The qualities of a successful entrepreneur - Practical grip (2/11)
Translation of the second post of Mark Saster from the series about the quality of a successful entrepreneur ( here the translation of the first post ).
_________
This is part of my new series of posts on what makes an entrepreneur successful . Originally, I published them on the VentureHacks site, one of my favorite sites for entrepreneurs. If you have not been there, then you should go.
The series was started with a conversation about what I consider the most important quality: persistence .
')
2. Practical grip . So you are a stubborn person and never give up. Obviously, this is of little use if your startup idea is no good. I don’t think that to create good companies requires well-read people - often this only hinders the business. But you need to be smart, and I prefer those who have worldly, practical wisdom. There are people who just "cut the chip" - I’m looking for them. At the instigation level, they understand how their customers buy, and they know how to inspire them. The weaknesses of competitors they smell the sixth sense. They reveal opportunities that no one else has paid attention to, and create products that satisfy relevant needs.
With practical acumen, most good entrepreneurs prefer to get out of the office and talk to real customers, instead of hanging around their workplace all day, drawing wonderful slides in PowerPoint. And when they come to my office and give a presentation, it’s immediately clear that they know what they are talking about. You can literally hear the “voice of the client” when they talk about their concept.
I often tell people that I am not paying attention to those who were born in a shirt. I like people who are not too worried about social consequences, if they happen to do something that was not expected of them. For this reason, in my opinion, many immigrants and children of immigrants succeed in business. They are simply not allowed to play by the same rules as everyone else; in fact, I am not sure that they even know what these “rules” are. Therefore, among them there are more people with practical acumen than among those who observe the conventions.
If I wrote about the most important qualities of a venture capitalist (um!), Then the list would have included the ability to see patterns. I see the same things over and over again, and the ability to keep track of things and classify them is very important - it helps in quick analysis and training. Thinking out loud - I am sure that this quality is also important for entrepreneurs.
So, I wrote the entire series of posts for the week around Thanksgiving, but literally every day I wake up and see examples. Here are two stories from yesterday.
About social conventions. Two years ago I was in New York and called the younger brother of one of my wife’s best friends, with whom they studied at the Wharton Business School. He worked in a startup in a very popular area at the time. Yesterday I met him again, for the first time in two years. He said that when the markets went down, the company lost its former popularity. They realized that they were selling a bunch of cool products, but none of them had enough economic value. They squandered a lot of money, because they attracted a lot of investors and recruited a lot of employees. A new, experienced CEO (CEO) arrived and cleaned up. He helped to identify one key product that had the most value (as confirmed by customer reviews) and restructured the company around it.
He asked each sales manager and development manager to call customers and say that he would have to change the contractual terms. He said: “Call your customers, tell them about the situation and let them yell for 5 minutes. Keep your phone away from your ears. After the indignation subsides, and you do not shout back, they will ask: "Okay, what should we do now?"
I liked this story because it is very real. Only a true leader-entrepreneur would have taken such a step and prompted his team to make these calls. I think the first call was humiliating for each employee. During the second call, they were shy. But by the fifth or sixth call was already fun. It looks like a game. You did what was obviously not expected of you, knowing that there was nowhere to go. And the world has not collapsed. As I always say: “to be an entrepreneur - to have steadfastness”.
Once I was associated with a company (it did not belong to me and it did not have my investments), which had a wonderful product, but which squandered a huge amount of money. The headmistress was terribly smart and charming, but she was not (and now is not) an entrepreneur. And I contacted this company according to the principle “no good deed goes unpunished.” The headmistress was born in a shirt, studied in the right schools and worked in the right strategic consulting firms.
We were approaching a recession, but this was not yet completely clear. I knew that our sales were no good, and the costs were gigantic. I said LOUDLY on the board of directors that it was necessary to cut costs. Money simply burned. The headmistress said that it was impossible to cut those. support (where there were 7 people for a dozen customers, and sales did not reach a million dollars), because all these people were required to comply with the conditions set out in customer contracts. It was impossible to reduce the developers (23 people!), Because there were obligations to a large client who was going to start mass distribution of the product throughout the country. We could not cut marketing because it was necessary for sales. “Okay, then let's renew the contract with our client!”. I was told that this is impossible or, at least, unwise.
When I was engaged in BuildOnline (this is my first company), and things were extremely bad, we called all the clients and said: “We have signed a contract with you. But the reality is that the market has changed, and we need to adapt to these changes. According to the conditions we are obliged to implement certain functionality in the product. But we, unfortunately, can not do this. Do you like our product and our services? Yes? Excellent thank you. Listen, if you like what we do, you probably want to be a good supplier / partner. We need to have a profit, but under the signed contract it will not. Therefore, we will either have to cut down the developers (and not release the product, as promised), or to bill you for a slightly higher amount for the services or for the functionality you want in order to somehow make ends meet. Please tell me what suits you best of these two options. ” We have not lost a single customer. In fact, we even strengthened the relationship. I had no choice, and, as they say, “need is the mother of all inventions.”
