As an early-stage/seed investor in dozens of startups, I’ve seen, and reaped the rewards, of betting on some incredible entrepreneurs with bold visions for their technologies and companies. There are a few commonalities among the hugely successful investments in startups I’ve made over the years. Every 10X investment I’ve made has been on companies attempting to flip an industry on its head (disrupt); solve an expensive problem for customers or create an entirely new market of their own – essentially ‘making a market.’ (The ‘Holy Grail’ of entrepreneurship – they managed to construct demand for something that was never there previously.)
The four keys I’ve consistently seen from entrepreneurs that, for lack of a better phrase, run shit in their market, are below. These entrepreneurs made me, and other early investors in their companies, a lot of money because they built startups from day one with four common elements front and center in their day-to-day approach:
How Entrepreneurs Take Over Industries and Niches
Willing to take on more risk than their competitors: This is probably the most important for entrepreneurs trying to disrupt sleepy industries.
Know that any industry dominated by major players, legacy companies so to speak, are risk-averse. While most entrepreneurs shy away from competing against ‘the Majors,’ there is always a silver lining to taking them on (aside from the fact they’ll want to buy your company if succesful). Multinational corporations are reluctant to take on risk. They’re often giant, slow-moving bureaucracies ran by executives who have forgotten what it’s like to be on the front line dealing with customers.
If you’re willing to take on significant financial and/or reputational risk (likely lose money for the first year to 18 months to build your brand and show the marketplace why you care more than your larger competitors – which should be deemed as an investment, not a cost), you have the tolerance needed to win. Furthermore, recognize that large competitors, specifically multinationals, in this day and age have their hands in several industries. You can take a piece of one market, for one specific niche and become filthy rich. But you have to be willing to take on financial risk without an immediate return. Read how Jeff Bezos started Amazon twenty years ago and grew it in the early days. Amazon was once a disruptor with no brand equity, like any startup; now it ‘makes markets’ because its founder had brass balls.
Don’t get me wrong, taking on a higher level of risk is not without consequence. One example: There is a serial entrepreneur/friend of mine who I will always invest in when given a chance. You may be surprised to know that investing in his ventures, on two occasions, resulted in the loss of my entire investment. The companies failed to commercialize. That said, one of the opportunities he brought forth was among my most profitable, ever. He’s a gunslinger entrepreneur (see here for definition) with bold vision. He’s willing to take on a ton of risk in pursuit of his lofty entrepreneurial goals. If there isn’t the potential for a ‘B-valuation’ (billion dollar company), he can’t be bothered; and that’s why I love investing in him.
Hire top talent: You can’t do it alone. Seek out the best talent you can find. Pay them handsomely and offer ownership in your startup. Do what it takes to attract the best-in-breed.
Build a system/formula for everything important: From generating the lead, closing the deal, and retaining the customer, these entrepreneurs have an optimized formula/system (which has been split-tested to death) followed by every sales and operations person in the company. It’s a creed, never deviated. Wash, rinse and repeat.
Defined and taught systems articulate, across the company, how to close a deal, build a product and other essential processes of the business. They make companies more efficient and allow entrepreneurs to scale rapidly.
Get a brilliant spokesman – that’s your brand: Now more than ever, people want to connect on a personal level with businesses and brands. It’s no different than politics. People don’t really vote party anymore, they vote on the leader – the face.
I know a former bodybuilder turned very successful fitness entrepreneur in Virginia. He’s been starting and running his line of gyms for thirty years. Despite the odds being stacked against him in this day and age of large nationwide fitness centers popping up everywhere with their cheap membership plans, his business has thrived while charging two to three times his competition.
He’s adamant he (personally) handles incoming customer complaints and requests relating to his gym(s). Why? Because, and if you met him you would know what I’m talking about, he is the best spokesman for his brand. The guy is charming, a great listener and understands the pain points of the fitness industry. And he’s passionate about what he does, which is why he’s so successful. He enjoys walking the floors at his gyms and talking with members, making sure they know he is the spokesman and ambassador for the company. If you go online and check reviews for his company, customers frequently mention how great the owner is… no surprise.
Great Entrepreneurs are Risk-Takers Who Love Customer Interaction and Hire Top Talent
No matter which type of startup you want to create, the intent should be to take over an industry or niche – become the gold standard. Entrepreneurs need to be bold to win and create great brands that are known for innovation, efficiency, and problem solving on behalf of their customers. These are the four elements to make that happen.
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