13 important lessons from this video:
00:00:40 There are common mistakes that I see new entrepreneurs make over and over. There are tons of advice available online about this subject, and the advice seems to come from anglo-saxons, which tend to have the insane perspective of portraying entrepreneurs as Superman: wake up everyday at 6:00am, drink coffee until 6:15am, at 6:25 you begin sending emails…
There are many entrepreneurs who live this lifestyle to the max, and they almost always follow the same line: they are motivated and rigorous for the first three months, and then they crash and burn.
00:03:02 Yes, starting a startup is extremely difficult, and it is imperative that you see your future in terms of phases.
Starting your business isn’t supposed to last a lifetime. If after 3 years your startup is still a startup, seriously consider giving up and moving on.
[EDITOR’S NOTE: In her lecture Growing from Zero to Many Users, Adora Cheung explains that a typical amateur and failed approach to starting a business is:
She also points out that to launch a startup you need to have a lot of compressed time in your schedule (1-2 days uninterrupted) where you can really dedicate yourself to its success.]
The beginning of a startup is difficult because the kinetic energy that must be created at the beginning is incredible. This phase tends to be extremely taxing on both your mental and physical health, and leaves you with plenty of obsessive behaviors and social handicaps. This is because during this phase you are obsessively committed to one single goal: getting your startup up and running. During this phase, winning or losing one additional client can mean the difference between failure and success. But once your business is up and running, winning or losing one client probably won’t make that much of a difference.
One of the best ways to avoid burnout during this phase is to understand that this phase is temporary, and to create a contract with yourself, committing yourself to focus on your start for a pre-determined amount of time and where you expect the project to be by that time. Then respect that contract. If you haven’t achieved your results within the amount of time you set aside for it, let it go and move on to another project.
Another way to avoid burnout is to understand that life consists of five fundamental elements:
- Everything else
Now choose only two. If you’re launching a startup, then you must choose only one more and forget the rest. You’re launching a startup and have a family (wife and kids)? Then forget your friends, hobbies and everything else. Once your startup gets moving on its own, then you can replace ‘work’ with another fundamental element, such friends or hobbies.
00:07:30 A specific yearly revenue, number of clients or users, number of press articles about your company… being an entrepreneur requires having your own clear definition of success (what you are doing and why you are doing it) of which to compare your current status, and this defintion needs to be periodically updated and put into the correct perspective.
Also, your definition of success shouldn’t involve blanketly applying somebody’s definition of success, and you shouldn’t project your definition of success upon anybody else.
[EDITOR’S NOTE: In our interview, Data Consultant Benjamin Descazal points out that your goals need to be SMART goals (Specific, Measurable, Acceptable, Realistic, and Time-bound).]
This is because the journey of reaching your succes is filled with highs and lows, and if you don’t have a clear subjective definition of the success you’re looking for, your journey to ‘success’ will be filled with more lows than highs – which will even further demotivate you and you’ll burn out.
00:13:32 With your private and family life, having a clear timeline and definition for success is extremely important when it comes to explaining it to your friends, family, husband or wife. Not having clear definitions means that the people you love and care about don’t understand what you are doing and why. As an entrepreneur, if you don’t have clear goals and definitions to communicate to people who aren’t in the startup environment, they will simply compare you to Bill Gates or Mark Zuckerberg.
This unfair comparision will only lead to misunderstandings, disappointment, judgement and arguments:
“You’re an entrepreneur, you should be making a million dollars a year by now. What’s wrong with you!?”
“You’re making good money, so why are you still spending 15 hours a day at the office. What’s wrong with you!?”
If, however, you explain calmly and clearly to your loved ones that:
“Over the next two years, I’m going to focus on X objective. My definition of success is Y, and I will know I have reached this level on success when Z.
…they have a clear sense of where you are, where you are going, what you are doing and why you are doing it, and they won’t compare you to Bill Gates and Mark Zuckerberg. This an be talked about and reasoned with. Secondly, if you reach your objective, you all have something to celebrate! You cannot imagine how much celebrating the achievement of a goal changes your perspective.
How can I involve my loved ones in my project so they understand?
00:17:01 From a business aspect, treat your relationship with your loved ones as you would an investor: there are things you say, and things you don’t.
Recall that the business consists of highs and lows. If you tell your loved ones too many positive and successful stories, then they will not understand or appreciate the low points and setbacks. Likewise, if you tell your loved ones too many stories of failures and setbacks, then they will not understand or appreciate your high points and successes. Ideally, keep the stories and updates you share balanced somewhere in the middle.
Optimizing for your startup versus Optimizing for you.
00:19:20 One of the best ways of keeping your storyline realistic, measurable, and positive is to maintain an entrepreneural CV (resume).
For example, many entrepreneurs optimize their company to obtain as much seed funding and Series A investment money as possible, and many entrepreneurs would rather gamble and turn down bad or mediocre offers in the hopes of a better offer. But now consider this from the perspective of the entrepreneural CV: that actually raising the funds and selling their company is an accomplishment that VERY, VERY few entrepreneurs can actually put on their CV; that the great majority of startups fail.
