I currently work at an amazing company called Startup Weekend. The organization supports entrepreneurship through experiential education events for developers, designers and business minded people alike that have the entrepreneurial itch and are ready to doing something about it. I get to travel around the world and listen to investors and tech-entrepreneurs speak about a variety of topics as they relate to the tech-startup world and man have I learned a lot.
Before going to work at Startup Weekend I took action and did something about my own entrepreneurial itch. While working in South Africa I spent a lot of time thinking about going back to school for my MBA – I even started to study for the GMAT once. Ultimately I could not justify to myself the expense and future benefits. Instead of studying business theory in a classroom I thought I would be much better served by channeling my time and energy into launching my own company. I had no doubt in my mind that if I worked hard enough I could create a viable business. I decided it was time to JFDI.
I started a company called GreeNEWAL Group (co-founded with my best friend). We were in the business of providing residential homeowners energy audits and home energy ratings (which we subcontracted out qualified professionals). Essentially my real business was lead generation for home energy auditors and home performance contractors. However, things did not go as planned … go figure (sarcasm). With that said, I was quickly humbled in front of my family, friends and local community.
I get a great laugh when I think back about some of the mistakes I made. I certainly have no regrets but here is what I learned.
1.) Nothing is ever 50/50
I’ve learned that most businesses fail because co-founders break up. You can add my company to that ever-growing list. Early on my co-founder and I talked about how we would split ownership – we were best friends and 50/50 seemed like the obvious and fair thing to do. We never discussed situations that may arise such as, what if I want to move away or what if I can’t commit enough time or what if I have a personal financial emergency and need liquidity. These are among a long list of dirty and uncomfortable issues you should discuss before you spend a nickel.
You should be brutally honest with yourself and your co-founder about expected responsibilities and make sure you do that co-founder equity vesting thing …
2.) Charisma and Confidence
I am not very technically inclined (albeit trying), but I can sell pest control door-to-door, cold-call i-bankers with confidence and I have sat across the desk of a small business CEO and convinced them to do business with me. When starting out, you shouldn’t be afraid to ask for what you want but you better be prepared to have a convincing and honest answer as to why.
3.) If you are Ying – find your Yang
Don’t hire yourself twice – figure out what you are good at and find someone who can do what you can’t. My co-founder and I did not compliment each other’s skill set and we ended up spending money and time on things we should not have. Ultimately, you need to always work with people you love, who are smarter than you are, and aren’t afraid to tell you the truth – even if you aren’t ready for it.
4.) Embody the Staples “Easy Button”
The customer experience is a big deal – don’t fuck it up. I totally did. After homeowners had their initial energy audit or home energy rating our business model required homeowners to complete extensive paperwork to receive government reimbursements and then I sent them to a directory of potential home performance contractors. This was not only annoying but created zero value for them when it came time to take action on the recommendations presented in the final home energy audit or home rating.
5.) Government incentives don’t work … at all
If anywhere in your business model you have the slightest reliance or engagement with the government you will either strangle yourself with red tape or kill the customer’s experience – probably both. If you need taxpayer dollars to make people feel like they are purchasing something of value you better cut your losses now.
6.) People act like the want options but they really don’t
I learned that people like to be in on the conversation, but ultimately want to be told what they need or should do. They don’t want to invest in more time and more research and more calls and more appointments and more troubleshooting. They just wanted their problem solved and they wanted me to get it done for them. Take charge, be cunning and control your customer’s options. Don’t be afraid to tell your customers what they need and how you can get it for them. When you do make sure you don’t just alleviate their pain point, do it right and eliminate it for them completely.
7.) Validate your idea with potential customers before you even design a logo or get business cards made
Call it lean or customer development or common sense – but don’t launch a product or service if you can’t find enough people who are excited by it (because it solves a pain-point) and most importantly be willing to pay (because you create value). Seems simple but too many people get caught up in the rapture of launching something they want – not what people in a market need.
8.) Role Models are Good not God
I am fortunate to know a few successful businessmen. I felt totally comfortable asking them for advice and drinking their Kool-Aide. Before my co-founder and I committed any money, we decided that if Mr. I’ve Made a Million Bucks thought it was a good idea we would take that proverbial leap off the cliff of entrepreneurship. Well, Mr. I’ve Made a Million Bucks thought it was a good idea so we jumped. In retrospect, no one asked me enough questions about execution. The gritty details of how I was going to get my 1st, 10th and 100th customer, who were my strategic partners and why, what will the customer experience be like, etc. Run away from people who tell you everything what you want to hear and make sure to find someone who can challenge you to the point where you have go back and figure something out. When you reach that point that you’ve answered all the “how the hell are we going to do that” questions – it’s go time. In the end you can bullshit about ideas all day over cocktails, but if you don’t have a plan for execution you’re just getting drunk.
What do you think? Is the experience and lessons you learn trying to launch a company more valuable than a MBA?