Secrets of Successful Entrepreneurs
Every entrepreneur who breaks away from the pack deals with doubts and setbacks. And every company that succeeds has to tweak its business plan along the way — sometimes completely reversing course.
While there's no single secret to success, a big key in attaining it is knowing exactly when to pivot. And successful entrepreneurs recognize these "ah ha!" moments when they encounter them. (More: Building a Great Start-Up Culture.)
Sometimes those moments are obvious, while other times it's a subtle sign that most would miss.
Aha! Moment #1: For Nolan Bushnell, founder of Atari, it was the realization that his original idea was never going to work.
"I didn't set out to design a video game [system] but to take an existing mini computer and connect it to a cheap commercial TV set," he says.
It was an idea that made sense, given the high cost of video monitors at the time. But the mini computer he chose was extremely low-powered — and it wasn't exactly cheap, either. Problems kept popping up due to the complexity of the game and the system's processor speed, so he began designing workarounds, transferring some of the software functions onto hardware. That, too, failed to work.
Frustrated, he walked away from the project. But two days later, he realized he could bypass the mini computer altogether, by putting whole games into hardware.
"That dropped the computer cost from $7,000 to $300 and I knew I had a winning technology," he says.
That technology, of course, eventually became the Atari 2600, which ushered in the home video game console business, today valued at over $74 billion worldwide.
Aha! Moment #2: For Jason Glickman, co-founder and executive chairman of Tremor Video, it came down to realizing that the then-standard way of doing things was about to be outdated.
Tremor specializes in online video advertising. In its early days, though, it put videos inside standard ad banners — something that didn't feel like a natural placement to advertisers or readers (who usually ignored the banner ads).
Online video was a burgeoning market at the time that was expensive to create and stream, but Glickman saw potential. (More: Why Fewer Americans Are Starting New Businesses.)
"We thought 'wouldn't it be interesting to see some of those TV [ad] dollars move into online?'," he says.
As they explored the market, with concepts like pre-roll and interstitial video ads, they saw interest from companies, who offered up to 10 times the usual online rate, since the ads were integrated into the content.
"Even the small test we were looking to do was huge, so that was [when we said] 'This is the business we need to go into. As the market evolves, it will grow into it," he says.
Today, Tremor is the Internet's biggest video ad network, with over 1 billion video impressions per month and clients including Viacom and Discovery.
Aha! Moment #3: Sometimes, a successful small business comes less from a shift than from a revelation. Mike McDerment co-founded Freshbooks, a cloud-based accounting service, in 2003. Two years later, though, the company was only making about $100 per month in revenues. Common sense indicated the company was a failure — and McDerment was reaching a breaking point.
One of his advisers suggested interviewing current customers to get their opinion of the company and the product. During one of those conversations, a CEO told him "your software changed my behavior."
"At the time, I didn't think that was a good thing," says McDerment. "But I didn't say anything. I held my breath for what seemed like an eternity, then he went on to say 'Instead of waiting until the end of the month to do my invoice, I send them out as I do my work — and by doing that, I remember all the stuff I do. I don't forget stuff, so I earn more. And because I send the invoices out faster, I get paid sooner.' That's when I said to myself 'I think we're on to something.'"
With the support of an eternally optimistic co-founder, the company stayed focused. Today it has over 5 million users (in 120 countries) who have collected over $14 billion using the service.
Of course, sometimes the key to success is remembering that even in high-tech times, low-tech methods are more effective.
Aha! Moment #4: Greg Collier, founder and CEO of Geebo.com, an online classified advertising site, learned this a few years ago. The site was profitable, but he was concerned it had gone about as far as it could with current traffic levels.
He set up a meeting with a long-time client. Both sides were happy with the relationship, and as a result had done all of their communicating through email and the phone — but this time, he decided to make the trip out to see them in person. While there, he learned that the conversion rate for the company's job postings wasn't the 20 percent he thought, but closer to 50 percent — and the company was eager to do more business with the site.
"I would have had no way of knowing this had we not had this personal meeting," he says. "What this told me was how much value we had in this one particular area of the website. … I didn't realize as how valuable the space really was."
Collier quickly began arranging face time with other clients. The result was a 700-800 percent increase in revenues in roughly 18 months. And it was all done by adding a human face to an online partner.