For all the work that goes into crafting business plans, it seems--at least based on the entrepreneurs I meet--that very few start-ups wind up being the business that was first imagined by its founders.
Here's another in my series where I pick a topic and connect with someone a lot smarter than me. (There's a list of some previous installments at the end of this article.)
I'm not a huge fan of the word "pivot," but clearly you've done that more than once.
Bullhorn has an interesting history. We're not that start-up that had an idea, went out and implemented it, and found success. We were much more the product of iteration and failure.
You always hear that failure is so wonderful, but I beg to differ. We had raised angel investment on an original idea, a dot-com, creative marketplace where companies could go online, kind of like Elance but in the creative space: graphic designers, writers, and illustrators. In many ways it was like Behance; we were Behance before Behance was a twinkle in its founder's eye.
The challenge was we'd go to creative departments and say, "Hey, you can hire freelancers using our platform!" They'd say, "That's great--but we don't want to use the Internet to do it." They'd point to a guy in the corner and say, "That's the only guy with Internet access." 1999 was a little too early to be selling what we were selling.
So what did you do then?
We came up with software for marketing departments to use to run their business. That idea helped us attract a Series A round.
That idea failed too.
I don't think there was a need for what we were building. We invented something assuming people had a problem. We didn't build something because people said, "Hey, we have a problem."
Then someone turned us on to a staffing firm that was having all sorts of IT problems. He had a real need for a database system to connect his offices--and we had our first real client. That established a line of sight to building a big business.
Building software for staffing and recruiting firms became what we are today.
I'm sure your investors were happy you finally landed a client.
Somewhat. When we went back to our investors and said, "Hey, we've got it, we're going to be staffing and recruiting software giants someday!" they said, "Hey, you cried wolf once already." They didn't believe it and I have to admit I had to wonder.
I kept waiting for proof we were going to be successful. I didn't believe we would be a big business someday. If you had said we would have 300 employees, offices in three countries, year over year growth of approximately 50 percent, and we would be leading our market, I would never have believed it. I was so beaten down from having failed with these other concepts.
That's one problem with all the "fail often" rhetoric; confidence, once lost, can be hard to regain.
Yes, and my concern prevented me from going back and thumping the table to ask for money. It took me two years to realize we'd created a really big business.
Sure, we were growing really quickly, so we had no real problems raising capital, but frankly we did it later than we should have. If we had raised capital in 2003 when it was clear we were gaining momentum--and really gone for it--we would be so much further along than we are today.
Those extra two years would have been really helpful.
That's an interesting take. A lot of people say they wish they'd waited longer to raise additional capital.
I knew we would build something. I definitely wanted to prove we were right. But I still had doubts. After so many successive failures, it's hard to be totally confident. Imagine the conversation with your investors when you say you need to pivot and go into something new. At a board meeting, when we were running out of capital, I presented this new vision, showed we had customers, but they were somewhat nonplussed. I think they were, understandably, reacting to 2001 and 2002. Many Internet investments they had made wound up being goose eggs.
Saying you were wrong but now you will be right--that's a very tough conversation.
So say I'm an entrepreneur, I've had to pivot a few times, I'm slightly gunshy, and I'm hesitant to either raise or raise more. What would you say to me?
Once you gain a little traction you have to be willing to suspend disbelief.
Entrepreneurs overvalue the suspension of disbelief before they have created something. "We're going to be huge..." but you don't have traction yet.
Then I meet with entrepreneurs who have created something but they're doubtful they can raise capital, they're worried investors won't like them. Those are the people you want to shake and say, "Hey, suspend that feeling if you want to build a big business."
There's a time to let the voices in your head tell you it's not working and there's a time to shut them off. Once you take off, you have to shut off the voices.
As an entrepreneur you're invested in your own success, so why hedge?
Check out other articles in this series:
- How to build your own talent pool
- Inside a completely transparent company
- Why 'going green' won't be optional in the future
- Is it better to train or hire great talent?
- The keys to maximizing your return on sponsoring events
- The ins and outs of franchising with Noodles CEO Kevin Reddy
- How Ashley Madison's founder built a business everyone loves to hate
- Julia Allison on building a great personal brand
- Eric Ripert on how to build a classic brand