The problem of the company where the money was burned was that the headmistress considered herself superior to making these calls to customers or making difficult layoffs. That year we did not reach the target sales volume by 66%, next year - by 45% and did not really reduce the costs. The company was turning money into ashes. And I asked to leave the board of directors. Well, or they asked me. In fact, there was a consensus. When the board of directors sits at the dinner table and eats with silver appliances, who wants to endure the old and clumsy me with uncomfortable questions.
About practical acumen and work with clients. Yesterday I drank coffee with another startup founder. Wonderful guy and really smart. His startup consists of three people; he is a co-founder, but not a director. The director is a “man of ideas.” The guy told me about the product they are developing. I noticed that the product implements an interesting function, but that customers will not use it, and they will not pay either. I explained my logic to him: “Well, if a client installs your program on his website, he will have to hire a whole bunch of people to manage the project. If your program does not increase its income, how will it cover additional costs - especially with the current market conditions? ”
I gave more examples. I said that he should visit clients and understand what problems they currently have in terms of attracting and retaining clients on websites. And then arrange a brainstorming together with clients to solve these problems. We need to find out if they want to pay for the fact that he will help increase their income or reduce costs. He admitted that his team had developed the product, because the idea seemed good to them, but testing on live clients had not yet been carried out. My practical grip prompted me that the product was unlikely to be a success.
I told him not to become disheartened. This is the reality - more than 80% of startups are developing products in a vacuum, without even thinking to check their business value for customers or find out their needs. Of course, they spoke to one or two - but did not do it methodically. If you do not understand how your product brings value to your customers, then it is unlikely that they will do it - unless you have experience in this field and are familiar with the products available in your own skin.
Why do people behave this way, ignoring the obvious? Because it is much easier to collect a bunch of smart guys, so that they gather and make interface layouts every night, borrow ideas and solutions from products already on the market and make a product, and then show the results to friends than quickly establish connections with potential customers who You seem to be disturbed by your calls. I explained to him that middle managers in large companies often want to feel involved in startups, and are much more accessible than it might seem. You just need to get out of your comfort zone.
Did you have a similar experience when you created your companies?
_________
Other translations of this series:
1. Perseverance .
3. Ability to change course .
_________
This is part of my new series of posts on what makes an entrepreneur successful . Originally, I published them on the VentureHacks site, one of my favorite sites for entrepreneurs. If you have not been there, then you should go.
The series was started with a conversation about what I consider the most important quality: persistence .
')
2. Practical grip . So you are a stubborn person and never give up. Obviously, this is of little use if your startup idea is no good. I don’t think that to create good companies requires well-read people - often this only hinders the business. But you need to be smart, and I prefer those who have worldly, practical wisdom. There are people who just "cut the chip" - I’m looking for them. At the instigation level, they understand how their customers buy, and they know how to inspire them. The weaknesses of competitors they smell the sixth sense. They reveal opportunities that no one else has paid attention to, and create products that satisfy relevant needs.
With practical acumen, most good entrepreneurs prefer to get out of the office and talk to real customers, instead of hanging around their workplace all day, drawing wonderful slides in PowerPoint. And when they come to my office and give a presentation, it’s immediately clear that they know what they are talking about. You can literally hear the “voice of the client” when they talk about their concept.
I often tell people that I am not paying attention to those who were born in a shirt. I like people who are not too worried about social consequences, if they happen to do something that was not expected of them. For this reason, in my opinion, many immigrants and children of immigrants succeed in business. They are simply not allowed to play by the same rules as everyone else; in fact, I am not sure that they even know what these “rules” are. Therefore, among them there are more people with practical acumen than among those who observe the conventions.
If I wrote about the most important qualities of a venture capitalist (um!), Then the list would have included the ability to see patterns. I see the same things over and over again, and the ability to keep track of things and classify them is very important - it helps in quick analysis and training. Thinking out loud - I am sure that this quality is also important for entrepreneurs.
So, I wrote the entire series of posts for the week around Thanksgiving, but literally every day I wake up and see examples. Here are two stories from yesterday.
About social conventions. Two years ago I was in New York and called the younger brother of one of my wife’s best friends, with whom they studied at the Wharton Business School. He worked in a startup in a very popular area at the time. Yesterday I met him again, for the first time in two years. He said that when the markets went down, the company lost its former popularity. They realized that they were selling a bunch of cool products, but none of them had enough economic value. They squandered a lot of money, because they attracted a lot of investors and recruited a lot of employees. A new, experienced CEO (CEO) arrived and cleaned up. He helped to identify one key product that had the most value (as confirmed by customer reviews) and restructured the company around it.
