Entrepreneurs who have had significant prior success often fail to achieve great things with their follow-on startups. I know this from firsthand experience, and I know this from my interactions with hundreds of startup entrepreneurs over the course of my 20 years as an entrepreneur and mentor.
Here I will explore some of the root causes of the entrepreneur’s version of the “sophomore slump,” and talk about things that successful entrepreneurs can do to maximize their chances for success in their second, third or fourth time around. Don’t start with an idea. Start with a wicked problem you really care about.
Don’t start with an idea. Start with a wicked problem you really care about.
Don’t get me wrong. Ideas do matter. Merely capable execution of a great idea beats extraordinary execution of a bad idea. Every time. But as much as we’ve been conditioned to think of new businesses in terms of a great idea, the starting point is almost always earlier. Startups that become great businesses begin with a problem or an opportunity. The “great idea” is always about connecting that problem or opportunity to a workable, marketable solution.
Beginning with a wicked problem isn’t really a novel idea. Entrepreneurs and inventors from Tesla and Edison to Elon Musk have been doing this since the beginning of time. During its heyday, AT&T’s Bell Labs was an “Idea Factory” devoted to delivering marketable solutions to wicked problems.
The exceptionally successful entrepreneur, investor and author Peter Thiel points out in his recent book Zero to One: Notes on Startups, or How to Build the Future, the lessons many of us learned after the “dot com crash” have resulted in a kind of incrementalism.
“Make incremental advances. Grand visions inflated the bubble, so they should not be indulged. Anyone who claims to be doing something great is suspect, and anyone who wants to change the world should be more humble. Small, incremental steps are the only safe path forward.”
Peter Thiel’s book, based on a course he taught at Stanford in 2012, is worth reading. It’s filled with insights that will be particularly valuable to entrepreneurs pursuing their next big thing. But he’s hardly the only one championing the notion that entrepreneurs should once again turn their attention to big, wicked problems. Steve Case argued, at this year’s Health Datapalooza (2014) that big problems and big opportunity are inextricably connected. He urged his audience to rise to the challenge. And, as TechCrunch reported recently, YCombinator’s recent demo day featured entrepreneurs that have focused on solutions to some of the world’s biggest problems. You can read, here, YCombinator’s call for “Startups We’d Like to Fund.”
Incidentally, it doesn’t really matter where the problem or opportunity comes from. Any source will do – individuals, corporations, nonprofits, friends, strangers. But it does matter that a solution to the problem could offer access to a substantial market that your company could own. Perhaps more important, you must care about the problem.
Treat your decision about your next big thing like the biggest investment decision you’ll make in the next ten years.
Actually, you need to do more than care. Much more. You need to be so passionate about this problem or opportunity that you’re willing to invest the next ten years of your life in creating the company that will provide the solution. This is not a small investment decision. Problems are a dime a dozen. And good ideas about how best to solve them are worth only a little bit more. But what value are you placing on the next ten years of your life? If you aren’t extremely passionate about this problem or opportunity, it is not for you.
What’s on the horizon? How far can you see into the future? Most of us have a pretty good sense about what’s going to happen in the next year or so, and some of us even have a pretty good sense about what technology will be able to deliver over the next five or ten years.
So try this. Imagine yourself 5 or 10 years into the future. What will you have done in the next 5 or 10 years that gives you the greatest sense of accomplishment? In other words, what sorts of things are really worth the investment of ten years of your life?
You’re very good at some things. You know what these are. You suck at some things too. You probably even know what most of these things are.
When thinking about their founding team, most successful entrepreneurs have learned to think in terms of their complement – the person or persons that serve as magnifiers and amplifiers of the entrepreneur’s vision, talents and abilities. These “complements” do a spectacular job, using skills and experience to deliver superior results in domains the entrepreneur desperately needs help with but can’t do alone.
You can apply similar logic to choosing your next big thing. Who are you? What do you love? What do you hate? What problem or opportunity do you care so much about that you’re willing to slog through almost any kind of difficulty – over the course of the next five to ten years – to make certain this happens?
Think about that problem or opportunity. What will it require of you? Personally. And what will it require that you know you cannot bring to the table? If you can see a clear path to obtaining these missing resources – talent, capital, intellectual property, distribution, etc. – the problem or opportunity belongs on the list of viable alternatives.
If, on the other hand, there is no clear path for securing what will surely be needed to make the solution to this problem successful, scratch this problem/opportunity off your list. It’s not a good fit for you.
Is this really the right opportunity for a startup?
One caveat. Make sure its the sort of problem/opportunity that can best be addressed by a startup. Sam Altman, President of YCombinator , makes this point at the beginning of a recent Stanford University video, “Lecture 1 – How to Start a Startup” that features Dustin Moskovitz.
Some problems and opportunities are better handled by existing companies. If you make the mistake of attacking these sorts of problems with your startup, you’ll discover soon enough that there are other, larger competitors that are perfectly happy to seize the opportunity you thought was yours alone. And reflect for a moment on this: it’s not enough that you can, as a startup, develop a marketable solution. To win over the long haul, you must have or develop a way to protect your solution from would-be competitors. These competitors may be startups themselves or they may be some of the largest, best financed companies in the world. If your market-based solution affords you no barrier to entry – some way to retain ownership of the majority of the market – your investment of money, talent and time will almost surely have been wasted.
Find a way to connect in a significant way with entrepreneurs that aren’t afraid to call bullshit on your brilliant ideas and plans.
You are brilliant. After the sale of your last startup, nearly everyone knows this. (You may harbor a sneaking suspicion that your “genius” is not without limits, but you’re not going to argue.) Your Midas moments may not be sufficiently consistent to turn everything you touch into gold, but you’re surrounded by more 24 carat experiences than most people on the planet.
This is where many successful entrepreneurs begin their journey down the path to mediocrity. Instead of “next big thing,” they find they’ve become mired in the “sophomore slump.” And this happens so often, so regularly, that it’s painful to witness.
Those first steps in the wrong direction happen, in part, because too many people around you are calling your ideas “brilliant!” You start to grow all too comfortable with the adulation. It feels good. But it can be deadly.
The people you want to surround yourself with are instead those you most respect. The man or woman willing to say “The Emperor needs some underpants.” These people are very likely entrepreneurs themselves. Or investors. They’ve been around the block once or twice. And they aren’t afraid to tell it like it is. You need them. Especially if they hate your brilliant idea.
In Part 2, I will talk about what to do after you have landed on your idea for your next big thing – from getting your proposed solution to the problem validated by the right people to just getting honest with yourself about what may not work. Take it from someone who has waited too long: be ruthless, if a particular solution or business model won’t work, kill it. Fast.