TEN DIRTY LITTLE SECRETS OF SUCCESSFUL ENTREPRENEURS Suppressing the truth, though readily acknowledging it, can enable

many of us to confront and deal with (read: correct) certain personal shortcomings. For example, consider an entrepreneur, who by recognizing some unpleasant truths about herself and the business world can learn how to succeed in spite of known limitations. This Ivey professor serves up valuable suggestions on how to succeed in spite of the limitations. Entrepreneurs rarely have the opportunity to speak about their experiences without someone asking for their top tips or secrets for success. Over the years Ive heard about many such prescriptions for winning at the game of business. Words like passion, persistence and initiative are among the more common adjectives used to describe successful entrepreneurs. It was even a staple of my own undergraduate and MBA courses that students had to devise and submit their own Top 10 lists for success in entrepreneurial ventures. Sometimes, though, the most valuable lessons can be found between the lines. Its not so much that theyre secrets (despite the deliberately provocative title of this article) as they are things left unsaid. When Ive shared this list with entrepreneurs, they generally agree so Ill take that as partial validation and Ill leave it to you to decide whether they make sense for your situation. The first seven items are what I would call observations; things that Ive found to be true more often than not. The last three are more advisory; suggestions on how to act that are consistent with the behaviors of many of the best entrepreneurs and leaders I know. 1. PEOPLE ARE LAZY. This may sound harsh but, really, we are. Whenever possible, people will seek to accomplish whatever needs to be done with as little effort as possible. We also refer to this as efficiency, but it really amounts to the same thing. Think of the most successful innovations in the past year, or the past decade, or even the past century. Now ask yourself whether they involved reducing effort or made our daily lives harder and in fact required greater effort. Whether you thought of automobiles, computers, mobile phones or my personal favorite the TV remote control, reducing effort (or increasing efficiency) pays dividends. Another way to think of it is to ask yourself why some innovations dont succeed. A classic example is the Dvorak keyboard layout. It is much more efficient than the conventional QWERTY keyboard, but was doomed to failure because it required users to learn a new skill. Entrepreneurs should be cautious when trying to launch a new product or service that requires users to climb much (or any) of a learning curve. The magic of Apple devices has long been their intuitiveness. Easy-to-use doesnt guarantee success, but hard-to-use is a recipe for disaster. Laziness is also found in how we think. Nobel Laureate Daniel Kahneman refers to a Law of Least Effort in regard to how much mental energy we exert to solve problems. His findings are discouraging: we tend to do the bare minimum and end up making serious errors of judgment as a result. In a nutshell, thinking is hard work and we dont do any more work than absolutely necessary (and often not even that much). Given a choice between exerting a bit more effort (mental or otherwise) or a bit less, how many of us choose to work harder? Thats right were all a bit lazy. 2. PEOPLE ARE IMPATIENT. Just as we want things to be easier, we also want them to happen faster. As in, right now. Not later. How long are you willing to wait for a web page to load? How do you react to being put on hold? For most of us, the answers are: not very long and not very well.

One of the most famous experiments in psychology is known as the Marshmallow Test. Children were given the choice of one marshmallow (or Oreo cookie) immediately, or two if they could wait ten minutes. As you might expect, some took the immediate reward, while others were able to wait. The striking thing about this research came years later, when the research team was able to identify significant differences in the life trajectories of the now vs. later groups of kids. Those who were able to delay gratification at a young age were more likely to have finished school and obtained college degrees, had lower incidences of divorce, addiction, and obesity, and tended to be better off economically. The lessons for us? If we can delay gratification, we can attain some significant advantages. But as entrepreneurs, we should be just as wary about launching a business that requires our customers to wait as we are about one that makes them work hard (as per point #1 above). The success of the fast food industry should tell us all we need to know about the value of instant gratification. 3. EVERYTHING TAKES LONGER THAN YOU THINK. Despite the tendency of people to prefer instant gratification, the process of starting and building a new business is slow and deliberate, without immediate rewards. There are always a few exceptions Facebook is often cited but the definition of an exception is that it isnt normal. And the greater the degree of novelty, the longer it will usually take to educate and persuade potential customers. Thats not to mention the core activities of developing the product, building a team and raising the capital to pay for everything. I often describe this principle as the universal law of everything. It doesnt seem to matter how much time I allow for any given task whether its picking up dry cleaning or writing an article. Time seems to evaporate, leaving me scrambling to catch up. Watch entrepreneurs working during the start-up phase of a new venture and youll find them working whenever theyre awake; they almost never sleep. Theyll tell you its because there never seems to be enough hours in the day. Bob Nourse, founder and former CEO of The Bombay Company, notes that running out of time is failing. If you cant generate revenue and/or profits fast enough to keep the business afloat, you fail. Half of all startups experience this outcome within the first five years. Failing to allow enough time to make things happen is a major reason why. 4. ONE THING LEADS TO ANOTHER. Investors are fond of saying theyd rather bet on an A team with a B idea than a B team with an A idea. They know that business models change, technologies evolve, and customer tastes are in a constant state of flux. Those same investors will tell you that most business plans are obsolete the second they come off the printer. Simply put, theres no substitute for being part of a market (launching your product or service without exhaustive market research). Theres tremendous value in simply getting started and learning as you go. Accept that the first (or first 10) version of whatever youre selling wont be perfect. The process of trying, fixing, and trying again is how entrepreneurs figure out what their customers really want and what it will take to deliver against those expectations. Netflix is an online entertainment company. It began life when CEO Reid Hastings mailed some DVDs to himself to see whether it would actually work. The simple act of doing something triggers a reaction sometimes good, sometimes not so much. But the difference between a dreamer and an entrepreneur is that only one of them takes action. Businesses cant grow if they never start in the first place.

