We’ve previously mentioned Ask The Wizard, the biz advice blog of FeedBurner founder Dick Costolo, but it’s worth another mention for its wise and winning posts. Aspiring entrepreneurs should listen up.
Too Many Companies? explains why Dick feels there’s a 90% chance the initial business model is wrong. The solution? You’ve just got to start peddling and see what happens.
On a psychological level, I think a lot of people confuse fear of failure with not having enough confidence in the ultimate success of their idea. They thus conclude that they aren’t confident enough in their idea or their strategy because it seems to have holes and flaws for which they don’t have answers. This is a tremendous mistake. While I won’t pretend to speak for the entrepreneurs I mentioned above, I bet if you asked them if they were confident on day 1 that they had a winner with each of their previous successes, they would look at you sideways and say “of course not”. Speaking for myself, I can say that my cofounders and I try to find a market opportunity that seems like it will need to be addressed and for which we think we have some angle and then we just pull out shovels and start digging and figure other things out as we go.
Personally, I know going into any new company that there is a 90% chance we have the business model wrong on day 1. I also know that I have a historically poor track record for understanding what will and won’t attract customers or defeat competition (I didn’t get Twitter when Obvious Corp first launched it without an “e” in the name, I thought eBay would be out of business in six months after Amazon launched auctions, and I was certain Netscape would crush Microsoft in the browser wars because Netscape was more nimble). But the opposite of ‘fear of failure’ isn’t confidence. The opposite of ‘fear of failure’ is just not bothering to think about failure (BIG difference between this and thinking about risk profile for your idea/company)...
The key is to just get on the bike, and the key to getting on the bike is not the confidence in knowing you will be successful if you do x,y,z. The key to getting on the bike is to stop thinking about “there are a bunch of reasons i might fall off” and just hop on and peddle the damned thing. You can pick up a map, a tire pump, and better footwear along the way.
In You Always Start the Last Company, he talks about the need to have a “revenue animal” on your team, how to control costs, and why you shouldn’t obsess about competitors.
Lesson One: At some point in the company’s first two years, the executive team needs to become passionate about revenue. This may seem obvious to the point of inviting ridicule, but there’s a difference between “concerned about revenue” and “passionate about revenue”. In the first year or two of the company’s life, the passion has to be almost single-minded around the product or service. There is then a transition in which the management team needs to also become passionate about the customer, and then finally also passionate about revenue. Some people are revenue animals and some aren’t. If you’re founding a company and you’re not a revenue animal, then you need to understand that you should bring somebody in to run the company who is a revenue animal at some point…
Lesson Two: It is easier to not start spending one new dollar in expenses this month than it is to stop spending one existing dollar of expenses next month. This is true for travel, infrastructure, marketing, development tools, web services like salesforce.com, on and on. If you engender a strong sense of capital efficiency in the company, it’s much easier to KEEP spending under control than it is to GET spending under control.
Lesson Three: Goals, not competitors. When you focus on your company’s goals, you are focusing on something you have control over, you make strong decisions, and everybody knows what success looks like. When you obsess about your competitors, you are focusing on something over which you don’t have control, you make bad decisions, and nobody is sure what success looks like, since the company’s actions are in reaction to a third party….The best way to compete in the market is to focus on those things you can strive toward independent of what anybody else does.