Hillel Cooperman: Over two years ago, two friends and I left good-paying, secure jobs at a big company to start our own business. Typically, when people create new startups they have “the idea."
I’m sorry to say that we didn’t have one idea. We had dozens. All seemed like they’d be fun to work on. All seemed like they'd result in lovely pieces of software.
However, we had no clue which one (or ones) would work as a business. We did know that the only way to find out was to test our ideas and see what happened.
Here's the truth: We have no idea how to pick a winning business. In fact, I’ll claim that nobody can reliably pick a winner.
Even those folks who’ve hit it big in the tech startup lottery often have follow-up efforts (or investments) that have yielded results that are not quite as impressive (and often downright ugly). And it gets worse.
Not only can nobody reliably pick a winner, but it appears that even the best of us don’t have the ability to raise our batting averages.
Humans -- especially optimistic entrepreneurial ones -- want to believe in their own ability to improve. This is a good thing.
But it may not always be possible.
BEETHOVEN'S HITS AND MISSES
Netscape founder Marc Andreessen once blogged about a study by Dean Simonton from UC Davis about Beethoven’s “hits” and “misses” during his career.
Apparently, the time when Beethoven had the most number of hits was also the time period he had the most number of misses. As Andreessen says in the post: “...If Beethoven couldn't increase his batting average over time, what makes you think you can?”
Well, I don’t think I can.
Depressed yet? You shouldn’t be.
Knowing that nobody can reliably pick a winner, and that even those who have picked a winner once before can probably only do it every so often, is liberating information.
It doesn’t mean you shouldn’t try and increase your odds by placing your bets carefully. And it doesn’t mean that you can do anything and eventually get a hit.
But it does mean this: Success has a lot more to do with the number of times you try than most people would like to admit.
And that means, you are free to focus on things that are in your control: your number of "at bats."
TO VC OR NOT TO VC?
The single biggest enemy of an indeterminate amount of time needed for success is a deadline. And nothing gives you a deadline like taking money from venture capitalists who need a liquidity event within a specific timeframe.
I understand why most investors have deadlines. They’re running a business where they eventually have to show a return.
But you, the entrepreneur, may not be ready to close up shop according to the investors' deadlines.
You may have a 1 in 7 batting average and only be on try number six when your investors decide enough is enough. What you really need is an infinite amount of runway.
You know you’ll eventually get the plane off the ground. And as hard as that may be to do, it can get near impossible if you start out on a short runway with a cliff at its end.
Bootstrapping your business means designing the business so that you generate revenue – self-sustaining revenue – as close to day one as possible. And it turns out that this is neither easy nor impossible. It’s just work.
Much like humans will always prioritize breathing over every other requirement in Maslow’s hierarchy of needs, the bootstrapped business will always prioritize enough revenue to continue operating over everything else.
Even if it means taking baby steps towards the big idea. Even if it means taking a detour on the way to the eventual dream.
And while I understand the appeal of eliminating the “distraction” of getting revenue in those early days when you’re trying to develop your first offering, it turns out, that it’s never too early to start operating like a real business – one that earns more money than it spends, and gets money without having to give up equity to get it.
It turns out that “distraction” is really giving you discipline, focus, and patience.
And while we’re still working hard to find our “winning” idea, I can tell you with pride, that because we’ve been earning real revenue, there’s no deadline looming over the horizon by which we have to succeed or else.
And given that we have yet to determine what our batting average is, that’s quite a comfort.
Hillel Cooperman co-founded Jackson Fish Market with Jenny Lam and Walter Smith. He's co-hosting the Small and Special conference for small business owners and entrepreneurs on June 30th in Seattle. Opinions expressed in guest posts are those of their authors, and don't necessarily reflect the views of TechFlash or its staff.
READ MORE and COMMENT
No comments:
Post a Comment