Phantom CEO - Entrepreneurship Debunked

Entrepreneurship Debunked: You’re All Wrong

There’s so much shit floating around the inter webs about the “mystery” of entrepreneurship and specifically the entrepreneur. It’s the only thing that makes me angrier than working with bureaucrats. Some of the articles that I’ve read tend to lionize entrepreneurs as rock stars and treat them like they are some rare animal species that contains some “secret” that mere mortals weren’t born with. Because we live in a “now” society, we want the latest book that’s cracked the secret code of being an entrepreneur. 

The general thought process around entrepreneurship tends to be the following:

1.     Read article about some sexy Web 2.0/iPhone app company exploding with 300% growth and a founder who gave him/herself the title of “CEO”. By the way, it’s not hard to get 300% growth; all you need to do is move from 1 customer to 4 customers.

2.     Create some (largely untrue) story about how self-titled CEO is now an overnight millionaire because he/she got interviewed in an article. As an aside, I was lucky enough to get my launch announcement on the local news. I am not a millionaire (yet), and I received absolutely no new business for four days after the TV spot aired.

3.     Get sad about current state of life. Wonder what the difference between start up CEOs and normal people  is. I once heard a joke that the only difference between being unemployed and being an entrepreneur is that entrepreneurs print up business cards that say “CEO” on them.

4.     Go to _________ (insert name of book retailer here). Buy latest get-rich-quick book and support the monopolized publishing industry and jackass authors who know how to write books but don’t have any real company-building experience.

5.     Read book, get signed up in latest wealth creation fad: Robert Kyosaki, summer security sales, multi-level Marketing, flipping houses (my personal favorite).

6.     Use buzzwords and poorly referenced Ayn Rand quotes excessively, charge $5000 wardrobe (mainly consisting of True Religion jeans and bedazzled Ed Hardy t-shirts) to credit card to demonstrate the success “you’re about to have.”

7.     Fail.

8.     Blame the economy.

9.     Repeat.

The point of all that is that there is a large disconnect between the perceptions about entrepreneurs and the realities of being an entrepreneur. So let me start with shedding some light on three common misconceptions:

1.     The majority of entrepreneurs are NOT overnight millionaires. We have to work years at sub-market wages (read: for free) trying to develop the product, validate market assumption, mitigate against risks and then actually sell the stuff.

2.     Entrepreneurs rarely succeed in their first venture. As an entrepreneur, you are making decisions in the most imperfect conditions. Consequently, you make a lot of mistakes to gather valuable information. With limited resources to waste, a lot of new ventures fail before they even get cash-flow positive. There’s a reason that seven out of ten startups fail.

3.     Starting a company is not sexy. Remember the joke from earlier in the post? It’s true. If you quit your job, you are essentially unemployed until you can sell something. There’s a lot of work, you have to live on a Spartan budget and plow as much money as you can into your product to get it ready to ship, you’ll have zero social life, and there’s a lot more that no one tells you about. All this for no guarantee that your company anything in its, statistically speaking, short life.

Sounds very different from the stuff that the New York Times bestsellers spoon-feed you, huh? That’s because reality doesn’t sell, but a nine-step bullshit process that doesn’t require any real work, and is sugar-coated in a brightly covered book-cover, (The Secret, anyone?).

Having been through the process of launching eight startups (all still running and profitable) and reading a lot of academic research around entrepreneurship, I have distilled that entrepreneurship comes down to two things (my two cents): opportunity recognition and opportunity exploitation.

I will develop these two topics in later posts, but the important thing to remember is that entrepreneurs are people who start things, nothing else. Continuation of that initial push is another topic entirely, but it does require some management acumen – a skill not inherent in all people who start companies. It’s the difference between starting this blog post and not being able to finish it. Both require different, but sometimes overlapping, skills sets.

Stay tuned. Opportunity recognition is next.

Phantom out.