During a recent visit to an entrepreneurship conference in another city, I happened to eavesdrop on a fascinating conversation in the hotel bar at the end of the evening, between Dr. Abraham, a kind of world-weary experienced entrepreneur and a young, energetic hot venture capitalist named Doug.
The first part of the conversation covered the fact that 80 to 90 percent of startups fail, despite anyone’s best efforts. Next, it went through exactly why they fail. It became very obvious that despite statements to the contrary, not everyone is cut out to be an entrepreneur.
But now the talk turned to the vital elements of any entrepreneurship.
“So,” Doug asked after the next round of drinks arrived, “I totally understand that a very particular mindset is required if someone is going to be an entrepreneur. But you did say that, even with all that, it is possible. So if it is indeed possible for at least someone to succeed as an entrepreneur, where do they need to start?”
Dr. Abraham answered with a question of his own. “Well, what do you need, above all else, to start a business?”
“An offering. A product or a service.”
“That is correct. You need something to sell, something that people will buy. But what you sell must have a few other qualities as well—qualities that are only really becoming apparent today.”
“What are those?”
“Your product or service must provide a benefit to the buyer. It must be a solution to a problem. It must fulfill a real need. It must somehow make the world better.”
“Well I guess they haven’t all done that,” Doug said.
“Indeed not. As we’ve seen in the industrial age, many products and services were introduced that turned out to actually be harmful. Some notable examples are asbestos and one that is still with us today: fast food. Asbestos, originally introduced as a fire-retardant and soundproofing element, was proven to cause serious respiratory illnesses and finally banned.
“And many studies have shown that the fast food introduced in the 20th century has been responsible for a mounting number of food-related diseases such as diabetes. For that reason, today organic food is a major topic—and it would be really wonderful if an entrepreneur could solve the problem of making organic food affordable for everyone, since cheap food tends to be the worst for people nutritionally.
“We can no longer get away with such things—products or services that primarily benefit the seller through profit, but harm the buyer. The person who is, for example, creating fast food is not eating him himself. He got rich by making other people sick. It is not benefitting both sides of the equation—the buyer and the seller. This must cease.
“But in the same time as we’ve been these other, harmful things come about, we’ve seen products or services that were quite beneficial. At the beginning of the twentieth century Henry Ford introduced the first mass-produced automobile, affordable by the average family. Other examples include recorded sound, and telecommunications. Can you see what those things have in common?”
“They’re still around over 100 years later,” Doug answered.
“That’s right. Not only are they still around, but these types of things tend to evolve incrementally over time and get better and better. Compared with Ford’s original Model T, today’s automobile is like a starship with its climate control, heated seats, navigation system and the like. It’s the same as us looking at Star Wars space vehicles.
“Another incredible example is airplanes. Today an airliner can be like a flying 5-star hotel, as compared to the cramped seating of, say, 50 years ago.”
In any case, because they are beneficial, they continue. In some form, they always will. They’re sustainable—both for the customer, and for the companies that produce them. They satisfied a real need.”
“So that’s the first step, then?” Doug asked.
“Absolutely. And the more research done, the better. That’s why I’m sitting here tonight, giving you advice: I took several years, before I ever set off in business, and researched my bright idea to see if it would really provide real benefit. I obtained a lot of positive feedback before I set foot in the lab and began evolving prototypes and finally products.”
“And your company was built on that product and its accompanying services, and is still around twenty years later.”
“Precisely. And will likely be around long after even I am gone.”
Doug nodded. “So what’s the next step?”
Join us next week to see where this conversation went next.