Being an entrepreneur may seem glamorous and exciting. But the reality can be much different. Hey, I talk to many entrepreneurs – and I often hear words like “tough,” “challenge,” “difficulties,” and so on. And these are often from those people who have had tremendous success!
So before making the decision of becoming an entrepreneur, you really need to do a gut-chuck. Are you willing to make big-time sacrifices? Ready for lots of unpredictability?
Yes, this is all inherently personal. But it is still a good idea to get some insight from those who have been in the trenches.
And one such person is Mike Smerklo, who is the co-founder and managing director of Next Coast Ventures (his firm makes venture investments in early-stage tech companies – with a focus on megatrends). But before this, Mike was a successful entrepreneur, having founded ServiceSource, which he took public. The company was a pioneer in the cloud space and grew at a hefty 40% CAGR (compound annual growth rate) for a decade. ServiceSource also returned over $100 million to investors before even becoming public.
OK then, what are some of his takeaways when thinking about making the jump?
First of all, you need to truly understand the amount of work that is required. “Think 80-hour work weeks, a ton of stress and riding a virtual roller coaster on a daily basis,” said Mike. “Starting a business is likely the hardest job in the world – so make sure you are personally ready to take this challenge on and give it 100% commitment.”
As for his own experience with ServiceSource, Mike jokes that in the early days of chasing his dream his apartment furniture consisted of one chair, a bed and a TV in the bedroom. “The apartment was strategically placed at just under a mile from the office so I could get there as early as possible and I could walk back late at night if necessary,” said Mike. “I was 33 and ready to take on the world. I didn’t own a car, house or dog. I worked 100 hours a week. I flew around the world on a moment’s notice.”
Kind of brutal, right? Definitely. But it is what needs to be done if you want to be a successful entrepreneur.
But then again, hard work is just one part of the puzzle. You also need to think about how to most effectively spend your time. What is the best strategy?
According to Mike: “Do you have a really great business plan or just a neat idea? Given how much risk and hard work it takes to be an entrepreneur, think long and hard about how differentiated your business plan is and make sure to stress test this with as many smart people as possible.”
You do not want feedback from those who will give you mostly happy talk. Instead, you should seek out those who are dogged skeptics (if anything, this will provide good preparation for dealing with potential customers).
For example, it would be downright suicidal to try to create a rival to Uber or Airbnb. While the market opportunities are massive, it would take huge amounts of capital to get an edge.
In other words, try to focus on those categories where there is still lots of pain points and customer dissatisfaction. It also helps if you have a background in the industry. And if not, why not work for a company in the category and gain some experience? In fact, this was critical for Mike, who worked with Marc Andreessen and Ben Horowitz at LoudCloud.
And finally, Mike recommends that you need to make sure your friends, family and mentors are really behind you as you jump into this head on. You need as much support as you can get – because there will certainly be several near-death experiences for your venture.
“You need the right mindset when heading into the wide open and turbulent seas of being an entrepreneur,” said Mike. “There is so much written about business strategy, building a team and raising capital – all of which are critical to taking your business from idea to the next great thing. But I would assert that getting yourself ready to take the daily ups and downs of running a business, both mental and physical, is equally as important and might have more to do with your success than coming up with a better mousetrap.”