There is much that I can tell you about the class of Managing the Tech Start ups that Enrique Dans started at Instituto de Empresa this April intake on the International MBA, but the one thing that immediately comes to my mind is that it is an “eye opener”. They try to teach so much stuff at business schools, and it is perfectly understandable that they want to give you solid foundations and a nice structure, but as much theory they can give you, they can never prepare you for real life. I am 38 years old and I consider that I have succeed on my own terms at corporate venturing, and let me tell you that something I learned is that nothing is as you originally planed for, and that rules change and it is a day to day ongoing process if you really want to make it in any sector. What I had never realized until I had the chance of attending this class, is how much more difficult it is for an entrepreneur to launch a new startup and especially in a sector as aggressive and competitive as the technology industry.
First of all starting a business from scratch is hell, I mean working for a huge corporation is not a day in the park, and it has its huge disadvantages such as the process of decision-making. In big corporations, getting an approval can take forever and it is one hundred times slower to get people to move in one direction whereas in a small company you are the only one calling the shots, or the fact that it only takes a couple of screams to make the whole company go in the direction you want. It is also amazing how delicate are expenses or even the funding of a project, in big corporations if you already have a group of 10 or 20 people working for you and things start to go bad either for your group or for the whole company, it can take months before anyone asks you to fire someone or even raising salaries and giving bonuses and when speaking about funding, you get your budget and you can pretty much do whatever you want with it. As long as you hand in a decent justification, you will get funding for as many projects as you can justify even knowing that maybe 2 or 3 will go wrong but you have enough financial power to wait to get that one project that will pay for all the wrong ones.
In startups it is all about adrenaline and oxygen, if you can’t make your sales pipeline on time, you will get fired on the spot. You can probably get money for only one project so you better chose it wisely and sometimes on that project rely the future of many people. I believe that on one hand it makes you a lot more conscious and productive, but on the other it must be exasperating to have to be thinking about money every single minute and even trying to figure it out how will you be able to come up with money for the payroll of the next three months.
What I liked about this class specifically is that Enrique brought us people who have started projects and companies from scratch, people who have really made it in one of the toughest industries where competition is as bloody as a tank full of sharks. These are entrepreneurs that have been able to succeed where 95% of people have failed and that you will be given a speech from one of the Hollywood stereotype guys that we have seen in movies, but then you realize that this are regular people like you and me and that the only difference between them and the rest is that once, they dared and they didn’t gave up and that they fought and fought and fought till they made it.
Much of the learnings that I got from this class where either ideas, or phrases that this guys said during class or while being asked a question like the guy from Coches.com, a guy that had the first movers advantage buy being able to get hold on a domain name (and pretty much that was the only advantage he had over other competition) and got together with a friend and a family member and his best remark was “Don’t do business with friends or family, you will surely loose one of them… or even both”
I also loved the story of Jesus Encinar, the founder of Idealista.com, that he explained that when all you have is an idea, it is really simple to divide shares when there is no work or money involved, it is like a little kid in kindergarten…
“your mommy gives you a cookie and when you get to school and your friend asks for a piece of cookie, you don't give him 7.5% of the cookie, you just give him half.....”
Problems start in businesses when you decide to split your shares and since it is barely an idea and there is no business to share yet, everything sounds reasonable, and it is amazingly simple to split shares when the only thing you have is an idea and there is nothing tangible, the problems start when you realize that not everybody puts in the same amount of work or the best ideas or even the basic things a business needs in the same quantity. Or that they want salaries and don’t want to sacrifice as much as you thought, then is where the real problems start.
An true entrepreneur that basically turned a regular day to day business like magazines and newspapers and turn it into an online opportunity by creating several blogs and having people write on them pretty much like a magazine does this days, and not only that, but you can do it being profitable from day one (which in internet or mainly any other business is a real challenge) as he said “You don't have to go wild and get funding and loose money for the first three years, you can actually start positive from day one, it's all about speed.... If you start small 2and get a slow and steady growth, you can always manage to be positive…
Chikisimo.com taught me that it's all about listening to what your customers want and attending to his needs. Even if this means to create a business model for teenagers that wake up and take pictures of them and send them to their friends so they can see what they will wear that they.
Or like Pablo Larguia says, “It is all about being confident even if you are just selling a bunch of bullshit you better do it feeling very confident... When being asked from a cocky Mckinsey know it all ass about what would be your expected growth if you invest 1.7 million in marketing instead of .7 million you just answer 2.74..... If you're really confident when you say this he will just take you for it....”
Guess I can conclude that there are no written rules when it comes to starting a company and as much as business schools try to get as much theory as they can, you can see that each of the speakers have their own recommendations and each of them differs from the next, some will tell you to stay away from investors at the beginning, that it is cheaper to start your own business by yourself and that you should only require money when you need to grow, others tell you that without money it is almost impossible to succeed. From those who recommend you to get money from the start, there are two different groups; the ones that tell you to absolutely stay away from venture capitalists because they are vultures that will try to suck all your blood and only trust an angel investor that will stay with you from the beginning to the end, and other group that tells you you that you should go to VCs because they are the ones with the most experience and that they will help you and make your path a lot easier.
I believe that as usual (and just as one of my favorite answers in the MBA say…) IT ALL DEPENDS… it depends on your situation, your experience, the amount of money you have, the market you are trying to get into, and even if you have two projects in the exact same situation, no one can guarantee that one result will be better than the the one. I honestly believe that there are no good or bad decisions, just different outcomes, and that your future never relies in only one specific decision, but it is rather a continuous process of ongoing decision making that can lead you to one path or the other.
As I always say, any idiot can have a good idea, but not everybody can actually make one come to reality. The key is good implementation; there is when you really have to become creative, where you take the big decisions, when you prove your self as a leader and when you can be separated from the rest. It all relies on implementation and that is the real key. Those everyday decisions that you make, how you evolve, what changes are you willing to make to your original idea, how much can you adapt your idea to the reality of the market.
And some times the only thing you need to become one of this big shot guys we see published at Techcrunch or even on the news is one thing…
Take the chance… and Just Do It...
Arnoldo Marquez Romero