Entrepreneurship has been compared to an unusual lottery. The tickets are crazy expensive and the odds are far less favourable than the typical 1,000,000:1 odds. Like all lotteries, those who play actively overestimate their skill-level and by extension their chances of success, downplaying the amount of luck actually involved. There’s so much to learn when it comes to entrepreneurship and most of it can’t be learnt by reading. That hasn’t stopped me from writing though. Here are a few startup lessons I am learning from speaking to founders and actually getting my hands dirty building PushandStart.
Entrepreneurship isn’t a job replacement scheme
Entrepreneurship is being sold as a coping strategy for the high level of unemployment in the country. This couldn’t be a bigger fallacy if it tried. Humans make rational decisions. Entrepreneurs rationalise the improbable. Humans avoid risk. Entrepreneurs try to mitigate risk but even when they realise they can’t, they still plunge ahead. Humans are comforted by authority figures. Entrepreneurs have a different value system and they question everything – even their role models. Humans know how to spell “work/life balance” and even strive towards it. Entrepreneurs are consumed by their work. Entrepreneurship dehumanises you – if you’re doing it right.
When the Nigerian Government started promoting entrepreneurship like a panacea for the weak job market, it only served to show how little the responsible policy makers understood of human nature. Entrepreneurs must be allowed to self-select rather than being herded into a “career” in entrepreneurship. This ain’t no career!
I recall attending a bootcamp for one of these government programmes and the speaker (God bless his honest soul!) said to all of us in the audience; “You’re not here because your ideas are very good or because you are brilliant business minds, rather you’re here because you have shown that you can prepare business plans that meet a minimum acceptable threshold.” That’s hardly the stuff world-beating entrepreneurs are made of, is it?
Everyone acts like Usain Bolt instead of Carl Lewis
Usain Bolt is probably the finest sprinter that has ever walked the earth. He’s 100% dedicated to his craft. He trains hard, has the genetics to back it up, and is apparently drug-free. He’s even managed to sell himself as an all-round nice guy.
Carl Lewis was also a great athlete who had a stupendous work-rate and accolades to show for his efforts. How are they different?
Usain Bolt has restricted himself to 3 track athletics events – 100m sprint, 200m sprint, and 4x100m relay. Carl Lewis on the other hand was a track and field all-rounder. He started his career as a long jumper but subsequently went on to emerge as a sprinting talent. He participated in the long jump, 100m sprint, 200m sprint and 4x100m relay. Be versatile and stand ready to stretch yourself because your startup will demand that of you.
Usain Bolt reportedly dumped girlfriend, Lubica Slovak, in part because she was white and he could not deal with the backlash from his black Jamaican fanbase. Carl Lewis on the other hand was unafraid to not only quell his inner perfectionist but also invite public criticism by taking just two jumps in the long jump event for the 1984 Olympics even though he had talked up his ambition to beat Bob Beamon’s long standing record. He did this to remain fresh and within reach of his ultimate goal of matching J.C. Owen’s 4 gold medal haul. Stop playing to the gallery and focus on what’s important to your business, even if public opinion isn’t kind.
The most telling difference for me is how they both finish their races. Carl Lewis always finished strongly, but Usain Bolt is notorious for his trademark slow down at the finish. Carl Lewis ran his guts out, but Usain always gives the impression that he has more locked away safely in the tank. Many see this as a form of legacy-management. How? When Carl Lewis claims (and he has) that if he was running today he would beat Usain Bolt, we all know it’s false because he did the very best he could – head down till he was past the finish line. When Usain Bolt retires, even if there’s a faster successor who comes along and breaks all his records, he can convincingly claim that if he was still active, he could have beaten the pretender to his throne. He can point to the nanoseconds he wasted by slowing down and leave us to fill in the blanks by imagining what he would have accomplished if he ran flat out.
In our everyday lives, we all settle into the habit of giving less than 100% so we can leave ourselves a fall back excuse. “I could have made a 2:1 in school but I hated lectures”, “I could have gotten that babe but woman wahala dey quick tire me”, “my startup would have attracted more investors if only I did what they wanted and abandoned the social enterprise focus but I chose not to”, and the list goes on and on.
It’s scary giving it everything you’ve got. When you do, there’s no hiding place. You can’t brush off criticism and act like it was a part-time thing or a hobby. It forces you to wear your heart on your sleeve. It tests how far you can really go when you set your mind to it. It shows you unambiguously if you’re cut out to build a business or to merely work for one. Don’t be afraid to give it 100%. It sucks when you fail but that’s the only way you’ll ever have a chance of succeeding.
Far better is it to dare mighty things, to win glorious triumphs, even though checked by failure…than to rank with those poor spirits who neither enjoy much nor suffer much, because they live in a gray twilight that knows not victory nor defeat — Theodore Roosevelt, 26th US President, 1901-09.
Too many co-founders take out a put or call option on the business
Puts and calls are options in finance. A put gives the owner the right, but not the obligation, to sell an asset, at a specified price, by a predetermined date to a given party. A call, on the other hand, bestows the right, but not the obligation to buy an agreed quantity of a particular commodity or financial instrument from the seller of the option at a certain time for a certain price. Sorry for the jargon, let me use two simple example of bananas (for puts) and petrol (for calls) to explain a little better.
You sell bananas and you get your supply weekly. You have a problem guesstimating sales beforehand so some weeks you over-order in anticipation but sales don’t meet up and are you’re left with rotting bananas no one wants to pay for. Wouldn’t it be great if you could pay your supplier a little extra for the option to trade in the rotten bananas at close to the purchase price? Now they bear the risk of spoilage and it only cost you a little extra. That’s a put for you. Now let’s do calls. Imagine you could go into an agreement with your neighbourhood petrol station and for a small fee, you have the option to buy any amount of petrol you need at pump price, come scarcity, pestilence or famine. You wouldn’t even have to queue. Now he has to grapple with the lost revenue opportunity from missed black market sales while you make out like a bandit. That’s a call option for you.
Did you notice how the values of puts and calls work? Puts increase in value when the value of the underlying asset (in this case, bananas) declines while calls increase in value when the underlying asset (petrol) increases in value.
Back to the matter. Say you’re a startup founder who brings on a co-founder. Your hope is that they’ll be as committed as you are. It rarely works out that way. Picture these two scenarios:
- They prefer to stay in the background, working only when it’s convenient for them (startup put option)
- They are happy to be the visible but doesn’t commit to anything in writing (startup call option)
In the first case, if the startup crashes and burns, they can walk away unscathed. No one knew who your cofounder was anyway and they can avoid any cognitive dissonance (for example, I am a co-founder of this startup and I am smart; this startup failed and only dumdums fail) by retaining the option to blame you for the failure since you were working full-time on the startup.
In the second case, if (and only if) the startup succeeds, they tidy up the paperwork and become bona fide co-founders. They derive benefits from the upside potential but have no emotional stake in the struggle.
Neither case is good because your co-founder who should be all in with you is busy hedging her bets.
These are not the entirety of the lessons I have learnt but they are the first three on my list. Here’s a quick rundown if you skipped the article to get to the comments:
- Don’t get railroaded into a life of entrepreneurship. Make it a conscious choice and be prepared for how it will change you.
- Be more versatile, don’t look to others for approval, and give it 100%
- The co-founder relationship isn’t so much a contract as much as an on-going negotiation. Institutionalise accountability at the highest levels.
Now you can leave me a comment.