You: The Intelligent Entrepreneur Professor Kirk Alter

Purdue University

Fast Management, Inc.

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Opening Thoughts

• What got you to where you are today will more than likely NOT get you to where you want to go tomorrow.

• Successful entrepreneurs – like you – often try to continuously RETURN to what got them successes in the past.

• Business history shows that that is not a pathway to success, but a road to mediocrity and ruin.

• That is not intelligent entrepreneurism!

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Some questions for you…

1. It’s time to make the commitment to reinvent yourself - are you ready?

2. Do you know the 10 rules of intelligent entrepreneurs?

3. Are you really the same fiery, feisty business owner you were when you started with world and market-changing ideas, or have you matured, relaxed…calmed down?

4. Let’s relight that fire and reinvent the intelligent entrepreneur in you!

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What got you where you are today?

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But I said it’s not going to get you where you want to be tomorrow?

• Why not?

• What’s different?

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Why the inclination to return to what “got you here?” • …history shows that that is not a pathway to success, but a road to

mediocrity and ruin.

• That is not intelligent entrepreneurism!

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What’s wrong with the “old way?”

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So What’s An Entrepreneur?

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Definition of Entrepreneur

• “The entrepreneur, by definition, shifts resources from areas of low productivity and yield to areas of higher productivity and yield. Of course, there is a risk the entrepreneur may not succeed”. (Drucker, ’85)

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Much of We Know About Entrepreneurship is Wrong • Most new businesses launch in unattractive, static fields

• Most startups offer no innovation or competitive advantage, cannot articulate growth plans, employ only the founders, and generate revenues of less than $100,000/year

• Only a third of new businesses last seven years

• The typical startup begins with less than $25,000 in capital, acquired from the founders savings (or run up on credit cards)

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HBS Definition

• Entrepreneurship is the pursuit of opportunity without regard to resources currently controlled. • It is not so much a set of skills as it is a process, a belief, and a

commitment.

• It is a mode of thinking and acting – a way of observing the world, of figuring out how to change it, and, perhaps most importantly of becoming the person who is capable of implementing that change.

• Skills are important, but skills are commodities • You can hire people to perform or advise you on finance, marketing,

human resources…

• Becoming a successful entrepreneur requires courage, character, and faith.

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So, what is an entrepreneur?

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An Entrepreneur?

• A little nuts…crazy…have stars in their eyes

• Tenacity, not compliant…they don’t care…want to do what they want to do…

• Hard to define…all different types

• Make something happen…make something out of nothing

• Relentless focus & energy…wants to affect change

• See a vision…not necessarily congruent

• Quest to push the envelope…don’t have a fear of failure

• Tremendous energy…have sense of what you want to achieve, and you go out and find a way to make it work and build it

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Okay…sounds good…but is it too Pollyannaish? • Let’s refine the topic…let’s talk about becoming an Intelligent

Entrepreneur.

• 10 Rules:

Entrepreneurship Can Be Learned - • You don’t‘ have to be a “born” entrepreneur, you become one when you:

1. Make the Commitment

2. Find a Problem, Then Solve It

3. Think Big, Think New, Think Again

4. You Can’t Do It Alone

5. You Must Do It Alone

6. Manage Risk

7. Learn to Lead

8. Learn to Sell

9. Persist, Persevere, Prevail

10. Play the Game for Life

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1. Make the Commitment

• Decide, learn, become

• Before you develop the business plan, recruit your team, raise money, learn to lead, or build your venture…you must make a conscious and personal commitment to becoming a successful entrepreneur.

• Can you make the commitment?

• What other obligations will compete for time and resources?

• What kind of support systems do you have?

• What is the opportunity cost?

• What is your record of achievement, creation, and reinvention?

• What is your tolerance for risk?

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Where Will You Find Your Best Idea? • For the intelligent entrepreneur…

• Opportunity is personal, not universal

• It grows out of your talents, experiences, interests –

•and the problems you’re uniquely positioned to perceive in the world. al

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2. Find a Big Problem, Then Solve It • What’s Your Problem?

• As you consider your new venture, here’s the question you want to ask yourself: who cares?

• A tough, rude question that you should be asking yourself over and over.

• If you can’t think of good answers…you probably haven’t come up with the right idea yet.

• If you go ahead and start anyway, you’re in for a world of heartache.

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The Lure of a Better Mousetrap • Focusing first on the solution rather than the problem that

needs to be solved is a recipe for failure.

• You may know the technology, but often there is no compelling reason for the customer to buy.

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Do You Have to Be Young to Be an Entrepreneur? • On average people between the ages of 45-54 tend to

perform better than those founded by people less than 35 years old.

• Scott Shane – The Illusions of Entrepreneurship

• http://www.amazon.com/Illusions-Entrepreneurship-Costly-Entrepreneurs-Investors/dp/0300158564

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Pleasure vs. Pain

• Making sure you are solving a real customer problem is something that differentiates entrepreneurs.

• There are different kinds of problems. The real dividing line is simple: • Does the problem you’ve

identified relate to the promotion of pleasure, or to the prevention or termination of pain?

• Locate your chosen problem on Maslow’s hierarchy of needs. • Pain business are those that solve a

significant problem and people will rarely hesitate to pay money to solve that problem.

• Pleasure businesses solve less urgent problems….the success rate is lower.

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3. Think Big, Think New, Think Again • Think Big

• The scope of what many of us would call success is dwarfed by what high-percentage entrepreneurs consider success.

• It’s not innate…you have to learn to think big.

• You have to get close enough to see the wizard.

• Surround yourself by people who aim very high.

• Carefully choose which mountain you’re going to climb…you don’t want to realize you climbed the wrong one.

