“It is difficult to see the picture when you are inside the frame.”
~Eugene Kleiner, Co-founder Kleiner, Perkins, Caufield & Byers
How do you know if you’re meant to be an entrepreneur?
“Do I spend my life working for someone else or do I take a crack and beating the odds and hanging my own shingle?”
It’s an age-old question (and one of the most important when it comes to doing passionate work) and today we’re going to get the answer from someone who’s much more qualified than I – my good friend John Greathouse.
Now that I think of it, today is also a pretty big day. Until now, I have never published a guest article on Live Your Legend. Not once in 4+ years has an article on this site been written by someone other than me.
Today that’s changing ever so slightly, and I’m very excited about it.
From now on, over 90% of what you read at Live Your Legend will still be created by me, but in the future I will very occasionally host a guest expert, a Living Legend, who can cover a topic about 100x better than I could.
After all, how ridiculous would it be to assume I could cover every topic regarding doing work we love, better than other experts out there? The truth is, in some cases (actually, a lot of them) that’s just not true. Plus, a different perspective is always useful.
So today I’d like to introduce a good friend and mentor, John Greathouse.
I first met John while working for a startup in Santa Barbara. His blog and business track record were something I greatly admired, and after spending my first few hours with him and his writing, I think I’d learned more than in 4 years as a business major in college. We since became fast friends and he continues to be one of my most powerful sounding boards. He’s also one of the most connected guys I’ve ever met.
For the past 30 or so years John has built businesses and been a core member of founding teams that have led to acquisitions and public offerings in the hundreds of millons of dollars, including being the CFO behind the sale of Expert City to Citrix Online, wich is the company that provides some of the most powerful tools for us web entrepreneurs, such as GoToMyPC and GoToWebinar. He now backs dozens of passionate founders as they create the businesses they “can’t not build” as another friend, Jonathan Fields, loves to put it.
In a word, what sets John’s work and advice apart from others is simple: Experience.
John is a partner at Rincon Venture Partners, a venture capital firm investing in early stage web-based businesses. He’s also a Co-Founder of RevUpNet, a performance-based online marketing agency, and he still fills part of his time by teaching courses as a faculty member at the University of California, Santa Barbara on practical entrepreneurship (We could use about 10k more such professors!).
Practice Always Trumps Theory
The writing and advice that John provides for his thousands of followers over at his startup/entrepreneurship blog infoChachkie aren’t simply his theories of what may or may not work. They are the result of decades of trial, error and success in the business world. That’s why I love his work so much. It is purely grounded in reality, and is as far from graduate-school-screaming theory as could be (although he did get an M.B.A. from the Wharton School .
He has seen the startup and corporate worlds from a lot of angles, and his way of candidly describing the stark realities is downright hilarious at times.
Today he covers how to know if entrepreneurship is in your blood and how to start building what Pam Slim likes to call “a side-hustle”.
I offer similar advice to clients and readers almost daily, but John has a much more powerful way of communicating it.
The advice below refers to startups of all kinds, from the single-person blog to your pursuit to build the next Facebook.
Entrepreneurship is not what most people think – John’s words should help you decide if you have what it takes (or if you even really want it in the first place).
*Also be sure to read through the whole post to get free access to his Mini-Venture Worksheet PDF.
Enter John Greathouse…
A small percentage of people in each free-market society generate the jobs for everyone else. These entrepreneurs do not risk everything, work outrageous hours and put themselves under extreme pressure because they want to. They certainly do not do it for the promise of riches. They do it because they have to, because they are driven to create something from nothing.
Entrepreneurship is not a choice. It is a compulsion.
It is not rational to put oneself into the uncertain, stress-filled environment of a startup. It is far more logical to take a 9-to-5 job with little stress and a lot of holidays. If it were a decision to be an entrepreneur, then most right-minded individuals would decide to turn back when they encountered the first inevitable startup crises. As noted in Your Startup Ideas Should Not Be Charming, most entrepreneurs are haunted by their ideas and feel they must execute them before someone else beats them to the punch.
Entrepreneurs want to matter.
They do not want a job, they want a purpose. They want to make a difference and they know that if they do not show up for work, important accomplishments will not be achieved. In the early stages of their adVentures [John's appropriate nickname for startups], entrepreneurs often sleep like babies – they wake up every couple hours crying. Despite the stress and restless nights, most entrepreneurs would have it no other way.
Safety in Numbers
Most people choose to live in the midst of The Herd. They seek jobs created by others, allow their destiny to be controlled by exogenous factors and are quite happy to punch the clock at 5:30, Monday through Friday.
