to sell contracts, and you have a profitable business.
Rung 2. Complex service (Silicon Prairie News, Contemporary Analysis)
You have to create a market. You are selling something that people weren’t previously aware of. You have to expose their need through marketing, public relations, and sales.
Operationally, offering complex services can require employees to work together to provide services not previously offered. This complicates recruiting, training and management.
Rung 3. Simple product (Bric, Basecamp, Flywheel, Claimkit)
The time it takes to make revenue makes building a product complicated. You might be able to launch an MVP in a weekend, but it can take 24 to 36 months before that product can generate enough revenue to support a business.
Unlike a service business, you can’t just you can’t just hire people and profit. You have to validate your market, design your product, develop software, market, sell and offer great customer support.
Building a business around a simple product is also when bootstrapping falls to pieces. Even Basecamp, the company that is famously anti-VC, has taken money. Since you can’t easily generate revenue, you have to raise money using grants, savings, and perhaps even venture capital. This requires credibility, a track record, and some financial savvy.
Building the product is hard enough, and will take enough of your time and money. Keep sales simple. Build something that people already know they need. You can always do something challenging in the future, but for now don’t set yourself up for failure.
Rung 4. Complex product (Hyperloop, Tesla, SpaceX, SolarCity, really any Elon Musk startup post-PayPal)
A complex product creates a new market. It is something that people didn’t previously know they needed. This extends the amount of time it takes before you can start generating real revenue.
You don’t just have to build a great product, you have to build a new industry around it. You have to find a team of people that can build something not yet imagined. They have to believe in your idea so much as to commit years of their lives to making it a reality. Also, you have to convince investors that the returns will be large enough to offset the risks and delayed returns.
This requires recruiting people that can build something not yet imagined, finding a market big enough to support the amount of R&D required, and convincing investors.
Take it step by step
I wish I would have approached my first startup as a step on my entrepreneurial career. This perspective would have helped me be gracious with myself, set better goals, and I would have avoided some pitfalls.
When you are ready for the next level, success will come easily. I tried to build a product before I was ready. I knew how to run a business but that wasn’t enough. I didn’t understand product management, customer validation, design and development. I failed.
However, I tried again. This time I built a great team, joined an accelerator, and made sure I knew how to build a product. This time success has come much easier.
To new entrepreneurs, be patient. Don’t try to do it all at once. Proceed step by step gaining the knowledge, resources, and relationships you need to succeed at the next rung.
If you are on your 2nd or 3rd startup, what lessons have you learned? What do you wish you would have known when you were starting your entrepreneurial journey?
Grant Stanley is the CEO of Bric. Bric is a product that increases employee utilization for professional service employees through more accurate project planning and time tracking. On average Bric’s clients make an extra $850 in profit per employee per month. For a 10 person team that is an extra $102,000 a year in profit.
Grant Stanley is also co-founder of Contemporary Analysis. Nate Watson has taken over as the President of Contemporary Analysis, which provides predictive analytics to Fortune 500 companies and political campaigns.
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