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Think New

• Thinking new is what gives the intelligent entrepreneur a shot at slaying the dominant, entrenched competition.

• Innovation is about seeing new problems and discovering new solutions.

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Think Again

• Almost no one finds the right innovative solution to a problem the first time.

• Often before you succeed you have to revamp and redo, again and again.

• Transform bad ideas.

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4. You Can’t Do It Alone

• You have to surround yourself with the right people.

• Success requires a team…

• The Big Idea Person

• The Get Stuff Done Person

• What makes a successful company?

• Entrepreneurs who are able to hire other outstanding people.

• 50-75% of the success of the company is the caliber of the people.

• The #1 of 18 mistakes that kill startups…Single Founder

• Paul Graham of YCombinator

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So how do you build the team? • The number one rule is to be passionate about something.

Your passion is your best means of meeting people. People are drawn to the excitement of somebody who is really alive, really on fire about something.

• Specific ways to build the team:

• Use your existing networks

• Decide where you want to work

• Use technology

• Don’t waste time building useless networks

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5. You Must Do It Alone

• It’s All About You, Isn’t It?

• Kinda, yes. You’re the one who will come up with the idea, recruit the team, and reap the most substantial rewards.

• Alone In a Room

• You must have a strong sense of your own opinions.

• Being an entrepreneur is about saying, I know this doesn’t exist. This segment isn’t being addressed. But I can go do it.

• Entrepreneurial Psychology

• The importance of confidence, persistence, and the ability to go it alone are borne out by the research.

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How Do You Develop Healthy Confidence? • Get to know

other successful entrepreneurs.

• Inventory you own successes.

• Read about great entrepreneurs and their successes.

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6. Manage Risk

• DROOM – Don’t run out of money!

• Raise it before you need it, focus relentlessly on growing your revenue while improving your bottom line.

• Think about value…

• Take an inventory of what you bring to the table and value your assets accordingly.

• Start with your idea – that’s worth something.

• Your time is worth something, so is your passion, your experience and your contacts.

• Take inventory of your “scarce assets”:

• Do you have a solid financial background?

• Think about the formal organization of your company

• Have a Plan B

• Liquidity is your friend

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7. Learn to Lead

• “Leadership is getting someone to do what they don’t want to do, to achieve what they want to achieve.”

• Coach Tom Landry

• Learning to lead – and learning to sell – are about making promises and then dong everything you can to keep them.

• The language is the same for both – integrity, clarity, enthusiasm, finding the right people and giving them the power to make decisions even while shepherding them toward a particular goal.

• Most entrepreneurs are the idea people. But you must learn to manage the company, lead the people, and then bring it to a successful outcome – when you’ve done that, you’ve developed some essential skills that make it possible for you to be a capable CEO.

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How Do You Learn to Lead?

• Ask yourself the following questions:

• How well do you communicate? • Can you get your point across clearly?

• Are you a good listener, even when it’s not what you want to hear?

• Do you make a conscious effort to deal with people openly and honestly?

• How clear is your vision? • Can you point to a destination on the horizon and explain to those who

work for you why it’s important to sail toward and ultimately reach that destination?

• Can you put ego aside? • Basic Test: Are you a Big Idea Guy or a Get Stuff Done Guy? (Okay, I know

you think you’re both) • Are you willing to step aside and delegate?

• When evidence of your weakness in your own management style becomes blindingly apparent, can you admit the truth and then do something about it?

• What do you truly want to do? • Do you want to start or run? Do you want to be rich or be King?

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8. Learn to Sell

• As soon as you decide to become an entrepreneur, you became a salesperson. Even before you’ve decided which problem you’re going to solve – and thus which business you’re going to launch – you’ve got to sell yourself as someone who can innovate, lead and execute.

• If you can’t or won’t do that your venture will never get off the ground.

• So get used to it: sell today, sell tomorrow, sell all the damn time.

• First and last you’re an entrepreneur. But in between you’re all about selling.

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9. Persist, persevere, prevail

• It would be great if you could take the luck out of entrepreneurship…but you really can’t.

• Over time, with the benefit of experience, some of us can improve our predictive abilities and make smarter bets about what’s going to happen.

• But there will always be luck, both good and bad.

• The key is persisting long enough to take advantage of the good fortune that does come your way.

• The data supports this. The longer a business endures, the better its chances of survival over the long term.

• A company making it to its 2nd anniversary has better odds of lasting for ten or more years than a company that is still in its 1st year.

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How Can You Improve Your Luck? • Keep a record of what you do.

• Think about what you’ve done well and poorly…keep a journal.

• Be a student of business.

• Constantly be reading and watching sources on management, leadership, finance, markets, technology, social trends, and other business issues.

• Go to the well.

• Browse websites of schools and organizations such as HBS, Stanford, Babson.

• Use your mentors.

• Use MOOCs • https://class.coursera.org/operations-2012-001/

• Udacity, KhanAcademy, Coursera, Udemy, Codecademy, Duolingo, Google Online Courses

• When you can’t move forward, move on.

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MOOCs

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10. Play the Game for Life

• “We need 100,000 people in 100,000 garages trying 100,000 things – in the hope that five of them break through.”

• Tom Freidman

• How do we define success?

• Is it money? • How about: The freedom and security provided by a high income or

significant windfall are much more important than the money itself?

• At the deepest level, what matters most is finding a true measure of fulfillment – one that leaves you feeling that you have used all your talents to accomplish something worthwhile, make a difference in people’s lives, and leave a legacy for those who follow.

• Entrepreneurship isn’t just about solving a problem, building a venture, managing risk, or making money. It’s about having a positive impact on the world, making the most of the gifts you’ve been given, and realizing your full potential as a human being.

• An intelligent entrepreneur, in short, plays this game for life.

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Success

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The Art of the Start

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