Milling about in The Herd may be safe, but the security comes at the cost of controlling your destiny. Yes, you can moo loudly and hope for change, but this is akin to honking your horn while sitting in bumper-to-bumper traffic. Lashing out in this futile manner may temporarily relieve your frustrations, but it will not serve to improve your position within The Herd. Once you realize that no one heeds your plaintive mooing, you face a choice. Either give up and settle into a quiet, uneventful life within The Herd or take command of your destiny; by departing The Herd and founding or joining a startup.
You might rationalize remaining in The Herd with the hope that you will lead it someday. Leading The Herd is certainly more fun than milling about its midst. However, even as a leader, you will be limited by The Herd’s collective lack of speed and flexibility.
Waiting to be anointed a Herd leader is a high-risk strategy. It generally takes an oppressively long time to work your way to the front of The Herd, just as it takes many years to rise to the top of most Big Dumb Companies (BDCs). Throughout this process, the possibility exists that a capricious factor, outside of your control, will preclude you from attaining a leadership position.
Should You Stay or Should You Go Now?
If like the Clash’s Joe Strummer, “the indecision bugging you”, then you may be ready to leave The Herd and follow your entrepreneurial yearnings. The longer you remain in The Herd, the harder it will be to eventually depart.
To avoid waiting too long, pick an age or a specific life event (marriage, having a child, graduation, etc.) and use this milestone as the catalyst to jettison from The Herd. This approach will give you adequate time to plan your exit, allowing you to leave The Herd with no regrets, no misgivings and without looking back. If you amorphously assume that you will strike out on your own someday, you may find that John Fogerty was right - someday never comes.
The Herd University
Before you leave The Herd, learn as much as can from its leaders. Master how to cross rivers, defeat predators, survive blizzards, etc. Do not leave The Herd as a calf. Work for a BDC before you jump into your first adVenture. As described in Advice For Emerging Entrepreneurs, let the BDC train you and grant you opportunities to make mistakes on their time, on their dime.
Most successful entrepreneurs cut their teeth within The Herd before starting their own adVentures. For instance, P. Diddy worked as an intern for Uptown Records before creating his own Bad Boy label. Ray Kroc worked with the McDonald brothers for years before taking over McDonald’s and transforming it from a loose affiliation of regional franchises to an international corporation. In both cases, these famous entrepreneurs learned their industries within a safe environment before striking out on their own.
Enhancing Your IQ
“It is hard to see the opportunities all around you when you are standing in the middle of a crowd. However, if you lift yourself a few inches above the crowd, you instantly can see the opportunities that stretch from horizon to horizon.”
- Ed Moldt, Wharton Professor
Point of view is worth 30-IQ points. You can greatly enhance your point of view, and thus your entrepreneurial IQ, by stepping out of The Herd.
Even when you are still part of The Herd, the view from its fringes is more expansive than from its bowels. By staying on the periphery of The Herd, you are in optimal position to first see and then take advantage of an upcoming prime grazing ground. The first step in leaving The Herd is to mosey over to its fringes, so you can gain a more informed point of view of the opportunities beyond The Herd’s reach. Joining a smaller herd might also make sense, as discussed in Make Yourself Irresistible To A Startup.
Cold Turkey Not Required
Begin your departure from The Heard by initially leaving for day trips. You can always come back to the safety of The Herd at night. Such short excursions will allow you to experience the challenges you will face once you depart from The Herd for good. In this way, you will build your confidence, contacts, and experiences incrementally. Each trip can last a little longer until eventually you are confident enough to undertake an overnight excursion. Such mini-ventures, as described in Small Ideas, Big Benefits, will not only educate you, but will reduce your risk when exiting the Herd.
Your smaller, more nimble part-time startup can outperform BDCs. You can and will get to the waterhole first and sustain yourself on smaller grass patches. Thus, you can pursue new markets that are further from the mainstream and too small to interest a BDC.
You will work hard to stay in The Herd and sustain your part-time startup, but nothing will limit the amount of grass or fresh water available to you – your upside is boundless. In your own startup, you might experience lean times, but you never will be crushed in a stampede, like a middle-manager in a corporate layoff.
In your startup, you control your destiny.
Not as many startups fail as most statistics claim
One of the most repeated statistics trumpeted in today’s popular press is that “Four out of five businesses fail”. As is true with most Conventional Wisdom, it makes a great headline, but it is misrepresentative of the facts.
When the data are viewed in light of startups established by educated and experienced entrepreneurs, the success rate of such ventures increases substantially. When sole proprietorships are removed from the statistics, the success rate of startups improves even further. Sole proprietorships, which are inexpensive to form and effortless to dissolve, come and go as the founders move to other ventures, accept positions with BDCs, leave the workforce to attend to their families, etc.
