Amazon Logistik Zentrum. Many Silicon Valley giants fell along the Dotcom gold rush. PHOTO | AFP
In a survey by the Street University, nearly 70 percent of the people mentioned entrepreneurship as their top area of interest. They said they want practical guidelines on how to start and grow a business.
Before we get to that, some facts: First, a great idea does not automatically translate into a great business.
Second, you cannot use opinions of people who know and like you as an indicator that you have a business that will be profitable. The litmus test is when people with no emotional connection with you, or who may not even like you, find your product irresistible.
Many assume that what worked for Business A will work for Business B. This assumption has cost many start-ups and killed them before they left the ground.
Between September 1998 and March 2000, there was the Silicon Valley gold rush or the dotcom boom. The Internet era was thriving and everyone wanted in. There was no shortage of cash and a start-up frenzy with dotcom companies emerging for practically everything. It was not sustainable and eventually everything collapsed. People were left jobless and billions of dollars lost.
We are in an entrepreneurship boom; people are setting up “side hustles” they hope will take care of them in retirement. In the process, there is a blurred line between self-employment and entrepreneurship.
A self-employed person is just that: His/her own employee. An entrepreneur has built a business that makes money. For the self-employed, income is directly tied to personal activity. For the entrepreneur, income is tied to the efficacy of the structure, systems and processes that have been put in place.
DOTCOM CRASH LESSONS
The very nature of being self-employed is what will stop a lot of people from making money. There are limits to how much you can stretch. However, for the entrepreneur, the structures, systems and processes can literally be nurtured for infinite growth.
In his book Zero to One, Peter Thiel –cofounder of PayPal and Palantir and one of the first investors in Facebook, SpaceX and LinkedIn, urges start-ups to make incremental advances. Grand visions inflated the dotcom bubble.
It becomes more difficult to predict the future. Covid-19 and year 2020 have proved this beyond doubt. One upon a time, it was best practice to plan for the long term but today things are happening so fast that short is the new long.
Many start-ups upon creating their product immediately want to throw gobs of money into sales. Good products will gain traction with good sales but great products sell themselves. Thiel says: If your product requires advertising or sales people to sell it, it is not good enough. Sustainable growth has to be viral. The benefits of organic growth seem to be drowned in a world where social media marketing has taken centrestage.
The chief goal of the entrepreneur is to create something that goes viral - not on social media but among people that have power to purchase what you are offering. This, however, is not possible without an understanding of what the customer wants.
Many aspiring entrepreneurs fail for assuming that what they like is what customers like. You cannot impose your preferences on clients. This is where data plays a vital role. Many embark on a business without data that supports their idea. They chase myths.
Virality is what happens when your idea resonates with people with the least effort from you. It is where the product has a high word of mouth appeal. This is where satisfied and happy customers become self-appointed brand ambassadors. The goal should be to build something so insanely awesome that it develops a somewhat cult following. It creates FOMO (Fear of missing out) and it becomes an organic trend.
Wale Akinyemi is the convener of Street University (www.thestreetuniversity.com) and chief transformation officer, PowerTalks; Wale@thestreetuniversity.com
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