Recipe for successful entrepreneurship: My experiences
Do you have a good idea that you are about to release to an expecting market? A market that will wonder how they earlier at all could have managed without your innovation? Then you are up for a really good time. I urge everyone to do this, at least once in your lifetime. Let the dwelling entrepreneurship skills in you take place! It makes you grow and learn in a way that you never get in an employment situation.
But at the same time I want to give you a word that may get you to sit down and think through what you are about to do. Since it may, at the same time as it gives you your best time in your life, give your worst nightmares ever. It may result in horrible times, work fatigue and personal bankruptcy. Here you can use a military expression:
“Only the prepared survive!”
I consider myself by no means to be an incredibly successful entrepreneur, who has made trillions of money on an IPO or a buy-out, or created serials of successful startups. Unfortunatelly. But I still have my experiences and lessons learned that I may share with you, if you decide to read on…
My entrepreneurial experiences, outside of a safe employment, started in the beginning of the highs of the dot com era in 1999. A friend of mine introduced me to his idea in late 1998 and we started to discuss technical implementations. At the moment we both worked at a great Swedish telecom operator on mobile phone services and mobile data , and I had great trust and believe in my friend. I had no thought on that our discussions might be an idea outside of our joint employers business development, and I happily continued the discussing and thinking. In early 1999 he introduced me to a fascinating and very competent Australian guy that worked with Andersen Consulting (now Accenture) as a management consultant. The pieces started to fall into place and a founding and management team was created out of the three of us. But at first I turned the idea of starting a business, leaving a safe employment and possible career, down three times. The reasons for this was not due to leaving a possible fruitful career, but that my wife was about to give birth to a child, our daughter, and that we were in the midst of building our new house (but I didn’t do much of the actual building…). I also needed to have paternity leave for a couple of months one year after my daughter was born.
That was at least three things too many, when you at the same time go on an adventure like starting a new venture capital funded company. But I couldn’t resist this fantastic opportunity. Finally I gladly joined the party. My wife gave me the support to do it, without having a clue of what was coming. I am still married to her, so I am grateful that she put up with me during this time. It can’t have been easy and we had our tough discussions of course. Several times.
The three founders started building a company spread over Europe. Six offices in six of the most attractive cities and streets. We attracted financing from major players like Goldman Sachs, Reuters Greenhouse Fund, Innovationskapital and others. In total we got around $20 million in financing to build our dream. At the high, before the dotcom crash in late 2000, we had employed around 85 employees and attracted really interesting customers like CNN.com, Bertelsmann, AOL Europe, Telia, Reed Employment and others. We hade around 50 really interesting brands in our customer portfolio and we attracted in total around 200 customers, buying into our business model.
Then came the crash. In December 2000, after six months of planning, we sliced the company down to 23 employees, reorganized the company and moved the head office from Stockholm to Gothenburg. I was sad when I got to know that the board was going to let my two fellow founders and great friends leave the company. I was offered to stay onboard the company, trying to save what was left together with some other key employees. A new CEO was hired with great sales experience. Around us the headlines were in large bold war fonts. Boo.com, Framtidsfabriken, Letsbuyit.com and others revealed astronomous figures of loss, lay-off’s and slicing of their business. Former saluted entrepreneurs were dragged in the dirt for letting enormous amounts of cash go to waste. But what many forgot at the time was that there were also people “above” the entrepreneurs pushing for these things to happen. People brought in as senior advisors or director of the board. It was not the entrepreneurs all alone who wasted billions of dollars. There were VC’s, board room meetings and experienced management teams and CEO’s who participated in the race. Of course the entrepreneurs had their part in it as well, but they were not to take all of the blame, in my opinion. These were genuinely crazy times.
Since then, after I took the decision to leave my dream as the last founder, I have spent lots of time thinking what went wrong? What could we have done better or differently? What didn’t or couldn’t we see or anticipate? What would I do differently? But also, what did we do right? That is an equally important question. Out of those personal think tanks I have compiled my own list of what an entrepreneur should and shouldn’t do. But they have never come down as printed words, until now. Some of it may appear obvious and some might not. I hope you get some insight and use out of my experiences.
