More businesses are being started today than ever before, and while this is great for humanity and the economy as a whole, there is one major drawback for an individual entrepreneur looking to build an impactful company. On an almost daily basis, the bar for standing out and winning is constantly being set higher and higher.
In order to keep pace with the market, we’ve adjusted to this bar in the Founder Institute by making our program more challenging each of the last 8 years. We have had to take drastic measures to weed out the growing number of people that are just interested in “playing founder”, and are not ready for the rigors and commitment of building an impactful company.
There is one thing that these people do not understand:
A business is not worth building unless you are willing to go all-in.
I’ve started 9 businesses and have invested all of my time, all of my network, and most of my money into each and every one of them. Most have done well and others have failed, but I wouldn’t advise an entrepreneur trying to build an impactful company to pursue any other strategy.
1. Building an Impactful Company Requires 100% of Your Time
I am always surprised by how many founders tell me things like “I can’t quit my job to build this business until I get some funding.” This line of thinking of completely backwards, and naive. What investor in their right mind would take the risk of investing in your company if you (the founder) won’t even take on the risk of future earnings to devote your time to it? Realistically, the founders that tell me this are hundreds of steps away from getting investment – but even then, do they really expect talented people to go out on a limb to join their team full-time if they’re not willing to do the same? Unless you have an amazing track record in entrepreneurship, this is non-negotiable.
To be clear, I am not saying that a business can’t begin as a “side-project”. On the contrary, I believe starting a “side-project” before fully committing is the absolute best way to start a company. When it is just a “project” (not a “business”), you aren’t too attached to it, and you can look at things objectively while testing the idea with customers, researching the economics, and getting feedback from experts.
However, once you have put in several months (at least) and have gotten the proper validation, you need to devote 100% of your time to build the business if you want to have any chance of success. Realistically, this means 60+ hours per week for several years.
2. Building an Impactful Company Requires 100% of Your Network
If you are trying to build something of impact, then you need to quickly get comfortable with asking your friends, family, and colleagues for favors. These favors include, but are not limited to, sharing your news, giving you feedback on your product, providing introductions, handing over money (buying your product/ investing in your company), and more.
As awkward as this may seem, there is really no getting around it. As an early-stage entrepreneur you usually have no tangible product to sell, so all you can sell is a vision or idea. This is actually very similar to a politician starting a “movement” – and a “movement” requires an initial audience to get it going.
To force this thinking on early-stage entrepreneurs that are not quite ready to go “all-in”, in the first week of the Founder Institute we mandate that our founders create a mailing list of at least 20 friends, family members, and associates. After sending an initial introductory email where people can silently opt-out, the founders then send this mailing list business updates and requests for feedback on a weekly basis. To push things further, we even require our founders to add people to the list every week, and when they finish our program they have over 125 subscribed contacts that they know personally or met in the program.
Is this overkill? To be honest, when we first implemented this strategy the required subscriber numbers were much lower. However, over time we have moved the requirements higher and higher because it has be so effective. At the end of the day, this simple mailing list has acted as a forcing function that not only gets our founders comfortable with selling to personal acquaintances, but also provides them with a wide net of people from which to get valuable feedback, spread news, and more.
If you are not comfortable asking friends, family and colleagues for favors related to your business, then I suggest you do something similar. Trying to build your company alone is usually a fool’s errand.
3. Building an Impactful Company Might Require All of Your Own Money
It does not always require 100% of your money, like numbers 1 and 2 above… but it might.
This is what startup people call “skin in the game”. Joining, investing in, or partnering with a startup is always a question of risk management, and the most remedial question someone can ask to mitigate risk before working with you is “Are you committed?”.
“There is a difference between interest and commitment. When you’re interested in something, you do it only when it’s convenient. When you’re committed to something, you accept no excuses, only results” – Kenneth H. Blanchard – Author of The One Minute Manager
Most of the successful entrepreneurs you read about today have invested most of their money into their businesses at the early stage, while also taking either a very low or the legal minimum salary for the first several years. I have done the same with all nine of my businesses.
Obviously not everyone has the luxury to do this, but at the very least, they should expect to front the initial costs of the business (incorporation, legal, basic technology/materials, and the like), while also offering much higher salaries to their first key hires than their own. After all – what signifies more commitment from the founder than cold hard cash?
Okay, so let’s say you have read my three points above but are still wavering and not quite ready to go “all-in” with your time, network, or money. What should you do?
At the very least, I recommend that you take a step back and ask yourself two key questions:
Am I fully committed this idea?
If you are ready to go all-in but do not believe you have validated your idea, you can usually find the answer by (1) isolating your area of concern, (2) getting feedback on it through a well-constructed “MVP Test” with a few hundred more potential customers, and (3) reviewing the results with someone that successfully built a business targeting the same customer. If you are not sold after that, then it’s time to significantly alter (“pivot”) your idea, or start over altogether. Keep in mind that this is not a bad thing – it is better you learn this sooner rather than later.
Am I ready for the rigors of starting a business?
If you believe you have validated your idea but are still not ready to go all-in, then work backwards and create a plan that will get you to that point. Maybe you have a child on the way, or other family obligations on the horizon? Maybe you need to save up money and start another “side-hustle” in the interim? Or, maybe you need to take time creating relationships that will be crucial for your business to succeed? Whatever the situation, just create an actionable plan to get you there as quickly as possible. I promise you that the longer you wait, the more your chances of getting started and succeeding diminish.