This is a question that many entrepreneurs ask themselves before they embark on an entrepreneurial journey. Many people make the mistake of assuming that only charismatic leaders have the capacity to be great founders. Or they assume that if you haven’t engaged in some entrepreneurial activity in your youth that you are not cut out to be an entrepreneur. While these are useful attributes to have, it turns out that there are many more important factors at play.
Customer Empathy and Product Orientation
As I have written before, achieving product market fit is critical to the success of any startup. You need to have strong customer empathy and a deep understanding of the problems that they face to build the right solution for them. As a CEO, even after you have raised funding and hired an experienced management team, you will need to spend a good 30% of your time interacting with customers which you should enjoy doing. You should be constantly updating your understanding of customer usage scenarios and pain points so that you can effectively guide your company on how your product should evolve.
As the leader of your startup, you must be knee deep in defining your product strategy and features. You don’t need to be a technical person to do an effective job of guiding the product vision. You need to be ready to roll up your sleeves to define the feature set and even go as far as designing the initial UI for the product. This is something that I did for all my startups. Certainly, I hired a designer to help me with UI design, however, the initial UX framework was designed by me. Even later when I hired a head of product, I would closely monitor the product evolution to make sure that product stayed true to my vision and was easy to use.
As an entrepreneur, you need to be selling all the time to be successful. You need to sell potential co-founders, you need to sell customers to try out your product, you need to sell investors to fund your company and you need to sell employees to leave their high paying jobs and take a pay cut to join your company. As a result, you need to love the idea of selling your vision to all kinds of people and you must be good at it. To be clear, you don’t need to be salesperson to do this successfully or have prior sales experience. You need to have a deep understanding of your market, a clear vision for your company and you need to have strong communication skills to convince people of your point of view.
Perseverance and Mental Fortitude
Entrepreneurs need to have tremendous perseverance and mental fortitude to be successful. You will encounter all sorts of obstacles and challenges along the way that you will need to overcome. Initially, your challenge will be getting customers and proving product market fit. Next you will have to raise funding which is a never-ending task. Some of your employees may not be a good fit and you may have to fire them. As I had mentioned earlier, I faced two deep recessions after raising initial funding for my startup. I had to lay off more than 50% of my team in my first company. In my second company, I was 2 months from running out of money before I was able to secure my next round of funding. The stresses of running a startup are never ending. You have to really believe in your vision and love what you are doing. You have to work hard on maintaining an even keel and convey a sense of calm and confidence to the rest of your team so that they don’t get defocused by the challenges that you are currently facing. The entrepreneurial journey is a marathon, not a 100-meter dash. You need to be good at preserving your energy and keeping your spirits up so that you have a good chance of making it to the end with a successful outcome.
Capacity to take financial risk
Starting a new venture will require you to take substantial financial risk that you need to fully consider before taking the plunge. You will likely be without a salary for a good 12 months and even after you get some funding, you may have to still take a 50% pay cut until you raise Series A funding which could be another 12 months away. Let’s say that you are a mid-level manager at a tech company making $250,000 in annual compensation. You are looking at a potential loss of income of $250,000 for the first year and another $125,000 in the 2nd year for a total loss of $375,000 in income. In addition, it is quite likely that you may have to invest another $50,000 to a $100,000 to fund the initial development of your product.
Of course, if you are moonlighting, you don’t have as much financial risk, however, your progress will be slow and you may miss out on the opportunity if your competitors get out ahead of you. If you are relatively fresh out of school, the risk that you are taking will be also less significant. You could move back in with your parents and cut your monthly living expenses quite significantly. However, if you have a family and own a home, you will need to substantially dip into your savings to cover your monthly living expenses or rely on your spouses’ income to help you make your ends meet.
At the end of the day, if you have identified a burning customer problem and have identified a good solution that meets the customer’s needs, I would encourage you to take the entrepreneurial plunge. Even if you are shy by nature or an introvert, your natural enthusiasm for your product and your mission will allow you to develop the communication skills to persuade others to sign up. Make sure to bring on other strong co-founders so you can strategize together and support each other when times get tough.
If you liked this article, you can learn more by reading my book From Startup to Exit – An insider’s guide to launching and scaling your tech business.