I do want to know your thoughts on the list. Please comment on it or drop me an email!
Do! For successful entrepreneurship.
Starting your own business? Here are some thoughts on what you should think of and questions to put to yourself before going crazy in the entrepreneurial dream:
- Have you talked this through with your family? Are they fully aware of the serious business you are getting into and do they fully support you? Are you capable and willing to work 10-12 hours a day and travel several days a week? Is your family prepared for this? Otherwise, prepare for a divorce, big fights and/or a new girl/boyfriend.
- Are you capable of fully focusing on starting your business? If not, does your fellow founders know that? Are they in consent with your limited possibilty of focusing on the startup? We were in consent and it worked, but I can’t recommend anyone on doing it the way I did it, trying to take paternity leave while starting my own business, building a new house.
- Are you financially stable? If times turn tough, will you be capable of surviving on a lower salary than you might be used to? Are you and your family willing to use your house as security on a loan to finance the business?
- Do you feel fully comfortable with your fellow founders? When times turn tough friendships are re-evaluated and your formerly known friend will show you new sides of him/her self that you didn’t know was there. Thanks to our founding team being comfortable with each other it worked, but I will not spread out the management team, as we did, the next time I start my own business.
- Choose your VC’s as carefully as they choose you and your founding team! Turn them down if you feel the least of concern regarding their intentions or the people you meet from the VC company. Investigate things they don’t present to you. The details you need to know are often not presented, if things aren’t looking as good in reality as in the presentation.
- Recruit people that gives you a good gut feeling and can make you laugh. You’re in for a tough time and you want to spend your time with people that makes you feel good and are responsible and take accountability. These are things that don’t show up in a CV. You can only find these out if you are genuinely interested in learning new people.
- If you are responsible for the technology and development, keep the helicopter perspective, benchmark competitors and set aside time for creative thinking around where your customers are heading, what new technologies can do for your product or service so that you try to stay one step ahead of both competition and customers.
- Grow your business from one corner of your defined market and spread your presence into the next arena. At the same time, keep controlling your earlier gained markets.
- Be skilled in project management and follow up on agreed targets. Review reasons for missing targets and re-evaluate your project and business plan according to knowledge gained.
- Spend your cash only on those things that you are sure of will create value to your business. Everything else can wait until you are sure of whether they will or won’t contribute, or that you are rich enough.
- Spend lots of time on risk management. Which are your risks, probabilities and what are the impacts? How will you handle them if they turn true? It’s difficult and imperfect, but will get you in the drivers’ seat.
- Document work descriptions to those who work for you. This creates well defined borders and employees who understand what is expected out of them. They can act without asking every time and you get time for other things than giving answers on questions people should know or be able to make own qualified decisions.
- Stick your nose into anything that might concern the well-being of your company, even if it isn’t exactly your area of responsibility. Even your best friend that is fully qualified can make bad decisions, forget things or just plainly miss details that you see. That is not doing your colleagues work. That is taking responsibility for a wider purpose.
And here is a short list of what you shouldn’t do while starting up your business:
- Spread out your management team. It is vital that you have daily physical contact in all decision-making. It will help you to avoid letting problems grow into galactic proportions before someone deals with them.
- Don’t trust that VC’s will help you with other things than financing your business. You are most likely on your own as a management team. And expect them to expect a return on their financial support!
- Don’t try to achieve everything at once. Stick to your plan or make a new plan if it is bad.
- Don’t let someone else be fully in control over the finances. The opportunity creates the thief. If it is your business, you need to be in control over finances. Someone else may do the job, but you need to be in control.
- Don’t forget to get rid of people immediately who proves to be psychotic, dishonest, improductive, having a bad influence on colleagues or being poor leaders. If you let time fly, your company will be drained on energy and the best people will leave the company first, which both will end in catastrophe, if not properly managed.
I am sure that there are tons of other experiences that I should pass on to you, but that will have to wait until another time.