How to Know If You Are a Real Entrepreneur
“Stop evangelizing and start selling!” I blurted out in a board meeting recently.
Entrepreneurs are in search of big problems to solve. I believe this is what separates the entrepreneur from the business person.
The very first step in starting a business is to define the problem you aim to solve. If there is no clear definition, there is no business. Simple.
The business person’s approach.
Business people, unlike entrepreneurs, start and build businesses to solve a well-known market problem.
If the problem is well known and already addressed by existing businesses, then the solution is defined, and so is the buyer. The pricing model is fixed in the market and business economics defined.
Back in the mid-nineties, I created an incubator for professional services IT companies. These startups focused on solving the problem large corporations had in installing enterprise software they had purchased.
There is always room for a new service company in the market. I had a simple investment rule. If the market isn’t already buying what you intend to sell, I’m not interested. Because of this investing rule, I never had to wrestle with product-market fit.
We focused on hiring great people and selling them to people who needed their expertise. We agreed on an hourly rate, kept our expenses in line, and made money.
The entrepreneur’s approach.
Entrepreneurs are in search of a big problem. The problem the people in the market simply live with because it is too big to solve. It has too many sides to it and too many people making money at it by chipping away at their little piece.
This is true in healthcare. This is a big problem with apparently no solution. There are thousands of businesses serving this market in thousands of different ways. But no one has defined the problem succinctly at a high enough level so it can be addressed and solved.
Lacking a clear, high-level problem definition, business people continue to start and build businesses that address a smaller, more manageable piece of the problem. They are doing this and making money at it.
When an entrepreneur gets his teeth into a really big problem, he won’t let it go. He talks about it incessantly. He has studied every side of the problem. He has discussed it with every person impacted by the problem. He's talked to every business solving a piece of the problem. In short, the entrepreneur is so excited he found a big problem, and he just can’t stop talking about it.
Defining and talking about the problem is not building a business.
Entrepreneurs who discover these kinds of big problems and come up with a reasonable solution always raise early funding. Always.
They ultimately fail when they refuse to go from thinking big to thinking smaller. They want to eat the elephant in one bite.
When you define a big problem, the natural follow on is everyone should buy the solution. This is the beginning of the end for the entrepreneur.
You can’t sell the solution to everybody. But you have to sell the solution to somebody.
This means going deeper and taking on a subset of the problem while selling to a subset of the market. You solve this, and you have the staying power to stick around for the long term.
Do this and you have a shot at solving the really big problem…eventually.
To get that next round of funding, the entrepreneur must show evidence of people buying what they are selling.
The market is willing to spend money solving the problem using your solution. Do this, and you are on the way to building a business with sustainability.
Build a business that is sustainable, a business that makes money, and you have a shot at changing the world.
So at some point, you must stop evangelizing and you must start selling!