If the entrepreneur were to strategically accept a mediocre investment offer, then that entrepreneur has set himself/herself apart from all those other entrepreneurs, and this accomplishment will be a permanent fixture on his or her CV.
If, however, the entrepreneur holds out for a better offer, and that better offer never comes, then that entrepreneur will have nothing to put on his or her CV other than a failed business.
For example, Aaron Levie, CEO and Co-founder of Box has only 3% of his own company he created; a very low percentage in terms of the industry. Yet in accepting this he has joined the exclusive club of only a handful of entrepreneurs to create a billion dollar company.
[EDITOR’S NOTE: Aaron Levie, Cofounder of the box, gives an excellent talk on Choosing Between B2B & B2C Business Models.]
00:24:51 What counts isn’t your first entreprise, even though it is your baby; what matters is:
- your long-term reputation as an successful entrepreneur
- the lessons you learned from your previous ventures
- the revenue generated by your previous successful ventures that can be injected into your next project(s)
- your ability to attract investors in your future project(s).
[EDITOR’S NOTE: In his lecture A Checklist Of Counter-Intuitive Startup Rules, and his interview How Angel Investors Judge Startup Founders, Paul Graham of Y-Combinator makes a list of other personality traits and characterists of successful entrepreneurs, noting specificially that he looks for entrepreneurs who already have a few successful ventures on their entrepreneural CV.]
00:32:10 Many entrepreneurs are petrified of their initial success because they think “If I lose this, I lose everything!” This causes them to not spend the money they raise, and not take the risks they should take, for fear of losing everything.
This, ironically, is also why entrepreneurs are the most dangerous because they have absolutely nothing to lose, and so they come up with crazy ideas and solutions to problems: their business idea doesn’t take off? They didn’t have too much invested in it yet – he/she is pretty much already bankrupt.
But one day, if you don’t manage your entrepreneur CV correctly, you may have “everything to lose.”
The French entrepreneur ecosystem versus the US entrepreneur ecosystem
00:38:13 In the United States, the system is set up so that entrepreneurs get rich before their business becomes successful, whereas in France the idea is that the entrepreneur must suffer and work for next to nothing until his/her business becomes successful, and then the entrepreneur becomes rich.
The problem with this French model is that entrepreneurs working for so long under such stress are prone to fear and making errors in judgment and spending, errors that can increase the failure rate of an otherwise successful business idea. This is also why once the entrepreneur does come into money, he or she is so petrified of taking risk and spending the money he or she worked so hard to get for fear of ‘losing everything.’
In the US system, on the contrary, the entrepreneur begins with the necessary money he or she needs to successfully make a living and be able to focus all his or her energy on making the company successful without the fear of running out of money.
The entrepreneural ecosystem in Silicon Valley is so efficient that in the last 10 years (2005-2015ish) it has produced 170,000 entrepreneur millionaires. Include employees, and that number raises to @700,000 millionaires.
00:42:00 To put all this together:
- Determine whether you are optimizing for your startup and/or optimizing for your entrepreneur CV
- Set clear and transparent goals, pay and bonus scales, time frames and definitions of success at the beginning of your startup venture
- Once you’ve reached your goal, celebrate your accomplishment and collect your reward you deserve for your hard work
00:44:00 As an entrepreneur, it’s your responsibility to be clear, transparent, and fair with the employees you hire who will help you build your business into a successful one, even with those employees who don’t know how to negotiate. The idea of paying it forward, and not burning your bridges or making enemies, is important. Once word gets out that this is how you treat people and do business, nobody will want to do business with you.
[EDITOR’S NOTE: For more information on attracting and hiring the right people, watch the lectures:
- Identifying & Developing Key Employees
- How To Keep Quality Employees (Part 1 of 2)
- How To Keep Quality Employees (Part 2 of 2)
- Surviving During Changes In Management
- How To Create A Successful, Long-Term Company Culture]
00:51:22 Money is a hard drug. Once you’re addicted, it’s very hard to get off of. And money doesn’t make you happy; living the life you want to is what makes you happy. Money should be viewed as a tool for living the life you want.
00:52:28 There are plenty of startups that exist, and are successful, that shouldn’t be. For example, many people have found themselves in a romantic relationship where one thing about the person is great, but then many other things are horrible.
The problem is at least you have a relationship that ‘works,’ you cannot work on finding a better suited partner or relationship while you’re in your current relationship, and trying to find a better relationship is just too much work. Eventually, you would prefer to be single than in bad company. This is the same idea with startups.
If you, as an entrepreneur, find yourself running a business that is making ‘enough’ money to keep running it, but you are miserable and not capable of pursuing other, better projects you enjoy, then you’re going to have to make the difficult choice of choosing between the money you’re making or walking away from that business.