Passionate people prioritize their principles! That’s great – when it’s what the customer wants. But most of the time, the customer just likes simplicity. It never ceases to amaze me how many times world class companies and their entrepreneurs just don’t get this.
I get to spend a lot of time in airports these days, and most of all at Amsterdam Schiphol, where we are launching a world class new service for frequent flyers. The great thing about airports is that they are such an amazing opportunity not only to people watch, but to watch mankind – imagine all that amazing talent from all over the world and from so many different cultures. It’s an opportunity not to be missed.
A weakness of mine is my coffee and so I get to spend a lot of time in the Starbucks queue at Schiphol. They know me well by now. So, the other day, I was performing my perfunctory queue duty at the height of the airport rush hour, and I made note of the following: 6 different spoken languages, 12 different orders for coffee, and 12 moments of insistence….and the conclusion?
Bearing in mind the wide cultural diversity, not one single traveler mentioned “venti”, “tall” or “grande”. To them it was simple: small, medium or large. 12 points of denial on behalf of the “barristas” who insisted on using the language they were trained to use, and 12 points of insistence from the customer….”NO, I WANT IT SMALL. Don’t you get it????” Starbucks creates a world class experience for some of us who like coffee. But they didn’t change the world for any of us with a tongue in our heads. People like it small, medium or large. Period.
Likewise I see many entrepreneurs embark on a journey ground-breaking, world-changing, top-of the curve, bells n’ whistles, super-particle accelerating, record-breaking product that will change peoples’ lives forever. Truth is, it hardly ever does. Never over-engineer, keep it simple and humble, and ensure ALWAYS it’s what the customer wants.
Creativity is a great thing – when it’s needed. And that’s the problem, sometimes we only get creative when we have to. And that’s often too late.
Take the example of raising investment funding for early-stage start-up companies. You start out in good times with a ground-breaking product idea that is going to change the world. You evanglise it, and hey presto – you’ve attracted a bunch of investors. The valuation is high, but the investors doesn’t seem to mind – after all, it’s good times and you’re onto a good thing.
But then, the world changes. Now you’re at the bottom of the economic curve and times have gotten tough. Guess what? New investors are laughing you off at the sheer audacity of your valuation proposal. Remember Murphy’s Law – the other queue is always shorter. There’s always another company who is MUCH further along than you are – AND has a better valuation. “Thanks, but no thanks. Next”.
So you cut a deal to stay alive – and the valuation is a fraction of your previous round – then you’re busy trying to keep your current investors happy….”hey, why didn’t I get the same deal?” There’s no way back. Now you’re in a recession, and investment funds have dried up and your cash burn rate has gone through the roof! Goodbye party time. Hello fight or flight.
OK, so you’re an entrepreneur, and all entrepreneurs fight, right? So, big nasty sabre-tooth tiger is at the entrance of your cave and your defensive instincts are kicking in. Nothing like a bit of adrenaline to keep you on your feet. The creative juices start flowing – and fast…with traditional sources of finance out of the window, you’re looking at innovative new ways to raise finance – crowdfunding, partnering with your clients, etc, etc. Ah, so you’re in bootstrapping mode all of a sudden huh? Hold on Mr. entrepreneur wise guy – you gave equity for a ridiculous valuation in the beginning and raised all this money that you probably didn’t even need. Dream On* Isn’t it a little late to start being creative?
The traditional venture capital model for early stage companies is dying – fast. Use this as an opportunity. Build half a product, with a few simple bells and whistles, then go get revenue. Stop spending time and investors’ money over-engineering a product that customers might not need. Forcing yourself to be creative in the beginning will bring 3 advantages: (i) it really WILL be your own company, (ii) you’ll spend less time chasing money and more time creating value, less time planning and justifying to investors and more time selling, and (iii) bootstrapping in this way will help you manage your finances a whole lot better.