What does it take to be a great entrepreneur?
Ever thought about starting your own business? This week, we talk to Maria Zubeldia, Head of the Entrepreneurship Centre, at Saïd Business School, part of the University of Oxford about start-ups, the biggest reasons for failure, and what qualities you need to succeed in this highly competitive field.
Maria has worked in entrepreneurship for almost 17 years. She was an entrepreneur herself and subsequently launched a consultancy business in innovation, where she helped companies to launch new products and services and develop new business models.
Maria, what qualities do you feel makes a successful entrepreneur?
M: I always think passion is essential. That passion leads to resilience, which for me is a key component. Launching a startup often means facing a lot of adversity. Being able to pivot and change is crucial. Unless you have resilience and passion for what you do, it’s going to be difficult.
Another key quality is being able to build a great team around you. That’s crucial and not everyone can do that successfully.
This leads to my final quality, humility. Being humble helps a lot. All the really successful entrepreneurs I’ve met have this in common. Humility helps them to be able to learn from the experience, from failure, and from feedback.
Being able to listen is very important. There are times when you will have to make difficult decisions and you can’t please everyone. At the end of the day, it’s your business. But that ability to really listen and be open to feedback is a great asset.
Everyone dreams of having a unicorn, but the reality is that most startups fail. How can people test if their idea has potential?
M: To be honest, I always disagree with this idea that all entrepreneurs envisage having a unicorn. What I notice the most are entrepreneurs who are very passionate about solving a problem and then in the process, they build a successful business, and that grows into a unicorn. But I don’t think their initial objective was building a unicorn. I’m talking about those entrepreneurs who are successful.
How can you test if the idea has potential? I get asked that question all the time and I always answer the same way. You can ask, and you can test your idea and you can ‘get out of the building’ as Steve Blank says. But that leads me to the problem.
Do you know enough about the problem you are solving? Or have you moved too quickly to building a solution? The biggest reason for the failure of most startups is building something that no one needs. More than 40% of startups fail for this single reason. So, how can you test if your idea has potential? By asking and asking questions about your problem and listening to relevant stakeholders. Start with the problem. That’s one of the most important things for me.
How do founders identify what kind of problem to work on? How do we know it’s a problem that affects enough people deeply enough to warrant a business? Any advice?
M: I see many entrepreneurs who are already familiar with the frustration of the particular problem they are solving. They’ve encountered this problem themselves and they really want to build a business to solve it. These people are in a great position. They already know a lot, but the danger is that they might feel that they already know everything and do less research than others.
Then there are founders who are not that familiar with their problem and in this case, it’s important to observe and experiment. Dig deeper into the problem and the need. When you don’t have a particular problem you want to solve you are more of an outsider, so you need to understand how all the stakeholders interact to fully understand the problem. So, dig, dig, dig, that would be my advice.
What advice do you have for people when forming your founding team?
M: That’s a great point and it is a big reason for startups failing. Many startups worry about ‘death by murder’ (someone stealing their idea) but startups are more likely to ‘die by suicide’ (founders falling out etc) and the founding team falls apart.
I see a lot of obsession with protecting the business idea. I think it’s very important to protect your ideas and there are tools to do that, but it is also important that your defensive approach doesn’t get in the way of losing relevant or useful feedback from others. That balance is key.
Advice for founding a team?
You need to have a founders’ agreement and an early discussion. It’s like a marriage. You need to pose the questions: If we go in this direction, what would be your priorities? What are your values? In these scenarios what would you want to do? If you’re not aligned at the beginning, it will be very difficult later down the line.
I can’t think of a better analogy than a marriage. So it’s important to have a process in place, a discussion when the founders come together and this is reflected in a founders’ agreement.
What are the common pitfalls for startups and how can they avoid repeating the same mistakes?
M: The biggest one, is building something that no one needs. Another one is starting several ventures at the same time and I made this mistake myself. You have only so much energy and when you launch, you need to have time to focus. That lack of focus is a big pitfall.
You’ve mentioned two so far. Are there any others that you’ve noticed?
M: Another one I have seen, particularly more recently, is entrepreneurs obsessed with raising funding. They haven’t spoken to a customer yet and they are already approaching investors. But what traction do you have? Do you have any customers or anyone in the market who is interested in your product?
In order to approach an investor my advice would be, why don’t you gain some traction beforehand and do something relevant to gain credibility and to show that investor that there is something there. I would say that focusing purely on series A, B, etc, and forgetting about the customer is another pitfall for me.
I was interested to read in your biography that you a certified facilitator for the FORTH Innovation methodology.
Could you tell us a bit more about this methodology?
M: This methodology was developed by Gijs van Wulfen and is based on design thinking and it helps organizations to start with innovation effectively. You start with a structured process over 10 weeks and, as a result, you get 4-6 new mini business cases that are either new products or business models that are at a very early stage of development, which the company can actually use to launch.
It’s very difficult for many companies to start with innovation. This allows you to start with something tangible, rather than with promises and objectives that don’t get met. Then you can decide which one to go ahead with and move forward with. At the end of the process, you have tangible results.
It also creates a positive culture around innovation and embraces people from different departments. The benefits are well known. It’s been implemented worldwide in many organizations, and it includes the customer in the process, which reduces the risk of building something the customer doesn’t need.
On the road to success, there will many ups and downs. Given our tendency towards sunk cost fallacy, how do people know when it’s right to keep going?
M: That’s so important because a business is like your baby. It’s so difficult to decide that it’s not working. I would say that this links to one of the skills that I mentioned before, which is humility and the ability to listen.
If you are surrounded by the right team, the right mentors, and the right stakeholders, and if you are open to those opinions, you’ll know if it’s not working out and when it’s time. But it’s difficult and that’s one of the biggest struggles of entrepreneurship.
It’s the same as when you are in love with someone who is not right for you. No matter what anyone tells you, you can be really blind. So here, that antennae to really listen gains more importance. Another important question is when is it right to keep going? I would say when you are still seeing that there is a potential there.
Are there any particular entrepreneurial stories that have inspired you?
M: I find every entrepreneur really inspiring. I’m talking constantly to entrepreneurs. Each one comes with a different problem idea. The normal entrepreneurs are the ones who truly inspire me. Normal people who are really mobilizing to solve a problem that they are frustrated about and I speak to them every day and that’s why I really enjoy what I do.
In your opinion, how will Covid19, or pandemics, change the entrepreneurial landscape?
M: Nobody really knows what exactly is going to happen, but what I have seen is that there is a radical change in terms of consumer behavior. I believe that we are going to go back to basics in some way.
I think human needs are going to change, hopefully for the better, and are going to become more fundamental and less superficial. Because this crisis has also given us the opportunity to do some reflection and shown us what is truly relevant.
And I think this can bring a lot of opportunities for entrepreneurs to focus on, across different sectors. For instance, a big one I can think of is digitalization. There is a bigger scope for digital transformation for companies across different sectors, at a very high level.
What potential trends do you envisage? I know that’s a big question.
M: I see sectors like health, government, and education that have historically been less proactive towards innovation in the past. I think this crisis has helped them to learn how important innovation is and hopefully it’s going to provide some transformation of these sectors and help them to become more innovative and bring new innovations to the market. So, I also see a lot of potential there.
There are also other specific problems like the aging population or climate change that are huge issues for society. And I think these are not necessarily related to this crisis, but they are also affected by it in different ways.
Artificial Intelligence / machine learning provides an opportunity to revolutionize different industries, also big data and the internet of things. All of these new trends and technologies are going to be used in a way that helps us to be in a better position after the crisis. There are going to be a lot of different needs from consumers that are going to be fulfilled by these new technologies.
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