He asked each sales manager and development manager to call customers and say that he would have to change the contractual terms. He said: “Call your customers, tell them about the situation and let them yell for 5 minutes. Keep your phone away from your ears. After the indignation subsides, and you do not shout back, they will ask: "Okay, what should we do now?"
I liked this story because it is very real. Only a true leader-entrepreneur would have taken such a step and prompted his team to make these calls. I think the first call was humiliating for each employee. During the second call, they were shy. But by the fifth or sixth call was already fun. It looks like a game. You did what was obviously not expected of you, knowing that there was nowhere to go. And the world has not collapsed. As I always say: “to be an entrepreneur - to have steadfastness”.
Once I was associated with a company (it did not belong to me and it did not have my investments), which had a wonderful product, but which squandered a huge amount of money. The headmistress was terribly smart and charming, but she was not (and now is not) an entrepreneur. And I contacted this company according to the principle “no good deed goes unpunished.” The headmistress was born in a shirt, studied in the right schools and worked in the right strategic consulting firms.
We were approaching a recession, but this was not yet completely clear. I knew that our sales were no good, and the costs were gigantic. I said LOUDLY on the board of directors that it was necessary to cut costs. Money simply burned. The headmistress said that it was impossible to cut those. support (where there were 7 people for a dozen customers, and sales did not reach a million dollars), because all these people were required to comply with the conditions set out in customer contracts. It was impossible to reduce the developers (23 people!), Because there were obligations to a large client who was going to start mass distribution of the product throughout the country. We could not cut marketing because it was necessary for sales. “Okay, then let's renew the contract with our client!”. I was told that this is impossible or, at least, unwise.
When I was engaged in BuildOnline (this is my first company), and things were extremely bad, we called all the clients and said: “We have signed a contract with you. But the reality is that the market has changed, and we need to adapt to these changes. According to the conditions we are obliged to implement certain functionality in the product. But we, unfortunately, can not do this. Do you like our product and our services? Yes? Excellent thank you. Listen, if you like what we do, you probably want to be a good supplier / partner. We need to have a profit, but under the signed contract it will not. Therefore, we will either have to cut down the developers (and not release the product, as promised), or to bill you for a slightly higher amount for the services or for the functionality you want in order to somehow make ends meet. Please tell me what suits you best of these two options. ” We have not lost a single customer. In fact, we even strengthened the relationship. I had no choice, and, as they say, “need is the mother of all inventions.”
The problem of the company where the money was burned was that the headmistress considered herself superior to making these calls to customers or making difficult layoffs. That year we did not reach the target sales volume by 66%, next year - by 45% and did not really reduce the costs. The company was turning money into ashes. And I asked to leave the board of directors. Well, or they asked me. In fact, there was a consensus. When the board of directors sits at the dinner table and eats with silver appliances, who wants to endure the old and clumsy me with uncomfortable questions.
About practical acumen and work with clients. Yesterday I drank coffee with another startup founder. Wonderful guy and really smart. His startup consists of three people; he is a co-founder, but not a director. The director is a “man of ideas.” The guy told me about the product they are developing. I noticed that the product implements an interesting function, but that customers will not use it, and they will not pay either. I explained my logic to him: “Well, if a client installs your program on his website, he will have to hire a whole bunch of people to manage the project. If your program does not increase its income, how will it cover additional costs - especially with the current market conditions? ”
I gave more examples. I said that he should visit clients and understand what problems they currently have in terms of attracting and retaining clients on websites. And then arrange a brainstorming together with clients to solve these problems. We need to find out if they want to pay for the fact that he will help increase their income or reduce costs. He admitted that his team had developed the product, because the idea seemed good to them, but testing on live clients had not yet been carried out. My practical grip prompted me that the product was unlikely to be a success.
I told him not to become disheartened. This is the reality - more than 80% of startups are developing products in a vacuum, without even thinking to check their business value for customers or find out their needs. Of course, they spoke to one or two - but did not do it methodically. If you do not understand how your product brings value to your customers, then it is unlikely that they will do it - unless you have experience in this field and are familiar with the products available in your own skin.
Why do people behave this way, ignoring the obvious? Because it is much easier to collect a bunch of smart guys, so that they gather and make interface layouts every night, borrow ideas and solutions from products already on the market and make a product, and then show the results to friends than quickly establish connections with potential customers who You seem to be disturbed by your calls. I explained to him that middle managers in large companies often want to feel involved in startups, and are much more accessible than it might seem. You just need to get out of your comfort zone.
Did you have a similar experience when you created your companies?
_________
Other translations of this series:
1. Perseverance .
3. Ability to change course .
Source: https://habr.com/ru/post/83191/
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