Lots of popular literature on start-ups portrays success as a rather linear process involving well-crafted plans animated by hard work. Those two elements are indeed helpful, but are no guarantee for success. In fact, they rarely explain success when it comes to start-ups.
The most important moment in a start-up’s life, the instant of creation, is as elusive as the full understanding of the Big Bang is to cosmology. Like in the case of the Universe, the moment when value bursts and allows the start-up to expand tremendously is but an instant as compared to the entire life of the future company.
This “Big Bang moment” for a start-up has little to do with careful market studies and disciplined efforts to develop and execute strategies. It my experience, it is rather a discontinuous leap of faith likely to embed “don’t try this at home” elements. It cannot be rationally explained. It cannot be neatly presented as a series of logical steps to a desired outcome. It cannot be defended in front of a panel of investors asking wise questions like the ones on the popular TV show “Shark Tank”.
Let me exemplify with a few real world anecdotes from my own serial start-up experience.
Lunch at Marriott…or Hilton
Back in 2006, fresh after quitting my corporate job and having just created my first start-up, I was busy networking. At one particular event I met a 75 year old Danish guy who had been a known businessman in his day but had since lost all his wealth and was forced to freelance with no prospect for retirement in sight. We had a one hour conversation which ended with his statement that he liked me, and that he would help me build a business. And so we would meet for coffee or lunch every week for the next year at the Marriott or the Hilton. Every time he would promise it’s just a matter of time until he finds a good lead for me, and every time I would end up paying for lunch. After about seven months I started to doubt not just his ability to help in any way, but my sanity for continuing to believe something would come from this. And so I asked that at least we share the table bill. Without being offended in the least, he said it was a privilege for me to be in the presence of someone with his level of wisdom and business experience. I ignored my natural impulse to feel cheated, and continued to pay for lunch for the next five months. I pushed away my rationality and shut down my reasoning in order to continue to meet this 75 year old week after week. My business partner finally stepped in and demanded that I stop sponsoring pointless lunches. He pointed out the unfairness in me wasting my time with senile old men while he was hard at work looking for real leads. The same – now former – partner today runs a very profitable operation based on the lead that the 75 year old guy gave us after exactly 54 lunches at the Marriott…or Hilton.
Flying over the Alps
In the winter of 2008 I received a phone call from a business acquaintance. He was running a non-profit in the area of transportation policy and had an urgent problem. The CEO of a large multinational was showing up at his office imminently and he couldn’t produce an audience to greet the delegation. Could I show up as a favor? He just needed bodies to fill a room. I dropped everything and went. There was little chance to exchange words with the CEO. But we did exchange business cards and he did tell me on his way out they had an interest in expanding into the Central Eastern European region. Over the next three weeks I embarked in a leap of faith experiment. I created a scenario in my head that if I would do a market study pro-bono, they might invite me to the headquarters and I might be able to obtain a consulting agreement. And so I spent three weeks doing a full-blown market study and I sent it, for free, to the CEO. I received back no response. I calmly said to myself email is overrated and a face-to-face should help. But how to obtain a meeting with the CEO I had only met for 15 minutes in another country? I emailed him and said I would be in the town of his company’s headquarters for a conference, and would love to stop by and go over the free market study I was hoping they had received. He agreed and I took a flight. Halfway on my flight, somewhere high above the French Alps, I started to wonder whether I had gone completely crazy, wasting precious few discretionary company resources on what could well be a worthless adventure. I knew full well that I wasn’t going to any conference. I was betting my spare cash on the possibility that I could obtain a consulting agreement based on sheer will power. Had I not been a start-up entrepreneur but an established executive in a corporation, the board would have most certainly dissuaded me. The meeting with the CEO and his team went great and I indeed obtained a consulting contract that would go on to be my largest to date. It was this Big Bang moment that proved to be the game changer for my small consulting boutique firm. It was this moment that allowed me to hire another key person who subsequently changed the entire company dynamic.
A daring question
Two years before the Marriott lunches, I was comfortably employed in a corporate job. I had managed to send myself to a large conference and was listening to a high level government executive giving a speech on a Friday afternoon. As I recall I was about ten rows away from the podium. As the talk ended and the official invited questions from the audience, I noticed that every time a question would get asked, someone from the first row would stand up and explain why the question wasn’t fair, wasn’t applicable or wasn’t relevant. It seemed to me the whole entire row was working for this official in one capacity or another. I waited until the end of all questions and stood in line to ask my own question. It was something along the lines of “are you sure all these people in the first row are doing you a service, deflecting what appeared to be valid and potentially useful questions”? I went on to highlight several examples. The official didn’t get offended and invited me to be part of her working group. After fighting through the corporate bureaucracy at my own company, I was allowed to attend the industry-government working group. Several months later I introduced one of my corporate colleagues to this person. Ten years later that former colleague went on to support the organization of this particular person in various capacities. It has proved to be an intensively lucrative opportunity.
About a year and a half ago I was watching CNN. A former senator was on discussing something related to transportation. I noted he was a board member for a certain company. Curiosity got the best of me and I looked up the company. They were a global consultancy looking for international partners to deliver seminars as well as consulting. I called and left a message for the CEO. We eventually spoke and agreed to do a seminar together. Six months later the CEO was overseas, delivering a seminar to a local audience my partners and I had assembled. We are now contemplating the establishment of a new market niche in terms of consulting services for the particular international region. Watching the seminar come to life I couldn’t help but think of the “something from nothing” idea.
These are but four modest examples drawn from my personal experience, meant to lend credence to the Big Bang metaphor for start-ups. There is much wisdom that can be derived.
One insight is that it takes a special someone to generate value where nothing existed before. This is the essence of entrepreneurship. It is also important to be aware of the difference between entrepreneurship and business management. As rare as good CxOs are nowadays, entrepreneurs able to generate Big Bang moments for start-ups are rarer still. Also, it is orders of magnitude easier to nurture a company after the Big Bang moment than create the value burst. And I don’t mean here just technically simpler. I am referring to psychology, leadership, vision and guts. It’s easy to lead after the impossible has already been made feasible by someone else. Contemplating the impossible at the limit of sanity on the other hand is no joke. I’ve seen many respected business leaders and investors discount the Big Bang moment, precisely because it doesn’t follow any rules.
Here’s another take-away. An entrepreneur of the Big Bang type cannot work for someone else. You cannot subordinate Steve Jobs, or if you do, you won’t get the iPhone. Imagine how pointless it would be to impose targets, business goals and objectives on someone like that. What would those goals look like? You have to watch CNN and come up with an idea to contact someone you see there and create a business opportunity? You have to meet with a 75 year old for a full year and come back with a brilliant business lead? You have to go on a hopeless trip and invite yourself into the office of a multinational CEO in another country and return with a signed contract? You get my point…
And one last thought experiment for kicks. Imagine McKinsey, the preeminent global strategy firm attempting to extract best practices from the examples I’ve just listed. There are no repeatable steps. So don’t expect McKinsey’s strategy tips to replace your true talent.