But in recent years much of the success that many entrepreneurs supposedly achieved was revealed as illusory. Market after market collapsed. Companies that were once worth a great deal of money on paper shut their doors. More recently, a new body of research has shown that much of what we think we know about entrepreneurship is wrong. We think of startups as exciting new ventures, incorporating spectacular innovation and great new ideas. We imagine businesses operating in emerging fields, led by founders with big dreams for growth. But the truth is quite different.
- Most new businesses launch in unattractive, static fields.
- Most startups offer no innovation or competitive advantage, cannot articulate growth plans, employ only the founders, and generate revenues of less than $100,000 a year.
- Only a third of new businesses last seven years.
- The typical startup begins with less than $25,000 in capital, acquired from the founder's savings (or run up on his or her personal credit cards).
Sounds daunting, doesn't it? But for the committed founder, the one who is truly determined to dare mighty things and succeed, all that entrepreneurial carnage can be a blessing. Here's why.
First, there is rarely any reason to reinvent the wheel in entrepreneurship. Some successful founder, somewhere, has addressed the same issues that just about every founder or aspiring entrepreneur faces today. By studying their examples and outcomes, the intelligent entrepreneur can dramatically improve his or her odds of success. The answers are out there, if only you know where to look.
Second, the doomed-to-fail entrepreneur doesn't have to be you. He or she can be—should be—your competition. Remember General George Patton's wise advice about the nobility of sacrificing one's life in combat: "No bastard ever won a war by dying for his country. He won it by making the other poor dumb bastard die for his country."
Easy enough, right? Just identify the best examples and follow them. As it turns out, though, these lessons can be difficult to find. Even at a place like Harvard Business School (HBS), where they investigate successful enterprises for a living, there is a wealth of academic research on how to manage and grow big corporations—but nowhere near as much data-driven research on early-stage companies.
"Even knowing what questions to ask is difficult," explains Noam Wasserman, an HBS professor who specializes in entrepreneurship. "Moreover, these are private companies. And that means that inherently there are no data. I have to go out and collect all of my own data."
True, Wasserman continues, when companies prepare for an initial public offering, they have to reveal themselves to the Securities and Exchange Commission (SEC) and the world. But when academics study these companies, Wasserman points out, they are almost never able to study founders, because at that point few of them are still around. "Until recently, we weren't able to really draw any real conclusions about the types of issues and decisions that founders face."
I know that other authors have tried to tackle this problem. But this book is different from others, most of which choose between providing a dry analysis of founders and startups, or using made-up examples, anonymous anecdotes, and composite stories to illustrate their theories. Instead, The Intelligent Entrepreneur tells the true stories of three entrepreneurs from the Harvard Business School class of 1998 who started four successful businesses within ten years of graduating. Over the course of that decade, these HBS graduates also learned ten key rules of intelligent entrepreneurship, and this book examines the rules in detail, allowing every reader to discover what it takes to start a new business and make it a big success.
Chances are, you don't know this trio of entrepreneurs unless you happen to have been a client or competitor of one of their companies. But by following them over roughly a decade, as they imagined, started, and built their firms—and ultimately as they decided whether or not to sell what they'd created—we can absorb their stories, learn from their mistakes, and internalize their actions. Ultimately, my goal is to help you understand how they practice what I call "high-percentage entrepreneurship"—and to show you how you can, too.
From the book THE INTELLIGENT ENTREPRENEUR: How Three Harvard School Business School Graduates Learned the 10 Rules of Successful Entrepreneurship by Bill Murphy Jr., published this month by Henry Holt and Company, LLC. Copyright (c) 2010 by Bill Murphy Jr. All rights reserved.Learn more at http://www.theintelligententrepreneur.net.
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