I remember going to a postgrad’s formal hall (a dressed-up college dinner) in Oxford and looking at the glum faces of the boys and girls when I sat down amongst them. “Why us?” They were thinking looking at this grey-haired old fart. Anyway, as the starters were being served the noisy young Australian sitting next to me said in mischief “What do you do then?”. She was looking for a laugh. After all, only losers come back to university in their mid-fifties. I turned a serious face towards her, and in my most authentic East London accent said “Who me love? At your age, I was working in a car factory but then I became a serial entrepreneur, four trade sales, one IPO and an orderly winding up. So, what the [blank] do you do?”. Table manners and emotional control not being a top priority in Oz, her mouth dropped open (without spilling any food) and she leaned in. Suddenly, I was useful. Like 80% of MBA students, she had her own idea about launching a startup and becoming rich. Placing subtlety to one side “What’s it like?” she said. A bridge had opened across the age gap and her classmates joined in. We had a great evening that continued with endless startup war stories in the bar after dinner.
Her interest is familiar to anyone who has had a modicum of success running their own business. Especially these days now that we hear so much about startups, tech billionaires, millionaire Internet influencers, wealthy crypto-pirates, viral app builders. Everyone has seen Dragon’s Den thinks they know how to make a pitch. In fact, there’s so many success stories it looks impossible to fail.
Let’s put that straight right now. The failure rate is about 90% and the chances of making a billion are a lot less than that. For all the effort they put into picking winners VCs can’t improve the odds above that.
What do you think of my startup?
When people ask me if I will listen to their idea, I always say yes and, unlike the plagues of parasite advisors and accountants who prey on the vulnerable, I don’t charge. I wouldn’t charge to stop you walking under a bus, and as the advice I give is pretty much the same, here it is. No charge.
The idea – I will listen politely, but I’m not interested. The idea is not that important. By comparison with what I am looking for coming up with a plausible and original idea is relatively easy. But creating a business around it is hard. The same goes for designing a revolutionary new version of an existing product or service. Name a market where the market leader is the leader because they are the best or have the best product. I can’t think of one. All you need is an OK idea. Other things are more important, which includes one super important super thing.
The plan – Don’t waste too much time on your plan. Why? Because it is wrong. That’s why. Don’t feel offended. All plans are wrong. A shorter plan that is easy to adapt and that has plenty of contingency is far more important than trying to make an accurate prediction. Two reactions to my first business plan have stayed with me for life. Firstly, an advisor from Ernst and Young said it was the best startup plan she had ever seen. While I was basking in glory, she then said she’d give me a one in five chance of surviving for five years. When I asked why she said, “Why do you think?”. I had done my homework, so I replied “Cashflow?”. Half a mark for that. The actual answer is that by then most people are so exhausted they just give up.
Our bank manager looked at the same plan and agreed to grant us a loan to the same value as we invested, but we had to secure his loan against a tangible asset like a house. He told us our plan was good but to get to the truth we should cut the revenue forecast in half and double the costs. He was right on the revenue but our costs were accurate. Everyone should have a branch bank manager like Stuart Warpshire. He really helped when we ran out of money. He doubled the overdraft this time without security, but that was when bank managers could trust their judgement before they became casino investment banks and shut their branches and replaced bank managers with algorithms and concentrated on money laundering and selling insurance scams to retail customers.
If you are still convinced you need a perfect plan, think about this. We launched a Unilever startup in August 2019. Six months later the world was in lockdown with Covid. When that calmed down, Putin started Europe’s biggest land war since WW2. Then energy prices skyrocketed. Then the cost-of-living crisis hit. Then central banks hit the interest rate panic button. Who planned for that? It is not as untypical as it sounds in terms of a five-year timeline of disasters that entrepreneurs must find a way to deal with. And, remember all the usual challenges are still there, stupid clients who won’t buy your stuff, competitors who want to rub you out, (if you are a spinout in a big company, “colleagues” might also want to rub you out!), the taxman comes knocking demanding a cut from day one, suppliers take advantage of weakness, employees who I dunno,.. crash their cars, lose their laptops, fall out with their partner etc etc.
Your target is dead simple. It is not to be in the 80% who fail within five years, usually because they were exhausted by the constant barrage of problems that hit like the waves of an unending Atlantic storm that lasts year after year. To survive is to succeed.
