Are you ready to be the lead entrepreneur?
It is not easy to be the boss if you have never been one, and the mistakes you make early on can come back to haunt you. In fact, the first-time entrepreneur faces perhaps no challenge greater than learning how to be the boss. But there is more.
Conducting an internal self-assessment is the hardest thing for entrepreneurs to do, but if you do not do it, you will really get into trouble. Are you prepared to face an immediate tidal wave of responsibility? Does the opportunity fit with what you truly want to do? Are you really ready to quit your day job? And what makes you the right CEO to lead this venture now?
It is normally assumed that the founder, or lead entrepreneur, serves at the outset as the chief executive officer (CEO). It is the CEO’s job to build the venture team, and to provide the leadership, strategic vision, and motivation. Much like a project manager, the CEO first has to prepare a preliminary budget and schedule of activities and then assign the routine details necessary to get the venture moving ahead.
Then the tidal wave hits:
- motivating the venture team
- meeting with legal and structuring the venture
- acquiring adequate resources
- dealing with obstacles, roadblocks, and challenges
- making thousands of decisions and trade-offs among goals, cost, time, performance, and profitability
- and finally, negotiating the risk and fear of failure!
Become a “Talent Magnet” for Team Building
It is well understood that creating a high-growth potential venture without a team is extremely difficult. While the “lone-wolf” entrepreneur may make a living in a “lifestyle” business, skilled teams are a requirement for growth; it is a “team-builder” who creates a venture where substantial value and harvest options are created. And leaders with high emotional intelligence and competence in social skills are therefore more effective in building the “social capital” that is needed to operate high growth-potential ventures. In other words, the people with talent will seize the right opportunity.
The ultimate mission for the CEO is to find great people, for two reasons: First, great people, like domain experts, are the only unique differentiator among ventures today. The business world is a huge, flat landscape where everything can appear commoditized except for human thought, spirit, and execution intelligence.
The second reason is that people breed people, and like DNA, they breed in kind. In essence, “A-People” will hire “A-People,” and “B-People” will hire “C-People.” Avoid what we call the death spiral, when entrepreneurs make the mistake of recruiting and hiring B or C people in order to save money, and then do not trust their judgment and decision making. Instead, follow the advice of one successful entrepreneur who told us, “I was always be looking to hire someone better than I was.” So choose your co-founders carefully; you will be married to them for a while, and divorce is painful and expensive.
Sense for Quickly Establishing Team Basics
It is important that entrepreneurs do not settle for average players on their team. If they cannot have or afford the best, they should not compromise and start the death spiral; it is better to have a smaller team. It is more important to focus on building a “solid people process” and having the right people in the right job.
Entrepreneurs must be more than just general managers. They must be able to spot the need for change and convince others of this change. And they need to get potential team members, including advisors and directors, to accept the idea of being on a venture team and to feel comfortable working with people from other functional areas and disciplines.
Establishing these “team basics,” as Jon Katzenbach calls them, will “unleash real team capacity.” According to Katzenbach, team basics come from an integrated balance of discipline and individualism. He has found that great potential is unleashed when a small number of people with complementary skills, who are committed to a common purpose, like the business strategy, and who have a business plan for which they hold themselves mutually accountable, are matched “with a burning desire for team performance.”
Team Motivator, Team Leader
Success depends on the ability to think strategically and achieve results quickly.
As Jack Stack says, “the challenge for entrepreneurs is to get people to follow their big idea, whether it’s the investment community or the people inside the organization. When entrepreneurs are able to sell their ideas, they become leaders.”
The goal of leadership is to quickly inspire and motivate a venture team with a common vision and purpose and then guide them in converting this shared vision into reality.
Richard Siegelman, general partner at Kleiner Perkins, probes to find out how people got together and what motivates them as a group. He asks, “Is there a shared vision and culture?” According to Siegelman, “Some people may have strong technical dreams, and others may be completely different—a warning signal.”
John Hamm, a partner at Redpoint Ventures, believes that leaders who are able to scale their business quickly understand the importance of a focused, streamlined strategy. They learn to extract a handful of goals from a longer list and know how to focus their team accordingly.
Rebecca Smith, a judge with Ernst & Young’s Entrepreneur of the Year Awards program, explains: “You have to be more than a strategist. You have to be dynamic, because once you develop a strategy, you have to lead people to your conclusion.”
An entrepreneur keeping everyone motivated in the right direction needs this “able-to-leap-tall-buildings-in-a-single-bound” characteristic that ignites and fuels a team in its early formation stages. What some call superhuman talents, we call leadership capital. Leadership capital is the collective management resources that are committed for executing an organized business activity.
As Kim B. Clark, dean of the Harvard Business School states, “Part of what it means to be a leader is to identify the mountains people should climb—and this is no easy task because the mountains of true value are not well-climbed or thoroughly mapped. Climbing will inevitably entail innovating, using new tools, solving hard problems, and doing things differently. It is like what General George Patton once said, “A leader is one who can adapt principles to circumstances.”
Prepared to Be Alone at the Top
The corporate types need not apply for becoming entrepreneurs. First, entrepreneurs have their own unique way of looking at the world. It is this creative combination of insight and irrational behavior that makes entrepreneurs tick. Some entrepreneurs who previously worked at large corporations feel too comfortable with expensive furniture, office perks, large administrative staffs, and regular hours. And second, for CEOs leading a new business venture, there is “a pervading sense of loneliness” at the top, where the responsibility for everything that can and will happen resides. Entrepreneurs often lack colleagues with whom to share ideas and commiserate.
Few entrepreneurs expect that the emotional consequences will be other than positive. Entrepreneurs are genetically predisposed to be very optimistic. But there will be a lot of bad times, and then there may even be really bad times. In fact, as Bill Reichert, president of Garage Technology Ventures, advises entrepreneurs, “Plan for the worst, it’s the most likely outcome.”
Because, as Marc Andreessen, creator of Netscape, found out, “In the start-up world, you’re either a genius or an idiot.” One study found that even successful entrepreneurs feel isolated and estranged. Said one, “I feel alone and lonely. I have difficulty enjoying the fruits of my labor.”
As Fred Smith, founder of FedEx, once said, “The biggest risk that an entrepreneur has to face is internal. They have to decide that this is the thing that they want to do with their time and their life more than any other thing.”