Entrepreneurial Readiness

I've been thinking about repackaging the Entrepreneurial Design work and the $1,000 Challenge as a set of open, in-public challenges.  The challenges would be designed to teach people what it's like to be a founder (something that can only be done by doing), whether their aspirations are to be independent, to build a small company, or to build something that is large scale, venture-funded or otherwise.

So much of the founder education experience today misses the mark.  It's couched in terms that pertain to the either the startup fundraising process–practicing your pitch, what you should have in your pitch deck, how to raise a round, what type of capital you should pursue–or the product development process–building an MVP, finding a co-founder, customer development, learning to pivot.

1. In the current system, readiness is assumed

In my experience, one of the biggest reasons founders fail is simply because they weren't ready for the challenge.  All of the things mentioned above are important, but they're secondary to readiness.  The founders thought they were ready, they were assumed by investors to be ready, but they just weren't ready.  The reason for this lapse isn't incompetence or ill-intent, it's simply that there isn't a clear owner for it.  It's a flaw in the system.

Let's break that down a bit.

First, there is an apt adage that part of being an entrepreneur is the willingness to "start before you're ready".  There is definite truth to this, and I've personally been known to say this quite frequently.  However, it's important to consider the context.  As an educator, you wouldn't say this to a room full of students who you knew were ill-prepared to launch.

You would only say this if you sensed that fear was what was holding people back, not capability.  Advice is like medication.  The "right" medication in the wrong context can cause harm rather than cure the illness.  Similarly, the challenge with having "start before you're ready" floating across the internet is that there are no guardrails to keep this from the ears of folks who are fundamentally and truly ill-prepared.  As a result, it gets accepted as fact that everyone is ready right now regardless of where they stand or sit.

Second, when you think about entrepreneurship, there's an inherent hierarchical structure to it, regardless of its different flavors.  The most popular flavor of entrepreneurship is the kind that feeds into the venture industrial complex.  It's assumed that the goal is to create a business that will generate outsized, 100x returns.  

The gatekeepers in this hierarchical structure are many: there are angel investors, accelerator directors, venture investors, and more.  These people are pickers first, and advisors second.  Their primary incentive is to identify opportunities that can not just make money, but generate huge returns.

However, from the entrepreneur's perspective, they are often looked to as guides.  The inherent conflict here is that the gatekeepers aren't incentivized to critique and help those that pitch them–that's not to say that they don't, as many do go out of their way to do so.  However, instead of hearing "your strategy is flawed and here's why", you'll hear "this is too early for us, but we'd love to keep in touch".  And that's because, in their role as pickers, investors want optionality. The deal you turn down today might become the deal you are scrambling to get into next month.  Being completely honest with an entrepreneur might adversely affect an investor's deal flow, which in turn would impact their returns.

As a result of this, there's a gap in the system.

Entrepreneurs are conditioned to believe they are already ready.  And, the job of the gatekeepers is to find the winners, not to develop entrepreneurs (one could argue that some accelerators aim to do this, and some do, however most accelerators are pickers, too, as their business model necessitates that, and so most of their efforts are really elaborate lead gen funnels).  

Particularly if a deal is hot, a founder's entrepreneurial readiness can be overlooked by both the entrepreneur and the rest of the ecosystem.

2. Teaching readiness only makes the pie bigger

Some take the point of view that this gap is beneficial, and that the best entrepreneurs are going to be the ones who can make the leap the regardless, sort of a survival of the fittest argument.  While it may be true that those who are able to make the leap are predisposed to succeed, I'd argue that what we're really doing is underinvesting–that if we were able to increase overall entrepreneurial readiness, we would see even more/better innovation across society.  

That is, there's an incredible opportunity to widen the pie.  

Certainly part of that is increasing access to:

  • technology education
  • capital, and
  • support networks

all of which have improved over the years.

However, there hasn't been as much development in teaching entrepreneurial readiness, and therein lies the opportunity.

3. How do you teach 'Entrepreneurial Readiness'?

So, first of all, what do we mean by readiness?  We said before that this isn't about fundraising or product development.

I see readiness as the sum of a number of smaller capabilities, which include:

  • the process of taking a risky idea and putting it out there before you're ready.
  • the process of engaging with people (which is harder to do in an isolated world) and to build a community or audience from which to both validate your idea, and gain early adopters.  
  • the process of learning how to tell a story that will convince hearts and minds (effectively sales) vs. the achievement oriented mindset of "just getting to the right answer".
  • the process of learning how to make tradeoffs because there will never be enough time or resources to do everything exactly right.
  • the process of learning how to ask for help, and how to find (or build) the support networks that you need, because no one has gone on this journey except for you.

What's unique about these abilities is that they're best learned by doing, not simply by reading books or listening to people talk.  And more specifically, they're best learned by launching your own side projects–ideas of your own versus work assigned to you by your employer.

They need not be grand or epic ideas, in fact they can be quite small (probably the smaller the better).  It needs to be one's own idea in order for the individual to really "feel" the nature of the challenge.  They need to be the protagonist, and not simply an implementor of someone else's orders.  It's through this that both their successes and mistakes will be their own, and they'll be all the better for it.

When I think about the mechanics of the $1,000 Challenge and why it works, you can teach readiness by designing the right set of incremental challenges that enable a learning experience.  In some ways, it's about taking people through one turn of the cycle, where they are truly taking a risk, but where there's adequate support to help them move forward and also process what they've experienced.

4. Entrepreneurial Readiness isn't "just" for entrepreneurs

I'd go so far as to say that learning these abilities are broadly relevant. Anytime you see or hear of companies looking for leaders or innovators, what they're really talking about is Entrepreneurial Readiness.

The reason for this is that the way we learn and work today is largely industrialized.  That is, every individual on the team performs their specific job, without a full understanding of how all our parts really fit together.  If something isn't going well, we attribute it to someone not doing their job well.  If we have a favorable outcome, it's usually because we excelled at something that our other teammates could not.

But if you challenged people to take on a project of their own invention, and own all of the work end-to-end, regardless of the outcome of that project, whether it succeeds or fails, you'll likely end up with an individual who is more resilient than before they started.

In fact, you might also find:

  • more empathetic employees because they'll have a better understanding of the full set of roles and capabilities (and challenges amongst their colleagues,
  • more resilient and confident employees because they've taken on a challenge and made it through,
  • a clearer sense of who is ready to take on bigger/different challenges because you'll have even more surface area by which to see what they're capable of.

And, individuals will have a better handle on whether they'd like to pursue something entrepreneurial in the future or whether they're happy in their existing roles.  In effect, it's a low-cost opportunity to scratch a career transition itch.

5. Why is all of this important?

There's long been a romanticism with the idea of Entrepreneurship–that it can't be taught or that there are only a select few who are the brilliant geniuses who can impact the world.  It's perpetuated a false dichotomy, simultaneously propping up the privileged while creating barriers–in the worst case, self-imposed–for others.

There are smarter people who can talk about how this is much more deeply rooted in the history of this country, amongst other things.

For the sake of this conversation, what this means is that there's tremendous unrealized potential for both new creators and new creations, who are less interested in creating extractive businesses primarily for the purpose of creating something they can flip, and instead motivated by building the houses in which they themselves want to live.