Qualities of a Successful Entrepreneur - Practical Acumen (2/11)

Original author: Mark Suster
  • Transfer
Translation of the second post of Mark Saster from a series about the qualities of a successful entrepreneur ( here is the translation of the first post ).
_________

This is part of my new series of posts on what makes an entrepreneur successful . I originally published them on VentureHacks , one of my favorite sites for entrepreneurs. If you haven’t been there, then it’s worth a visit.

The series began with a conversation about what I consider the most important quality: perseverance .



2. Practical acumen. So, you are a stubborn person and never give up. Obviously, this is of little use if your startup idea is worthless. I do not think that well-read people are required to create good companies - often this only interferes with the matter. But you need to be smart, and I prefer those who have worldly, practical wisdom. There are people who simply “chop the chip” - I’m looking for them. At an instinctive level, they understand how their customers buy, and they know how to inspire them. The weaknesses of competitors, they sense the sixth sense. They identify opportunities that no one has yet noticed, and create products that meet their respective needs.

With practical grasp, most good entrepreneurs prefer to get out of the office and talk with real customers, rather than hanging around in their workplace all day, drawing great slides in PowerPoint. And when they come to my office and make a presentation, it is immediately clear that they know what they are talking about. You can literally hear a “customer voice” when they talk about their concept.

I often tell people that I’m not paying attention to those born in a shirt. I like people who are not too worried about the social consequences, if they happen to do what they did not expect from them.For this reason, in my opinion, many immigrants and immigrant children succeed in business. They simply do not have to play by the same rules as everyone else; in fact, I'm not sure that they even know what these “rules” are. Therefore, among them there are more people with practical acumen than among those who comply with the conventions.

If I wrote about the most important qualities of a venture capitalist (um!), Then the list would include “the ability to see patterns.” I see the same things over and over again, and the ability to track things and classify them is very important - it helps in quick analysis and training. Thinking out loud - I am sure that this quality is also important for entrepreneurs.

So, I wrote a whole series of posts this week around Thanksgiving, but literally every day I wake up and see examples. Here are two stories yesterday.

About social conventions.Two years ago, I was in New York and called the younger brother of one of my wife’s best friends, with whom they attended Vorton Business School. He worked in a startup in a very popular area at that time. Yesterday I met him again, for the first time in two years. He said that when markets began to decline, the company lost its former popularity. They realized that they were selling a bunch of cool products, but not one of them was of sufficient economic value. They squandered a lot of money because they attracted a lot of money from investors and recruited a lot of employees. A new, experienced general manager (CEO) came and cleaned up. He helped identify one key product that was most valuable (as evidenced by customer reviews), and rebuilt the company around it.

He asked each salesperson and development manager to call customers and say that they would have to change the contract terms. He said: “Call customers, tell them about the situation and let them yell at you for 5 minutes. Keep your phone away from your ears. After the indignation subsides, and you did not shout anything in response, they will ask: “Okay, what shall we do now?”

I liked this story because it is very real. Only a true entrepreneur leader would take such a step and encourage his team to make these calls. I think the first call was humiliating for every employee. During the second call, they were shy. But by the fifth or sixth to call was already fun. It looks like a game. You did what you obviously did not expect from you, knowing that there was nowhere to go. But the world has not collapsed. As I always say: "to be an entrepreneur is to have steadfastness."

Once I was connected with a company (it did not belong to me and it did not have my investments), which had a wonderful product, but which squandered a huge amount of money. The director was terribly smart and charming, but she was not (and now is not) an entrepreneur. And I contacted this company on the principle "not a single good deed goes unpunished." The director was born in a shirt, studied at the right schools and worked at the right strategic consulting firms.

We were approaching a recession, but this was not yet completely clear. I knew that our sales were no good, and the costs were gigantic. I LOUDLY stated to the board that it was necessary to cut costs. Money just burned. The director said that it was impossible to cut back on those. support (where there were 7 people for a dozen clients, and sales did not reach a million dollars), because all these people were required to comply with the conditions prescribed in client contracts. It was impossible to reduce developers (23 people!), Because there were obligations to a large client who was going to engage in mass distribution of the product throughout the country. We could not cut back on marketing because it was necessary for sales. “Okay, then let's re-sign the contract with our client!” I was told that this is not possible, or at least

When I was engaged in BuildOnline (this is my first company), and things were extremely bad, we called all customers and said: “We signed a contract with you. But the reality is that the market has changed, and we need to adapt to these changes. According to the conditions, we are obliged to implement certain functionality in the product. But we, unfortunately, cannot do this. Do you like our product and our services? Yes? Excellent thank you. Listen, if you like what we do, you probably want to be a good supplier / partner. We need to have a profit, but according to the signed contract it will not be. Therefore, we will either have to reduce the developers (and not release the product, as promised), or bill you a little more for the services or for the functionality you want, in order to somehow make ends meet. Please say, which of these two options suits you best. ” We have not lost a single customer. In fact, we even strengthened the relationship. I had no choice, and, as they say, "need is the mother of all inventions."

The problem of the company where the money burned was that the director considered herself above making these calls to customers or making difficult layoffs. That year we did not reach the target sales volume by 66%, the next year - by 45% and did not really reduce the costs. The company turned money into ashes. And I asked to leave the board of directors. Well, or they asked me. In fact, there was consensus. When the board of directors sits at the dining table and eats silver appliances, who wants to endure the old and clumsy me with uncomfortable questions.

About practical acumen and work with clients.Yesterday I drank coffee with another startup founder. Wonderful guy and really smart. His startup consists of three people; he is a co-founder, but not a director. The director is a "man of ideas." The guy told me about the product they are developing. I noticed that the product implements an interesting function, but that customers will not use it and will not pay either. I explained my logic to him: “Well, if a client installs your program on his website, he will have to hire a whole bunch of people to manage the project. If your program does not increase its income, then how will it cover additional costs - especially in the current state of the market? ”

I have given more examples. I said that he should visit clients and understand what problems they currently have in terms of attracting and retaining clients on websites. And then brainstorm with clients to solve these problems. We need to find out if they want to pay for what he will help increase their income or reduce costs. He admitted that his team developed the product because they thought the idea was good, but testing on live clients has not yet been conducted. My practical acumen prompted me that the product is unlikely to be successful.

I said that he should not be discouraged. This is the reality - more than 80% of startups develop products in a vacuum, without even thinking of checking their business value for customers or finding out their needs. Of course, they talked to one or two - but did not do it methodically. If you do not understand how your product brings value to your customers, then it is unlikely that it will do it - except when you have experience in this area and are familiar with the available products in your own skin.

Why do people behave this way ignoring the obvious? Because it’s much easier to type a bunch of smart guys so that they get together every evening and make interface layouts, borrow ideas and solutions from products already on the market and make a product, and then show the result to friends, than quickly establish contacts with potential customers who, like you think you will be disturbed by your calls. I explained to him that mid-level managers in large companies often want to feel involved in startups, and are much more accessible than it might seem. You just need to get out of your comfort zone.

Did you have a similar experience when you created your companies?
_________
Other translations from this series:
1. Perseverance .
3. The ability to change course.

Also popular now: