Entrepreneurship becomes a lot harder when you’re trying to follow obsolete rules.
Being an entrepreneur is hard. That is pretty much a universal truth. But it becomes exponentially harder when you operate under false assumptions, outdated conventions, and myths that are no longer true.
I graduated with my MBA in 1997 and almost immediately got involved in startups and venture capital. For the last 21 years, I’ve worked with, mentored, invested in, and been pitched by thousands of entrepreneurs. It pains me to see them undermine their potential by relying on outdated assumptions, and ultimately fail because they believed a lie.
So without further ado, here are seven things entrepreneurs tell themselves, all of which I “learned” in business school, that simply aren’t true today.
1. Entrepreneurship is a black box, unknowable and mysterious.
When I was in school and wanted to study entrepreneurship, I was literally handed biographies of Lee Iacocca and Benjamin Franklin. Because entrepreneurship was a nascent field of academia, the only way to teach best practices was through case study. Then along came Steve Blank, Bill Aulet, and Eric Reis, and they showed that entrepreneurship is neither a black art nor an unknowable science. These luminaries used hundreds of dot-com startups to map the path to startup success. That path is generally referred to as the Lean Startup method.
2. You need money to start a business.
When I was in school, investors were always a founder’s first stop. Without a commitment of $2 million, most startups in 1997 wouldn’t get started. Today, the cost to launch has dropped from $2 million to below $2,000. So don’t start with investors–start with your own money. Build a prototype, get that prototype to early adopters, and use what you learn to grow the business. Bring in money from friends and family if you need to. Crowdsource if you need to. Venture capital today is focused on taking businesses to scale, and VCs only invest millions after you’ve reached product market fit.
3. You must write a business plan.
Business plans are dead. Business planning is alive and well. Two decades ago, I was taught to plan everything in advance, write a perfect business plan, and only then go out into the world. This couldn’t be further from the truth. The Lean Startup movement, which entered our zeitgeist around 2008, teaches that to be successful, entrepreneurs must “get out of the building” and engage in customer discovery.
Today, you must take your idea to market, and develop it through iteration and customer interaction. Startup founders who obsess over a detailed business plan prior to launch are missing the point. The best written business plans don’t survive first contact with users. Startups are living things; business plans are static. Today, it is better to launch early and iterate often. A lean canvas beats a business plan.
4. Keep your ideas to yourself.
Speaking of ideas, I was taught never to share my startup idea for fear it would be stolen. While there are a handful of such idea-theft incidents, there are literally tens of thousands of startups that benefit from early customer interaction. Today, having a big idea is only the start; the focus is on the execution. You have to show traction, and that requires exposing your opportunity to the feedback of others.
5. It is all about who you know.
In business school, a lot of emphasis was placed on networking. We were told that to get ahead we needed to have a network to leverage. We simply couldn’t succeed without some gatekeeper inviting us in.
Today, networks are still important, but they’re not the most important thing. Access to early adopters lets you generate insights and revenue and show your solution satisfies an unmet market need–all without “knowing” someone. Further, sites like Angellist and LinkedIn provide viable channels to those outside your direct network.
6. Fake it until you make it.
In school, I was told to pretend I knew what I was doing. The thinking was that being honest in my naivete would lead to negative outcomes. But faking is dishonest and stressful. By all means, project confidence in your abilities. But don’t stretch the truth–it will only hurt you in the long run.
I always tell the startup founders I mentor that they can fake it when it comes to confidence, but never when it comes to knowledge. The former is necessary (or no one will try your solution); the latter is unsustainable.
7. Investors always come first.
As mentioned above, entrepreneurs should chase customers, not investors. Investors are only interested once you have shown your solution works–once you have shown the dogs will eat the dog food, and you have a viable, scalable business.