The Hard Lessons of Entrepreneurship
I think if you’re an entrepreneur, you’ve got to dream big and then dream bigger. — Howard Schultz
Don't fall for the romantic founder's myth of a visionary who wants to change the world, overcoming all obstacles.
Real entrepreneurs aren't dreamers or opportunists. They are realists who research societies' struggles until they find a problem-solution-loop to monetize
This story isn't about why most entrepreneurs fail or how to succeed as a start-up. Instead, you will experience the emotional turmoil of my first start-up. So you can understand the discrepancy between entrepreneurial books and entrepreneurial life.
#Market Research is a B'tch
Business 101, start-ups provide a solution to some form of a problem. Step one, find a hole in the market.
Easier said than done.
Nowadays, founders don't guess which solution people prefer. Instead, we do customer interviews to validate our assumptions about a potential product-market fit.
This kickoff model seems logical proof.
The problem is most people are friendly. When you ask them for honest feedback on your ideas, they act like your mum, who doesn't want to hurt your feelings.
My first customer interviews seemed productive on paper. The interviewed students were excited about my idea of digitalizing the documentation of the Erasmus Exchange. They even pitched me ideas about helping them with housing, finding restaurants, and language lessons.
Seems nice, yeah?
But it isn't. These interviews strengthen my confirmation bias. In other words, I heard what I wanted to hear, which boosted my ego.
The result was that I spent 2,4k building two MVPs while convincing investors of the enormous potential by adding the additional features I learned from my customer interviews.
One day before the launch of my second MVP, it came crashing down.
#2 Competition is for losers
Capitalism sees competition as a positive force, called the invisible hand, which balances the economy through demand and supply. In most cases, competition is a race to the bottom.
On service hubs like Fiverr, Upwork, or 99designs, freelancers try to one-off each other by lowering prices. The result is that I can buy professional services for insanely low prices because freelancers are desperate for client ratings and reviews.
Business schools usually take the oversaturated airline industry as an example. According to Statista in 2018 their revenue was 812 billion dollars (b.d.), while the profits were 27,3$ b.d., 27,2 /812 = 0,03, or 3% profit margin.
Compare this with the profit margin of the tech sector, accused of monopoly practices, in 2018 of 52,47%, data provided by CSI Market. Competition sucks for business.
The Holy Grail of Investment
When you research the founders of Facebook, Google, and Apple, you won't find a hidden agenda to become a tech giant or monopoly.
Back in the day, computers weren't commercialized, and Steve Jobs and Bill Gates saw the potential of bringing such technology to the average man.
Never had they envisioned, in their wildest dreams, what their companies would grow into present-day.
In hindsight, I argue they were one of the first who banked on the growth frenzy.
Why do Google, Facebook, and Samsung continuously diversify into new industries like mobile operating systems, self-driving cars, and texting apps? Because, in my opinion, everybody with capital gravitates toward growth.
Shareholders love green numbers, and incubators hunt for unicorns; even governments solidify power based on economic growth.
Innovation
Unless you are Elon Musk or Richard Brandson and have gazillion dollars to invest in a new market, most entrepreneurs are stuck with niche picking.
The only reason start-ups can interrupt corporate behemoths is their two advantages accelerated learning and decision-making.
Let's return to my story. Only fools skip competitive analysis before committing time and resources to a start-up idea.
My competitor, the European University Foundation (EUF), had three advantages, being the official partner of the Erasmus Exchange Program, having a team of thirty devoted employees, and having several agreements with various universities for the pilot.
My strength was that they failed to identify their platform's B2B marketing potential and their slow-paced strategic plan.
Although EUF started in 2015, nothing was released in 2017. According to their public schedule, they will release their platform in 2019.
Racing
So I started growth hacking Facebook to get traction with my customer, the students. While I took care of marketing and attracting investment, my developing team in India built the second MVP.
What EUF would develop in two years, I would create in two months. Things were going my way.
Development went smoothly, and 6% of all students who visited my landing page signed up for the email list, whereas a 2% conversion rate is commonly expected.
Then after two months of hard work, I was ready to launch the MVP. What could go wrong?
Always on the lookout for better marketing tools, I watched a video about growth hacks on competitor analysis; I got a gut feeling to check my competitor; it was 2018. When I opened their site, it said Online Learning Agreement launches tomorrow.
I couldn't believe my eyes. WTF, that's the exact name I used to market my product on Facebook. First, I returned to the competitor analysis file, which still said 2019 launching product, not 2018.
I felt angry and disillusioned. Why did this happen to me? All the sacrifices of last year flashed before my eyes.
My sacrifices:
- I lost 400$ when a Fiverr developer made a useless app MVP and 2k$ on a web app MVP.
- My business plan had to be rewritten for venture capitalists and a potential EU grant. Hence I spent two months in Google Spreadsheets to calculate projected revenue, market capitalization, and other growth factors. Imagine calculating the average cost of a room and flight in different university cities in Europe for 40 000 students. In those days, I saw so many numbers that month I dreamed about them.
- Friends didn't appreciate that I almost always chose to work over leisure time with them.
- During Christmas dinner, aggravating my grandparents, parents, and siblings, I left early to work late.
The final nail in the coffin was that I chose to quit my studies while I only had to write a bachelor's thesis to graduate.
I sacrificed everything I had at 23 years of age, my savings, social relationships, and my college degree, and in return, I got nothing.
#3 Hope in Darkest Days
All these long hours of sacrifice taught me to always look for the bright side of life. So after one hour of feeling defeated, I chose to reflect on the last year.
Who did I become, and at what cost?
Back then, entrepreneurship was an obsession, which turned me into a workaholic, blind-sighted by ambition. I sacrificed my present life for an optimistic goal in the future. But I learned how to manage myself — dealing with the stress of failure and the hauteur of achievement. Conquering myself, I learned to inspire and instruct others to build my vision.
Whereas I could have pivoted by switching onboarding strategies, I chose to jump ship. Listening to my parents, I desired to work with experienced professionals. So I joined a company to not worry about sales and investors. It didn't work out because my boss was a sociopath. The following years were riddled with failures, and I had severe depression.
My days became grey, filled with fantasies of killing myself. I couldn't make peace with where I was in life. All my friends had successful start-ups, and others were building their careers.
What did I achieve? Nothing.
What got me out of that place? The coronavirus gave me the time to build my life again, step by step. I was reconnecting with friends and getting back into life-sustaining habits, exercise, and meditation.
My strongest motivator was that the afterlife could be worse. In this world, I could at least try again.
Currently, I have recovered and renewed my passion for life.
Entrepreneurship has been a rollercoaster of emotions for me. Somedays, I was fighting the world, and other days myself. At some point, I lost my way. But from the depths of despair, I eventually arose like a phoenix.
In conclusion, these trial and error cycles will convert most entrepreneurs into stoics — those who try to perceive reality for what it is and not what they would like it to be.
Either you move with the world or against it.
