David Cummings on Startups

More Entrepreneurs or More Resources for Existing Entrepreneurs

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David Cummings

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One of the questions that still nags me is why aren’t more entrepreneurs successful? We have amazing information and resources online, tons of community events, and a wealth of people that truly want to help out. On the surface, it appears that the necessary ingredients are present to have a higher success rate. Now, I don’t know the previous success rates or the current success rates, so this is merely based on my gut.

As I look around the community, I want to see many more startups that are clearly on their way to being a viable, on going concern (my definition of a successful business). The lean startup movement and tools like the business model canvas are great for helping entrepreneurs spend their time more wisely, thus increasing the likelihood of success. I haven’t seen the increased success yet, but I’m hopeful.

Another theory is that you can’t pick winners and some people will make it and most won’t make it. If that’s the case, and the resources for success are better and costs lower than ever to launch a tech startup, the next area of focus is to get more people that are thinking through ideas to take the plunge. Accelerator programs like Y Combinator and Flashpoint are great entry points for entrepreneurs to jump in with a group of peers around them.

I don’t have the answers but it appears that the next area of focus is increasing the top of the funnel of total number of entrepreneurs to increase the number of successes.

What else? What are your thoughts on helping more people become entrepreneurs or investing more in resources for existing entrepreneurs?

Comments

One response to “More Entrepreneurs or More Resources for Existing Entrepreneurs”

  1. Eric Langley Avatar
    Eric Langley

    Great post Dave, here are some thoughts;

    “Now, I don’t know the previous success rates or the current success rates, so this is merely based on my gut.”

    Since startups are by nature private this will be difficult without some central clearing house of anonymous data collection, like at ATDC, Flashpoint, etc.. This data would need to be publicly available. Some data points could be; funds raised, number of employees, revenue ranges, product maturity and possibly some of the AARRR metrics. The key here is it needs to be anonymous.

    “Another theory is that you can’t pick winners and some people will make it and most won’t make it.”

    You might not be able to pick winners but you can predict future behavior (based on past behavior and psychometric assessments). And you can find out what an entrepreneur’s motivations are (by asking them questions or through psychometric assessments).

    In the Kaufman Foundation book “The Founder’s Dilemmas”. Noam Wasserman notes that the way a founder thinks, their motivations, are highly correlated with success, success meaning building a big company, more so than their outward behavior or aversion to risk.

    The biggest issue is control. Do I want to be Rich or King. It is very difficult to be both.

    From the book; “Founders who gain insights into their core motivations for embarking on this perilous startup journey should also gain understanding of the trade-offs they will have to make each step of the way and which choices will help them reach their destination.

    A founder who knows whether wealth or control is his or her primary motivation will have an easier time making decisions and can make consistent decisions that increase the chances of reaching the desired outcome— Rich or King.”

    Wasserman, Noam (2012-03-25). The Founder’s Dilemmas: Anticipating and Avoiding the Pitfalls That Can Sink a Startup (Kauffman Foundation Series on Innovation and Entrepreneurship) (p. 26). Princeton University Press. Kindle Edition.

    “…the next area of focus is increasing the top of the funnel of total number of entrepreneurs to increase the number of successes.”

    In my opinion some filtering needs to take place here. Just like in hiring there has to be a defined selection process, not based on gut feeling. Having more candidates may or may not lead to success. Correctly selecting the candidates to mentor, advise and invest in that are best aligned with the type of success that they want to achieve can go a long way in producing the expected outcome.

    ~eric

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