I just completed Stanford University’s Ignite certificate program on Entrepreneurship for Post 9-11 veterans. Thirty two of us veterans spent nearly 4 weeks together, intensely engaged in learning the theoretical and practical aspects of how to take an idea for a product or service, evaluate it, develop it, and then commercialize it to succeed as a business. We visited several of the giants of Silicon Valley, and had a most impressive list of guest speakers, as well as lectures from the finest faculty in Stanford’s Graduate School of Business. On day one, we were divided into 6 teams, and each team immediately set to work creating a business plan for a different startup. On the final day, the teams briefed their plans to a panel of experts, who gave us “constructive feedback.” Our very own “Shark Tank.”
What an amazing opportunity, to be at the number one ranked business school in the nation, one of the best in the world, located in Silicon Valley – “ground zero” for innovation in technology and social media. Bottom line: It was a lot of work, and it was fabulous. For more about the program go to: http://www.gsb.stanford.edu/programs/stanford-ignite/campus
Below are just a few of the insights I gained from the program. Each of us connected with different aspects of a very broad curriculum, but here are a few things that I took away:
– Good ideas are a dime-a-dozen; the hard part is creating a business model with a team that can PROVE that the idea can actually create value.
– The Business model – A fundamental part of business innovation is how the idea is commercialized and marketed. This may be as much art as science, but it is certainly some of both. The rock-star entrepreneurs in our economy were often most innovative in creating a business model that was able to successfully take a good idea to market.
– Courage required. While we have all heard about the Apple’s, Googles, Facebooks, the Ubers, the AirBnBs – they are the exceptions. There are thousands of entrepreneurial start-ups every year, and over 90% fail. Being an entrepreneur is not for the faint hearted, nor for those who are unwilling to live with risk, out on the edge, and with the strong possibility of failure.
– Be ready to work like a slave, but that’s ok, if you truly believe in the product or service your business is selling, and you can convince others to believe in it with you. Founders and entrepreneurs must have passion, persistence, and resilience, since there is only a pin-prick of light at the end of the tunnel to pull them forward.
– Cash is King. It’s usually quite a while before a new business starts bringing in revenue, and finding the money to get through that “quite a while” is essential. Many founders work for very little or no pay for “quite a while,” before they can afford to pay themselves. When cash-is-king, and running out of cash means failure, frugality and rock-solid discipline are necessary virtues, for “quite a while”.
– Most startups fail for reasons that are both complex and simple, but the four reasons I heard most are:
1. Poor product-to-market fit
2. Running out of cash
3. Lack of maniacal focus and discipline
4. Break-up of the founding team
– “A Shit-Show.” At a startup incubator we visited, we were told that most startups are a chaotic “shit-show” at the beginning. Some get through it, most don’t. Passion, persistence and teamwork are necessary, but not sufficient virtues. You also need a workable idea, business acumen, a great and supportive network, and…..luck.
-Culture is Queen. If cash is king to get a business started and moving, culture is queen in building a successful business over the long term. I was pleased to hear my own views reinforced by the faculty and our speakers, that a key leadership responsibility is to build a great culture in their business. One very successful CEO told us “Build the culture every day.”
– Know when to fold ‘em. While persistence is a virtue to a point, smart businessmen know when to pull the plug – which is hard for most founders. Investors often know well before the founders, when it’s time to quit pouring good money after bad, and to choose to fight another day. A line we heard often: “Fail fast and cheap.”
– Venture Capital and Private Equity. Founders and entrepreneurs are creative and passionate. VCs and PEs are (often) good men and women, but their job is to be cold, calculating and (sometimes) ruthless. They decide and act based on the answers to two fundamental questions: Will this make us money? And if it doesn’t, how do we get out of it as quickly and cheaply as possible? The rest are mere details…..
– Accounting and Finance. We had a number of sessions on accounting and finance. I learned that “money” and “capital” are even more complicated than I had thought, and accounting and finance people know how to measure ‘em, splice and dice ‘em, six ways to Sunday. This reinforced what I already knew – this ain’t my forte. But it’s important. Hire someone good.
– Strategy and Discovery. We were taught that the road to success is very often more a result of discovery and adapting, than of successful strategic planning. While planning is important, it is more important to stay agile and flexible, to be ready to pivot when something isn’t working, and to strike when opportunities present themselves. Surprisingly similar to military planning.
– The Four stages of business development. We were given several models, but all were variations on this one:
- Exploration – An idea is born, evaluated, validated, and nourished into an opportunity
- Development – A product/service is developed and early customers are identified.
- Revenue – The product/service is commercialized and sold on an increasing scale.
- Profit – The company matures and operates as a profitable and growing enterprise.[i]
-To MBA, or not to MBA. Most of the other transitioning vets in the program were in their thirties, just leaving the service, and one question kept coming up: Should they do an MBA on leaving the service? The advice I most often heard was: It depends. Those who are pretty sure they know what line of work they want to go into, and can get a job in that industry right out of the military, should take the job. Get the experience, don’t mess around – maybe do an Exec MBA later. For those who are struggling to figure out what they want to do, the MBA provides a transition window to learn about options in the private sector, figure out what they’re good at and might want to do, get a broad and general set of business skills, and develop a network that can help find an entry level job in the direction they decide to go.
Shark Tank. After returning home from Stanford, I was watching Shark Tank with my bride, and found myself chiming in with the “sharks” as they raked a presenter over the coals: What do you mean you don’t know who your primary customers will be, or whether they are willing to pay for your product/service,or how much? Who’s going to market and distribute it, and at what cost and risk? What do you mean, you haven’t figured out your expenses, don’t have a revenue model, and don’t know how much money you’ll need to break even or get to profitability? Go back and do your homework!
As I watched the show, I anticipated those questions, because in Ignite, all of us had to squirm under that same grilling while our teams were preparing our own startup projects. While Shark Tank is somewhat artificial due to its imperative to be entertaining for 60 minutes on TV, it does offer some pretty good learning points for those wanting to bring a “good idea” into the market place.
My experience at Ignite was extremely informative, and even transformative; I learned an enormous amount, made some great new friends, and gained a much better understanding of business, and the creativity of capitalism. I got some important ideas for my own Fifth Factor Leadership business, and am a better man for having participated. I am truly thankful for having had the opportunity to become an Ignite alumnus.
[i] Stanford Graduate Business School case E-194 “A Note on Building a Financial Model,” Date 07/28/2005
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