Risk in Business - Part II

I recently heard Marissa Mayer of Google at Stanford's GSB. Being a veritable tech goddess, and from the pantheon of Google, arguably the coolest hot company on the planet at this time, she addressed a large, awed audience. During Q&A she was asked what personal traits made her successful. Her response, to paraphrase, was her affinity for hard work, her desire to be surrounded by extremely smart people and her willingness to get into things that she might not be quite ready for. The last was very intriguing, especially when she gave the example of living in a country without knowing the language.

This is risk-taking too, not a jump off the cliff risk (the kind that makes you give up your steady paycheck to strike out on your own) but in the form of a willingess to be uncomfortable - to get off the cozy couch in the comfort zone. This resonated with me as the best piece of advice I got during my first year in a startup was 'get out of your comfort zone'.

Staying in your comfort zone is a partly due to an aversion to effort, since the new activity is almost always in an area of little interest to you (if it were, it would be inside your zone) and you need to develop the required skills. It is also due to a fear of failure, since you don't have the requisite skills in your back pocket you're afraid you'll fall flat on your face. To kick the attachment to the c-zone, you need another 'c' - confidence. Confidence makes you feel that even if you don't have what it takes to do something right now, you do have what it takes to get it - and get it fast enough to do the job.

Whether it is getting used to making sales calls (my own challenge) or making VC pitches, every entrepreneur will have at least one thing that they're not used to, or don't like doing, or know very little of - but needs to be done for the success of their startup. And you know you'll just have to suck it up and do it. There are two good reasons for getting out of your comfort zone. One, things get easier the more you do them and two, you may actually get to like them as you've blurred the boundaries of your c-zone and brought them in.

Risk in business.

Earlier on, in a post on definition of an entrepreneur, I'd written about the must-have trait of risk-taking. In the past couple of days I've run across a couple of viewpoints on risk that brought home the fact that risk-taking is not an on or off, black or white thing. It's very individual and situational, and is about one-size-fits-all as a contact lens.

First, I read a blog on corporate entrepreneurship. Yes, that phenomenon exists (I can personally attest to that), and corporations are frequently smitten with the urge to develop 'entrepreneurship', along with its twin 'innovation', in order to stay ahead of the running of the competitive bulls. There was a post in this blog on creating a 'decision-making network' - i.e., managing risk by spreading it to your network within the organization. In the corporate world the decision to take a risk is less likely to be an individual one (management by consensus anyone?). There are steering committees, audit committees, planning committees, strategy councils and of course the BOD (no, not that bod - the board of directors). Anything you take on will most likely fit into some approved master plan. And when you do get the green light, there are enough people to pick and choose for your 'support network' to deliver on the idea. Yes, championing a new initiative may be risky, but it is less likely that it has sudden-death consequences for the company (though getting fired may feel that way to you). Most of all, you don't have the burden of making payroll hanging over your head.

The entrepreneur's risk is a different beast, larger, faster and with more teeth - and lurking within pouncing range.
In the early stages the very existence of your business is at risk, and that too on a daily basis. Sudden-death is not an imaginary monster under the bed, but a dwindling cash balance without visibility of revenue or funding. Which is why you do so badly want a founding team. You hope your co-founders will have skin in the game, not so much to lessen the risk, but so you don't have to face it alone. This is not like the network you'd have in a corporation, where you could have the luxury of focusing on the specific project. Here you, and your 'network' (read your whole startup team) have to focus on the survival of the whole business. And just to keep you sharp, you have to simultaneously focus on growth, innovation, and staying ahead of the ever-threatening competition.

The good news is that as the business grows, the visceral impact of the risk lessens - the 'death' is no longer likely to be 'sudden'. You get the warm fuzzies from receivables, and possibly funding, floating you for months at a time. You can keep the edge, but lose the sweat.

If you're a risk-taker in your corporate life, you could possibly be primed to be an entrepreneur too. Just remember that grabbing your tabby's fluffy tail, risking scratched arms and snagged clothing, is nothing like doing the same with a tiger.


The spirit moves you.

Entrepreneur = passion. Can't stress that enough.

A couple of days ago I visited a startup (Sharpcast). On a Sunday afternoon. Got the grand tour. First off, a goodly number of folks were there working away. Very reassuringly startup-like. And I got to meet the Founder/CEO, Gibu Thomas. I expected a polite handshake, a 'nice-to-meet-you' and a wave before he went back to his laptop. But no, he bounced out of his office with a 'let me show you a demo', and proceeded to do just that.

He was excited, articulate and seemed to genuinely enjoy doing the demo. And I got an end-to-end show with background info, planned features, market potential, and Q&A - the works, and I wasn't an investor, analyst or influential tech blogger. (He doesn't know about this very-much-under-the-radar blog either.) The potential ROE (return on effort) was small -
I was, at best, a possible customer for the product somewhere far down the line.

But Gibu behaved like a quintessential entrepreneur who's pumped every time he talks about his product, and looks for every opportunity to do just that. If it meant another half-hour at work on a weekend, that thought wouldn't even register in his drive to evangelize to yet another soul.

Last Sunday I met a poster-boy for the entrepreurial spirit. And the product's very cool too. I guess he's won another customer so the ROE wasn't quite zero.

The call of the conference.

An early-stage entrepreneur conjures up the image of someone who's got no time for anything that doesn't further his/her business. Abs turn to pot bellies, hairstyles change to long and longer, beards become biblical, families are held together with tokens and promises, friends limited to birthday e-cards, and conversations about politics and what's hot on TV become impossible to sustain. So why should/would an entrepreneur attend conferences?

Attending conferences specific to your field or ones where you're likely to find customers are no-brainers. Attendance is a sales and marketing requirement. How about conferences for entrepreneurs? For a first-timer, or someone who's testing the waters, these conferences could be a great learning experience. They usually have tracks on the basic to-do's and you get to ask questions, or better yet, listen to someone else doing ditto, and you'd easily get your money's worth out of it. There's also the promise of networking, which delivers, but rarely as much as you'd expect (that's another post). Still, if you're new to startups, picking one or two of the more effective conferences (check out the speakers and panels first) is definitely worthwhile.

What about entrepreneurs who already know about stuff like incorporations and term sheets? Shouldn't they be out hustling for team members, customers, funding etc., instead of attending a conference? Well, I asked myself that question, but decided that I could clear up one day and go to one. And I did so for 'inspiration'. No, I didn't necessarily expect new ideas, I've already got mine, but it is kind of like going to a revivalist meeting - when you're in a gathering of the uber-faithful, everyone is so incredibly upbeat and excited about entrepreneurism that you can't help but absorb some of it.

Yes, you do have to pick and choose which keynote speaker is worth your while, and panel discussions may do little except give you a place to sit and catch up on email, but going to one does freshen your thinking. If nothing else it re-energizes and confirms your startup decision - a little caffeine for the entrepreneurial spirit. I've yet to meet someone at these conferences who wishes he/she stuck to a corporate job. And, as an added bonus, you're likely to run into old friends and maybe meet someone new who's fun too (just don't go expecting to find your CTO there).

So, if you hear the call of an entrepreneurs' conference, it's okay to give in once in a while. Notwithstanding the lukewarm coffee, the hard folding chairs, the dry chicken and the soggy salad, there could be dynamic speakers and fascinating stories too - a nice little pick-me-up for the hard-working entrepreneur.