I recently wrote some former students from the HBS MBA classes of 1999 and 2000, asking what advice they’d give to current students considering an entrepreneurial path. In a prior post, I shared their responses to the question, “Do you have any regrets about founding a firm upon graduation?” Below, I present their advice to current students.
In 2000, Rod Harl co-founded GiftwareExchange, an online B2B marketplace that connected gift stores with product suppliers. The business never gained traction, and after several career twists and turns, Rod is now President of Alene Candles, a business he and a partner purchased in 2008 that manufactures custom candles. Rod shared this advice:
Ample low-cost funding can compensate for founders’ weaknesses. In such periods I might endorse aggressively pursuing new businesses regardless of your experience or the quality of your idea. Playing musical chairs, you can make a lot of money. But outside those periods, entrepreneurship is about creating value for your customers before yourself.
HBS doesn’t teach about handling failures, which represent a very large proportion of outcomes. Be aware of the personal risks associated with starting a business. Many of my classmates attached themselves so strongly to their startups that it cost them their life savings, marriages, or years of their professional lives. This should not dissuade a true entrepreneur, but it is rarely discussed.
When Guy Miasnik co-founded AtHoc in 1999, the company provided a browser toolbar that presented alerts and updates from online content companies — akin to today’s RSS. After some early pivots, AtHoc identified an attractive opportunity in emergency mass notification systems. Guy, still AtHoc’s CEO, shared this advice about founding a firm:
The decision is not so much a matter of timing or financial upside. It is about the passion to create something new, to shape the world in ways you believe it should be, and to lead those around you — co-founders, investors, employees, customers, business partners, and media — to accept and adopt your vision. It is about incredibly positive thinking despite many rational negatives. It is about willingness to work extremely hard; to be relentless and persistent while still being flexible as you listen and learn.
As you go down the entrepreneurial path, you should build skills in two areas. The first is sales. Getting a customer to buy your product means you’ve learned how to gain trust, convey value, and extract commitment. The second is product management.
As you embark on this path, don’t forget your family. Your partner’s buy-in to an entrepreneurial life style is crucial, and your family will help you keep things in perspective in good times and bad.
In 1999, Joel Silver launched SalesDriver.com, which provided incentive programs for sales reps. After Joel sold SalesDriver in 2001 to a larger marketing services firm, he served as President of Indigo Books & Music, a leading Canadian retail chain founded by other entrepreneurs in 1996. Joel offered this advice to current students:
Entrepreneurship is life changing. It is exhausting. Every decision is yours. There is no “down” time. It takes smarts and tenacity. It will test every relationship you have.
Be conservative and raise more money than you think you need.
Know your customer cold. Customer insight — not being first with technology — will carry you to success.
You will meet a lot of smart people who will give you advice. Take it. But don’t assume anybody, despite their pedigree, knows your business better than you do.
You will attract people who want to be part of a great team and work really hard. That is the best currency you have.
Dispense money from an eye dropper. Find the ugliest, cheapest space. Go to Goodwill for furniture. Use chipped coffee cups. You will gain investors’ respect.
Just ship! Your first product needs to do one thing well, but it can suck in other ways. Version 2 will be good. Version 3 needs to be great
In 1999, Nikitas Koutoupes, co-founded eBricks.com, an online B2B marketplace for construction supplies which was absorbed through a series of mergers into Sword CTSpace. Nikitas, now a Managing Director at Insight Venture Partners, shared this advice: “Ambition and humility are not mutually exclusive. You don’t know what you don’t know, so hire well.”
In 1999, Sasha Novakovich co-founded GetConnected.com, which provided advice for consumers shopping for voice, internet access, and video services. GetConnected successfully morphed its business model from a destination site into a private label service for brick-and-mortar giants like BestBuy, then sold its technology to a rival after eight years in operation. Sasha, now planning her next move, said, “Make sure that you have the best possible founding team: people with relevant, non-overlapping skills and experiences, who you trust and respect. Make sure there is a clear reporting structure and division of responsibility. A great team can take an okay idea and turn it into something phenomenal. A weak team can kill a phenomenal opportunity.”