So, what is the most important determinant of success? – As the idea and the plan are already eliminated, some people say their ability to sell. That is vital and you won’t succeed without it. You are constantly selling and not just to clients, but suppliers, funders, colleagues, business partners, your family, your friends. If you can’t inspire confidence and belief don’t start. But it’s not that. “Luck?” some people say. That’s important too, as Napoleon knew when he was picking Generals. You can’t succeed without it and to be the top of the class, to be a Musk or Bozo (Bezos?) or that funny looking geek who started Facebook and dominate your market and make gazillions, luck is far, far far more important than ability, intelligence, judgement, and all those “superpowers” they drone on about in their bestsellers. By the way, do yourself a favour, throw those books away. They aren’t you and more importantly they aren’t them either. Peter Thiel, get real mate. You were ok, better than average even but mainly you were lucky.
[An entrepreneurial event: lapping the table signing funding documents. That’s me on the left. Millions were about to be handed over]
The answer to the big question of what is the most important determinant in your success? is: YOU. On a scale of ten you have to be eleven as the most determined, resilient, stubborn, irrationally positive, inexhaustible form of human life. You are about to take on the hardest, loneliest job in business. It is going to rinse you out. To you all the stuff in Kipling’s “If” is real. It’s at the bottom of the page. Read it. It’s cheesy but gold. The only line I take issue with is on hate. There is plenty to hate when you are giving years of CPR to your startup, which is how it is for most of them. Don’t waste hate. Hate is an energiser.
When I see wannabe entrepreneurs I like to look them in the eye and ask them if they can hack it. Can you go beyond the pressure point where you aren’t just hurting yourself but also all the people who care about you. Can you “fill the unforgiving minute” and “hold on when there is nothing in you except the will which says, “Hold on!”. If you can face that then, go ahead, if not, then stay under the covers. Don’t bother.
At this stage in a session, I am sometimes asked, “If it’s that hard why do serial entrepreneurs even bother. Why do they repeatedly subject themselves to this Hell?”. What a good question. I don’t know. But I have some hunches. I like Schumpeter’s thinking on this. It’s not money or status, though they are nice to have and a good proof of success. I think it’s genetic. I think entrepreneurs are born dreamers, creators, and builders who have a gene deformity when it comes to risk, optimism and pain. They want to turn an idea into reality and bring it to life and see it being valued and loved by the world. Along the way they take any risk and suffer any pain. If you make it, there is no other reward like it, but you can never satisfy it. Despite the pain, you always come back for more. [Note: This leaves a massive challenge for the recently retired, which I am currently working on].
Finally, what is failure like? What is it like to see the thing that you invested every drop of your sweat and blood in smothered before your powerless gaze in a slow and painful death by the forces of evil? Even worse is when this happens after your success led to an acquisition by a global megacorp and the MBA hyenas descend on you and devour the value in the thing they just bought. Ugh. Let’s leave that for another day but consider this: if you choose to be an entrepreneur and play the Big Tunes on the keyboard of life (that is your one life, that short blink in the infinite lifelessness that eternity has granted the atoms that constitute you) you will end up exploring the lowest notes as well as the highest. And if you can’t face that why not be an accountant and just play the boring stuff around Middle C.
Kipling’s great gift to the tea towel and poster industry and anyone planning a new business.
IF you can keep your head when all about you
Are losing theirs and blaming it on you,
If you can trust yourself when all men doubt you,
But make allowance for their doubting too;
If you can wait and not be tired by waiting,
Or being lied about, don’t deal in lies,
Or being hated, don’t give way to hating,
And yet don’t look too good, nor talk too wise:
If you can dream – and not make dreams your master;
If you can think – and not make thoughts your aim;
If you can meet with Triumph and Disaster
And treat those two impostors just the same;
If you can bear to hear the truth you’ve spoken
Twisted by knaves to make a trap for fools,
Or watch the things you gave your life to, broken,
And stoop and build ’em up with worn-out tools:
If you can make one heap of all your winnings
And risk it on one turn of pitch-and-toss,
And lose, and start again at your beginnings
And never breathe a word about your loss;
If you can force your heart and nerve and sinew
To serve your turn long after they are gone,
And so hold on when there is nothing in you
Except the Will which says to them: ‘Hold on!’
If you can talk with crowds and keep your virtue, ‘
Or walk with Kings – nor lose the common touch,
if neither foes nor loving friends can hurt you,
If all men count with you, but none too much;
If you can fill the unforgiving minute
With sixty seconds’ worth of distance run,
Yours is the Earth and everything that’s in it,
And – which is more – you’ll be a Man, my son!
Rudyard Kipling
