With the growth of the global startup ecosystem, I see more and more people “playing founder” than ever before. Attracted by large amounts of venture capital and the mainstream hype arounds startups, these entrepreneurs have entered the “startup game” for one simple reason: to become the next billion dollar startup.
They pitch their ideas with slick presentations, “hockey-stick” graphs, and in-depth statistics on the size of their market and target customer. They have quick, concrete answers for every technical question I ask about their business model.
But, when I ask these entrepreneurs one fundamental question, they are often stumped.
Why are you building this company?
This is my favorite question to ask entrepreneurs because if you don’t have a good reason ‘why’ you are building a company, you will never have a good “what.”
This is true for three main reasons:
1. Without a Clear “Why,” You Can’t Develop a Clear Vision
Why you are building a company will form the foundation of your company’s vision – which is essentially your organizational “north star” for your business strategy and culture. If you don’t have a strong answer for “why” you are building your company, how can you possibly develop a clear vision for what it will aim to accomplish in 5, 10, or 20 years?
2. Without a Clear “Why,” You Won’t Pitch Your Business Effectively
No matter what business you are in, you will need to pitch prospective customers, employees, partners, press, investors, and more. In the early days, you will literally pitch your company over a thousand times a week.
In order to pitch your business effectively, you need to be passionate about the problem you’re solving, and convince people that you are the right person to solve the problem. If you don’t have a good reason for why you are starting the company, this will be extremely hard to do.
In particular, investors will judge your intentions just as much, if not more, than the business itself. In their head they are asking questions like, “What is your motivation behind doing this?,” “will you give up if things start getting dire?”, “is this more than just a business project for you?”. Similarly, to convince your first employees to come on board for little to no salary, you will need to inspire and rally them around your passion for the business.
Pitching your business without having a good reason for starting the company is like doing it with one hand tied behind your back.
3. Without a Clear “Why,” You Won’t Survive the Journey
Entrepreneurship is not fun and games, and as an early-stage entrepreneur, non-stop work and rejection will become your new normal. In addition, you likely will not even know if your business is viable for several years. It will be a grind.
In order to power through the hard times of entrepreneurship, money cannot be your main source of motivation. As Elon Muskfamously said, “Being an entrepreneur is like eating glass and staring into the abyss of death.” Only the most passionate founders will survive.
How to Nail Down Your “Why”
So, how do you determine your “why”?
Your answer to “why are you building this company” should be formed from the intersection of a customer problem and your personal strengths and passions. If you can’t align these elements, then your business does not have a high chance of succeeding.
Perhaps the best way to explain this is through providing my answer to why I started the Founder Institute. In short:
Tens of thousands of companies are being started every year, but more than half of them fail right away and only a small percentage survive for even a few years. I have built 9 different companies in my career, including a very popular site to help entrepreneurs raise funding, so helping early-stage entrepreneurs is both my passion and my strength. So, I created the Founder Institute to reduce the rate of startup failure by providing entrepreneurs with structured training at the time where most fail – at the very beginning of the process.
As you can see, the customer problem I am solving is perfectly aligned with my personal strengths and passions. I love talking about new ideas, starting companies, and building businesses, and with my company I get to do these things every day. I have been able to rally entrepreneurs across the globe with this “why”, and it is what keeps me working 100+ hour weeks to continue building the company.
So, now I ask you. Why are you starting this company?