Returning to Argentina after graduation in 1999, Alex Abad co-founded Certant, which provided website development services. The firm failed in the recession that followed, and Alex is now the founder of Advanced Organic Materials. He said, “Entrepreneurship is a long and sometimes painful process. To succeed you need to have a passion. This has been the difference between my two startups. The second company I started is a chemical manufacturing company. I am a Chemical Engineer. Now, I enjoy everything I do.”
In 2000, Richard de Silva co-founded Siteburst, which hosted and distributed online video for content companies. The service failed after online video emerged more slowly than expected, and Richard is now a partner at Highland Capital. He offered the following advice to aspiring MBA entrepreneurs: “It’s important to be honest with yourself. If you feel compelled to start a business because it seems fashionable or you have seen others having fun, you should join a young company or a fast-growing bigger company and develop functional expertise — until you feel compelled by a market need.”
One former student, who asked to remain anonymous, launched a failed consumer Internet venture that was truly ten years ahead of its time: a successful variant of his idea exists today. He offered this advice to current MBAs debating whether to launch a firm upon graduation:
Recruiters like to see big names on your resume: Google, Facebook, Amazon, eBay. Getting a job at these companies is a lot easier while you are at HBS than it will be after you graduate. Today these companies are courting you. A year from now you may be explaining what you ‘learned’ from your failed startup experience.
Back in the web 1.0 era, the goal was to raise a huge first round and spend it quickly, acquiring users via large portal deals and banner ads. In the web 2.0 era, product is marketing. Now, with low technology costs, the goal is to do a lean start-up and get breakout user traction before raising serious VC money. After all, great products sell themselves, right? Just look at foursquare and Twitter. It’s easy!
In fact, one could argue that it is harder today than it was back in 1999. Back then, you had a fighting chance to get to scale using your VC war chest. Today, you’re expected to have product pixie dust that magically spawns a million users through spontaneous virality based on your insanely great product.
So what would I do if I were graduating this year? Taking these two points together, I would take a job at Facebook, and do my start-up on the side. At Facebook — or Twitter or Zynga or a similar company — you will learn about product management, and you will meet the developers and UX people you’ll need to know if your start-up takes off. You can build your business at night and on the weekends, and see if it gets traction. And if it doesn’t take off, so what? You work at Facebook. You’re a stud. When you are ready to move on, recruiters will be calling you, and magically you’re on the HR buy side again!
To be clear, I’m not saying don’t start your business. Life is short. I’m just saying you should think about doing it in this less risky way.
Finally, Craig Carroll co-founded eGrad, which provided on online channel for established brands to market goods and services to college graduates. After morphing eGrad’s model and selling the company to a larger student marketing firm, Craig is now founder and CEO of Rezolve Group, which provides services that help families secure financial aid for college. Craig shared this advice:
As a founder, you don’t have much control over exit timing. You take on responsibilities to investors, employees, and clients. If things aren’t going well or you aren’t enjoying it, you just can’t just extricate yourself. Understand the ramifications for your personal and family life.
There are real benefits to being entrepreneurial when you are young. It is easier to deal with the stresses while you still have energy and no children. Sure, you may be less experienced, but energy, optimism and a touch of naivety can more than make up for that.
There is no formal career path. You truly make your own destiny, but I have seen many friends struggle with the transition from a failed venture and the uncertainty of “What do I do next?”
The best entrepreneurs have an indomitable spirit and are resilient in the face of adversity. Every new venture really is a rollercoaster of successes and setbacks that test your emotional fortitude. Aspiring entrepreneurs need to ask themselves if their personality and mental strength is really suited to this.
The HBS definition of entrepreneurship as “the pursuit of opportunities beyond resources currently controlled” is more than just a platitude. For me, it sums up perfectly what I do day-to-day. You need to be inventive, creative, opportunistic, persuasive because you rarely have enough resources. Embracing this definition helps me in my role.