What is it like to be an entrepreneur who goes through the typical journey of launching a business out of a startup accelerator?
More people than ever before are now inspired to become entrepreneurs. That’s fantastic. We need more great entrepreneurs. However, the reality of being a startup founder is often, if not almost always, far different from first-time entrepreneurs’ expectations.
Let’s take a look at those differences, what it is like, and why it is all worth it, in spite of the challenges.
The Dream Of Entrepreneurship
Entrepreneurship is very alluring. Today, the dream sold in the media is that you can dive right into creating the next Facebook. In almost no time at all, you’ll be raising billions of dollars, and then before you know it, you’ll be in the news, ringing the bell as your company goes public, or bigger companies will be throwing even more billions at you to try and buy your business.
It is sold as easy, fast, and a big party with lots of money and fame. You get to be the big boss; it is easy to dream up a genius product everyone is begging for. All you need to do is run some ads, and you’ll make it big.
This is all possible. Many startup founders featured on the Dealmakers Podcast have raised billions, built multi-billion dollar companies (sometimes more than once), and have exited for even more. Some have done it in brief periods.
If it comes this easy for you, that’s great. Though, the reality is often very different. It’s much harder. It requires real work. Perhaps more than at any job you’ve had so far.
Still, building something from nothing, the big and lasting impact you can have, and knowing that you’ve lived out your full potential makes it all worth it. At least for those that aren’t just jumping in for the promise of easy money.
The Reality Of Entrepreneurship
So, what’s it like? How does the journey of most successful entrepreneurs usually play out? What might you want to know to make it smoother?
It’s Not About You
Perhaps one of the biggest and most important differences between the expectations the media is selling, and reality is that it is not about you.
If you are just getting in for the fame, money and to feed your ego, then you might be better off becoming an athlete, YouTuber, Reality TV show contestant, musician or politician.
In reality, the most successful startups are all built on the customer and their needs and wants. It’s about focusing on the customer and the problem.
It is not about dreaming up a product or service that you think is wonderful and then trying to sell it. Instead, it is about finding an existing problem, really getting to understand your customer, and then tailoring a solution for them.
As a result, many successful and accidental entrepreneurs have started out by creating a solution to a commonly shared problem, frustration and inefficiency that bothers them, and then finding millions of others are craving the same solution, and are willing to pay for it.
You’ve Got To Start Very Small
It may not sound very sexy to most aspiring entrepreneurs, but you need to start small. You should have a really big, grand vision. It’s great if that is tens of billions of dollars big.
Only you have to break that down into the most minute pieces possible. Start as small as you can.
You aren’t going to start with Super Bowl ads and 10M followers and sales on day one. Start with one product, one customer, and sale, and then grow from there.
Keep it basic. Keep the product simple. Nail one fantastic feature and unique advantage. You can expand all you want later. You just won’t get the chance to do that unless you start very tight to begin with.
You Need Extreme Focus
Thinking big and wide is fantastic. It is necessary to have a vision and to think long and at scale. If you aren’t, you’ll never get there.
However, building on the above, the key to getting there is starting small and extremely focused. Taking one small step at a time. Putting everything into that step before trying to move on to the next.
This is one of the top attributes that investors will want to see when you are fundraising. It is vital for making real progress.
Create a tight action list and focus everything on the one most important thing you can do next.
Most Don’t Hit Product Market Fit Right Away
Most startups don’t focus enough on the problem and customer at the beginning. They try to lean too much on their own ‘genius’ instead of truly listening and implementing the keys to success they are being given.
As a result, it often takes new startups a couple of years to hit product-market fit. Many don’t survive long enough to hit it. So, just because others are slow at it doesn’t give you a free pass to take the long detour there either.
If you aren’t sure that you’ve got it, then you don’t.
You Are At Greatest Risk Of Going Broke When It Becomes A Hit
Ironically, and perhaps what most overlook is that young startups are often most at risk of going broke once they do finally hit product-market fit.
Every great company has almost run out of money at least once. It’s not a comfortable position. Especially when you can’t make payroll, you are days away from having to shut down and going to get a real job, and you may have to make layoffs or max out your credit cards and virtually starve yourself. Yet, it is almost a rite of passage. The key is not running out of money, even if you get close.
This risk is often most significant when your product becomes a hit. You may get hammered and overloaded with orders. Then you have to figure out how to deliver on them all and fund it until the revenues are collected.
It’s About De-Risking, Not Taking Wild Risks
Entrepreneurs are frequently seen and described as people willing to take great risks. While they do certainly have to be willing to leap, move forward amid uncertainty, and do what others won’t, wild risk-taking isn’t necessarily a great thing.
In fact, that isn’t what savvy startup investors are looking for at all. It’s not the way to build a large and lasting company.
You must be willing to flop at things and to be constantly testing and experimenting with new things. Yet, successful entrepreneurs are much more conscious of risk than others.
They recruit advisors to help them understand the risks they aren’t seeing. They are constantly working to remove the next risk factor to move forward. As they do this, they attract more customers, partners, and investors.
Alejandro Cremades is a serial entrepreneur and the author of The Art of Startup Fundraising. With a foreword by ‘Shark Tank‘ star Barbara Corcoran and published by John Wiley & Sons, the book was named one of the best books for entrepreneurs. The book offers a step-by-step guide to today‘s way of raising money for entrepreneurs.
Most recently, Alejandro built and exited CoFoundersLab, one of the largest communities of founders online.
Prior to CoFoundersLab, Alejandro worked as a lawyer at King & Spalding where he was involved in one of the biggest investment arbitration cases in history ($113 billion at stake).
Alejandro is an active speaker and has given guest lectures at the Wharton School of Business, Columbia Business School, and NYU Stern School of Business.