- A smart entrepreneur’s guide to choosing the right VC
- Choosing an investor is like choosing a spouse (but with less romance)
- Not much difference between angel investors and VCs anymore
- What to do if your startup is suffering founderitis
- How risk and failure drive entrepreneurial success
- Beware of the revolving-door venture capitalist
- Getting an investor to move from “not now” to “yes”
- Talk to your venture capitalist before you crash and burn
- Entrepreneurs need to know when to call it quits
Facing challenges head-on is the only path to sustainable business success
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There were nearly 900 people seated at round tables, alternating small talk with bites of chicken. The ballroom was glamorous, the chicken dry, and few were paying attention to the emcee cracking jokes. “My wife says that if I don’t give up golf, she’s going to leave me. I’m really going to miss her! Har har! Isn’t that right, Barry? Let me tell you about Barry …”
I glanced across to the next table at Barry, CEO of a venture I’d looked at a few years ago for funding. Back then, he was struggling to find customers for his products. But things had changed. His team had reconfigured the product line, offered customers more flexible purchasing options, and sales took off. The following year, a customer with significant financing came in and bought the company outright.
Tonight, Barry was stepping into the spotlight to receive public recognition for his effort and success. He walked up to accept his acrylic award, and I was genuinely happy for him. The crowd applauded as his image appeared on several giant screens around the room. A video showcased the technical innovations that had driven the company’s rapid ascent. Then, I heard someone to my left mutter, “I had that same idea two years before he even started the company!”
Barry, ever the humble type, directed the spotlight to his staff, calling them the true winners of the award. He exuded a cool, James Bond-like charm, and his recent wealth gave him a certain glow. Given three minutes to tell his story, he touched on the highlights. The audience loved the story of a rocket ride to success, and he spoke without pretense, thanking everyone for listening.
I didn’t catch his final comment as I was busy imagining flipping my tiramisu into the lap of the wisecracker beside me. The remark might have been meant as conversation, but the tone seemed to imply that the real value and success should be credited to the idea alone. Worse, it hinted that they thought they ought to be the one on stage, not Barry.
In the glitzy atmosphere of cognac overtones and spotlighted success, it’s easy to buy into the illusion that success is a simple line drawn from idea to development to commercialization. But what our proclaimer hadn’t witnessed – and what very few in the room had seen – was the immense work, risk and stress that Barry endured to get here. What this person likely didn’t understand is that a great idea without execution is no more valuable than an empty roadside soda can. For those willing to make the effort, the can holds nominal return value or the chance to be transformed into something greater, but to most, it’s just litter.
I first met Barry at a local tech start-up networking event. His company was intriguing, so we kept in touch, and he sent me quarterly updates. It wasn’t until nearly a year in that he let his guard down. Things were tough. Making payroll was becoming a monthly nail-biter.
One afternoon, we met for coffee to discuss options during a particularly dark time for the company. His hands trembled as he spoke, his eyes red from sleepless nights. He told me later that he’d lie awake, overwhelmed by stress, waiting until his wife was asleep before going downstairs to watch sitcom reruns, hoping the babble would quiet his mind. His house, savings, and money from family and friends who believed in him were all on the line.
But he persevered and turned things around, and as we continued meeting, his mood and posture shifted. He was never cocky, but there was a quiet confidence about him.
So, how much is a business worth?
Things could easily have gone wrong, as they often do. A misstep in timing, capital, market conditions or technical risks could have taken him out. Most entrepreneurs ignore or downplay that, statistically, they’re far more likely to fail than succeed. But thank goodness they don’t dwell on these numbers. Without entrepreneurs, nothing would happen, progress would stall, and jobs wouldn’t exist. Without entrepreneurs, we wouldn’t find solutions to problems, cures for diseases or better-tasting pie.
That’s the trade-off when an entrepreneur starts a new company: it might work, it might not. And we need to accept that it often won’t work. People who don’t understand this reality frequently look down on those who tried but didn’t succeed.
Many venture capitalists prefer to back an entrepreneur who’s experienced both success and failure – there are lessons in both. Without the freedom to try and fail, many significant successes wouldn’t exist.
Henry Ford went broke five times before founding the Ford Motor Company. R.H. Macy failed seven times before finding success in business with his department stores. Walt Disney faced bankruptcy before his breakthrough. Michael Jordan missed over 9,000 shots in his career, but he’s not remembered for those. Babe Ruth struck out nearly twice as many times as he hit home runs, yet he quipped, “Every strike brings me closer to my next home run.”
We don’t expect our sports heroes to win every time; we should give our entrepreneurs the same latitude.
Warren Bergen is the author of Swagger & Sweat, A Start-up Capital Boot Camp.
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