When high-tech businesses, founded by appropriately educated entrepreneurs and receiving money from sophisticated invested are considered, the survival rates are much more encouraging.
In a 2010 TechCrunch article, Ron Conway discusses the success and failure rates of the ~ 500 companies he had invested in during the prior 12-years. Approximately 33% fail, another third return an approximation of the capital invested and the remaining 33% generate anywhere from 2x to “Google-x return.” Mr. Conway also notes that serial entrepreneurs have a 66% success rate after their initial venture.
Do not tell your brethren in The Herd, but the success rate of high-tech ventures run by properly trained entrepreneurs who can rely on experienced mentors is much higher than most of them imagine. Entrepreneurs with the appropriate training and experiences consistently succeed.
There Is No Try
“You just can’t beat the person who won’t give up.”
~Babe Ruth, US Baseball Player
In the event that one of your adVentures fails, The Herd will always take you back. Trying and failing is just a dry run for the day when you eventually succeed. Even adVentures that fail to result in a profitable exit are not without merit.
Failure is often rationalized by the expression: experience is what you get when you do not get what you want. However, in the case of most startups, this adage is more than mere rationalization, because you invariably will gain valuable experience from a failed adVenture.
By standing outside of the Herd, you can address the problem so eloquently articulated by Mr. Kleiner. Once you leave the Herd behind, you will gain an enhanced point of view that will increase your entrepreneurial IQ and greatly improve your adVenture’s ultimate chance of success.
Here are two exercises to further develop your possibilities, and increase your odds of actually leaving The Herd.
Also be sure to download the free Mini-Venture Idea PDF Worksheet at the end of this article to help you along.
Exercise I: Weekly Business Idea
Force yourself to identify at least one venture idea (new product or business idea) each day for ten-days, and then one idea per week thereafter. Looking for small ventures will help you open your eyes to the myriad of opportunities that surround you. The free worksheet download at the end may help you organize your thoughts. Keep your write-ups to a single page.
Vincent Van Gogh was clearly a man who saw the world from outside the frame. In his long walks through the countryside, he would come upon a hill, a windmill or a tree and see an intrinsic beauty that compelled him to feverishly paint, even though thousands of other people had passed the same hills, windmills and trees without giving them a second thought. If you carry out the venture idea exercise for one month, you will start to see the world in a different way and eventually you will become an Entrepreneurial Van Gogh who can identify opportunities where others see nothing.
However, unlike Van Gogh, who died a pauper, your new perspective from beyond The Herd will allow you to scoop up some cash by identifying and executing mini-ventures.
Exercise II: Your Fortune Magazine Interview
Pick one or two of your mini-venture ideas that you are most passionate about. For each one, answer the following questions as if you were being interviewed by a writer from Fortune magazine. This will force you to thoughtfully consider the challenges that your mini-venture will face and how you might address them on a macro level. It is also just plain fun to fantasize about your success – something you should not hesitate to do often and with unabashed relish.
The scenario is that you are the Founder of a successful venture. You moved on to other interests while the venture was doing well and the venture subsequently floundered. You have just announced your plans to return to the helm of the organization and now every major business publication wants to tell its readers how you plan to right the ship.
- What three decisions did you make early on that proved vital to your success?
- How did you address the three most significant threats to your business?
- Despite your phenomenal initial success, mistakes were made. What do you view as the most significant mistake and what did you do to rectify it?
- It must have been nerve-wracking to start a business. What risks did you identify at the outset and what did you do to mitigate them?
- How did you establish and maintain your leadership position in the market?
- What happened? It seemed you were on top of the world when everything apparently fell apart.
- Knowing what you now know, what would you have done differently?
- I understand that you are again fully engaged in the business, what do you plan to do to turn the business around?
John Greathouse is a good friend and successful founder and venture capitalist who’s provided hands-on startup advice to emerging entrepreneurs at his blog infoChachkie since 2008. If you have any plans to leave “The Herd” or explore how you might start a business or side-project of your own, I’d highly recommend you check his work out. In the past few years hundreds of thousands of readers (including myself) have found his site worthy of their time.
John has also put together a totally free Mini-Venture Idea Worksheet for all of you to download. It’s meant to go hand-in hand with that above article and exercises. All John asks in return is that you follow him on Twitter or subscribe to his blog if you think his startup advice can be helpful as you build your own passionate career.
P.S. Remember to keep an eye out for the launch of a very powerful new (and free) tool for Live Your Legend readers early next week!
Oh and if you have any questions for John, leave them in the comments and I bet we can get him to answer them!