How to Start on the Journey of EntrepreneurshipBy Jorge Combe | Wed, 10/21/2020 - 14:01
One of my first memories is playing Tetris on my Nintendo Game Boy in the late ‘80s. The first blocks were crucial: the speed was slow and you needed to get rid of the pieces at the base or have a solid foundation in order to be ready when the blocks fell at a faster pace. Have a lot of misplaced blocks at the bottom and you were doomed as you needed to maneuver your blocks with less space and less time to react.
Entrepreneurship is not that different. Millions of players, most will not survive. Most of them will rush when they shouldn’t, and slow down when it’s not the right timing. Yet, we all venerate entrepreneurs despite how little is understood about the process. Startups have been glorified and entrepreneurs are the new heroes and what everyone aspires to become. There is little understanding of the winner’s bias and also the sacrifice and 10 years behind the spotlight of every “overnight success.”
The typical professional career in the ‘50s or ‘60s would start by being hired by a stable and reputable company, and in your best-case scenario you would receive a car from the company after being employed there for five years, and ascend from intern to analyst to senior analyst to associate to senior associate to director to assistant vice president to vice president … and then if you are in the top 1 percent, showed up every day for work and didn’t upset your boss and were patient enough until he retired or died of a stroke … For 30 to 40 years, you would be performing similar tasks at your job, learning few new and differential skills. While the saying Woody Allen saying “90 percent of success is showing up” was true for the traditional job 50 years ago, it might not be true in the future given the velocity and differentiation that will be needed.
Let’s compare that with the typical career path of today. Before graduating, one is studying extra courses or abilities on his own that will differentiate him from his peers, and will make him standout in the interviews with a fast-growing company. The average job will last less than five years before you become bored and start looking for new challenges. This is the most stable scenario, as more and more will try to form their own company or adhere to an early startup team, which will most likely fail and then jump to the next one.
Over 65 percent of startups fail in the first five years. Even today. So why do we admire entrepreneurs and see them as geniuses? Because we have a winner’s bias, wherein we only hear about the positive stories and the ventures that were successful, so we overestimate how difficult is to start up a company or do something new.
Is entrepreneurship for everyone? No.
Is everyone ready for the challenges and variability that will derive from having their own company or becoming a freelancer? No
But even though it might be oversold and we have a winner’s bias, the future of work will be geared toward individuals or small teams running the show. It will be impossible not to prepare to become your own boss and to be ready to start up your own company, because if you don’t, when the future arrives and you are not prepared, the tsunami will run over you, and by that time, you will become unemployable and with no tools to start up your venture.
Entrepreneurship as well as creation can be learned because it is a process. To become an entrepreneur and create something you need to do the work. This is an ordinary process and that can be done by almost all of us, but sometimes the results of this first step will become extraordinary and difficult to believe that it was initiated by common people like you and I.
The difficult part is just to start without asking too many questions. When you state you do not have time to start up a company, in reality you are saying that doing it is not among your priorities. As Kevin Ashton in his book How to Fly a Horse says: “All that is necessary is to begin. I can’t is not true once we begin. Our first creative step is unlikely to be good. Imagination needs iteration. New things do not flow finished into the world. Ideas that seem powerful in the privacy of our head teeter weakly when we set them on our desk. But every beginning is beautiful. The virtue of a first sketch is that It breaks the blank page. It is the spark of life in the swamp. Its quality is not important. The only bad draft is the one we do not write.”
Our culture at DD3 has doers and everyone multitasks. We are all receptionists, accountants, mail service, IT professionals as well as financiers. We roll up our sleeves and do the work. For the first full year of operations we limited our team to only five people and were operating two divisions: investment banking and a credit fund. Keeping the team small and focused allowed us to be profitable every single month since we founded DD3. Every new venture we start has to stand by the same philosophy and be profitable on a standalone basis.
Scarcity in resources makes people be creative and conscious of the value of money. Raising a lot of money from venture capitalists at high valuations can be a blessing, as well as an impending doom. You don’t appreciate money unless it was scarce and difficult to get. Most good ideas and entrepreneurs will be victims of their early success. Too much glory, too much money, too much fame: too soon.
“The greatest paradox of life is that the greatest things come in the long term, but the opportunity cost of moving slowly is huge. Act fast on things that compound. Never let a day pass without doing something that will benefit you in the long term,” said James Clear. Overnight success is extremely rare and in a majority of the cases doesn’t exist. What you see is the work of many years in the shadows compounding and becoming apparent.
The early days are chaos. It’s a fast-paced MBA course on marketing, operations, finance and management. You need to learn to do everything with little time and with real examples. Most of our time was partially divided between operations, back office as well as selling and being in front of clients. It was crucial to hire only top talent who could achieve what 10 regular employees could.
At the end, entrepreneurship is like playing Tetris an infinite number of times. You have numerous lives, but you only need to win once to be remembered as a success. The blocks fall one at a time, you control the speed and the endeavor is to build something durable and to pivot based on what you learn as you play the game.
Small team, focus on profitability and compounding has been our formula. Easy to say, very difficult to implement. Too many distractions and temptations come across as you grow. Having our sights and objectives far in the future but always keeping an eye on the block that we are playing. Our blocks come in all forms: team, knowledge, relationships, clients, business know-how and capital. Today, we continue playing the same way: one block at a time. One day at a time.