5. THERE IS NO FREE LUNCH. Most of us learn early in life that you cant get something for nothing. Its a lesson we sometimes forget and have to re-learn (more than once). Choices are necessary, if not always pleasant. Theres only so much time and money and talent available. Spending an hour on one thing means that you cant spend this hour on something else. A dollar spent on a cup of coffee in the morning is a dollar no longer available for pizza later that night. Harvard Professor Michael Porter describes the essence of strategy as deciding what not to do. Leaders who arent able to make tough choices doom their organizations to mediocrity when they do too many things in an adequate way and nothing with excellence as the desirable standard. The hardest thing for a new company to do is say No to a customer. But if you chase every shiny penny you see on the sidewalk, you shouldnt be surprised if you end up somewhere you didnt want to be. Businesses evolve, but they cant be everything to everybody. Recognizing when trade-offs have to be made, and having the mental discipline to make hard choices often separates the winners from the losers. 6. STUFF HAPPENS. And sometime the stuff that happens is wildly outside our set of expectations. There are a number of labels for this: The Black Swan Effect, Tail Risk, or, the more prosaic, Sh*t Happens. We have different mental models to explain why things happen, including luck, karma, fate, destiny, chaos theory, and the law of unintended consequences. But whatever phrase or rationale we might use, theres no denying the fact that we cant plan for everything. Moreover, sometimes the very thing we expected least is the very thing that comes to pass. Sometimes the surprises are predictable (see Max Bazerman and Michael Watkinss book in References at the end of this article). But when we are caught by the unexpected, how do we react? In some ways, our ability to respond depends precisely on the nature of the trade-offs weve made in the past. Committing to a particular technology, for example, can lock a company into a dead-end trajectory if a new technology displaces the old. But failing to commit, which increases our options, may be too costly and lead to an uncompetitive position. One type of unexpected event that is both common yet sometimes hard to imagine is the dissolution of a partnership. Just as newlyweds find it difficult to envision divorce, so too do entrepreneurial founders struggle with the notion that their partnership might not last forever. Building a shotgun clause (also known as the buy/sell provision) into a shareholders agreement is not unlike a pre-nuptial agreement in a marriage. A tough conversation to have, but well worth the effort. 7. WERE ALL ANIMALS. I mean this in the literal sense. We are biological machines and we dont work well if we neglect our bodies. If you dont believe me, try a simple experiment: fast for a day or stay up all nigh t and see how well you make decisions and get along with people. Research is continuing to show how closely our minds and bodies are connected; fatigue and low blood sugar are just the tip of this particular iceberg. Yet how often have you pushed far beyond the point at which you can think and function effectively? Dont underestimate the value of a light snack or a power nap when it comes to making good decisions. Taking care of our organic selves results in a lot of business opportunities. For example, what percentage of our incomes is allocated to the basics requirements of food and shelter? As population demographics begin to shift, the nature of those needs will also change; entrepreneurs are pursuing those opportunities as you read these words. So start treating your own body well and begin to think of yet-to-be launched businesses that can cater to our animal natures.

The final three items in this collection of not-so-secret secrets are less observational and fall into the category of basic, commonsense advice. Theyre not magic and they wont guarantee success, but if you choose not to heed them, dont say I didnt tell you so. 8. SWEAT THE DETAILS. Understanding the intimate details of a venture is necessary. Not sufficient to ensure youll wind up on the cover of Fortune, but necessary to keep your head above water. The 2008 sub-prime lending meltdown was an extreme example of what can happen when decision makers lose track of the details. Forensic analysis has revealed how poorly corporate leaders understood the nature of the risks they were taking. Unfortunately, the consequences of their actions affected far more of us than those who made the decisions. The example of a buy/sell clause in a shareholders agreement is another example of a detail, which, if overlooked, can literally destroy a business. When it comes to cost and revenue drivers, lacking a crystal clear sense of what influences each one, and how costs and revenues move together (or dont) can be catastrophic. This is not meant to encourage micro-management (see point #10 below). Knowing the details is important. What you do with that knowledge is another thing altogether. 9. LEARN FROM EVERYTHING. We can learn from success. We can learn from failure. We can learn from our own experiences and from what happens to others. We can learn from what we see and hear today as well as from history. The title of this paragraph really says it all. But just because we can learn from everything doesnt mean that we actually do. As an educator, I am passionate about learning. Most of the successful entrepreneurs and business leaders with whom I work share that passion. And I dont think its a coincidence. When we stop learning, the world moves past us. Ask yourself what really new thing youve learned in the past 24 hours or the last week. And if you cant, watch a TED talk, pick up a magazine youve never read before, or find a blog that sounds interesting. It might not help, but its hard to imagine how learning something new will do you any harm. 10. DONT BE A JERK. Just because this is the end of the list, dont think that this is the least important. If you want to build an organization with great people, you need them to want to be part of your team. And, since we all know life is too short to work with jerks, its a certainty that the best people will exercise their options to work with the best other people they can find. You might be a technical genius, a visionary thinker, and/or a world-class salesperson. But that doesnt mean you cant also be kind, considerate and empathetic. The best organizations in the world (armies or companies or churches) are made up of volunteers people who passionately believe in what theyre doing and choose to be there. If talented people are in your organization despite you rather than because of you, sooner or later theyll be somewhere else. Laziness. Impatience. Unpredictability. These are hardly virtues and its a list unlikely to appear in anyones advice column on how to get ahead in life. But I do believe these are characteristics that shape our lives as do our inner animal selves. We dont have to be proud of these particular aspects of human nature, but we should at least acknowledge them. And, if were willing to learn, pay attention to what matters, and be decent to one another, things might just work out all right despite our collection of dirty little secrets.