START-UPS (& DOWNS. BUT MOSTLY UPS) – part one
Last Wednesday, I was scheduled to give a guest lecture to the Master in General Management at Vlerick Business School (Belgium). Back to the roots, that was – Vlerick is where my entrepreneurship story started. Without my year at Vlerick, there would not have been a company called EcoNation, nor EnergyVision.
Now, eight years after having graduated, I was asked to share my thoughts and experiences with the students. To take them with me on a journey through the last years’ adventure. To explain the obstacles and challenges, the opportunities and the risks of starting your own business.
It was nice to walk through memory lane.
At the start, I was told that the only secret to success was to ‘work hard’. I work harder than anybody else I know, but it’s not the main key to success. It took me eight years to understand and eight hours to write down the ten ‘lessons learned’ along the way. It will take you three times eight minutes or so to read. That might just be a good investment of your time.
1. Make a difference – not money
As an entrepreneur, you don’t start a business to make money. At least, I did not. Of course you have to make money – if not, you don’t exist. But it’s not what drives you most. You want to make a difference. You want to matter. Have impact. Change something for the better for your customer. Offer solutions. Surprise the market. That’s what really creates value for your customers. Make a difference – and the money follows. It always does.
2. Affordable loss (say hello to your parents)
When you want to start your business, you start by writing a business plan. Now, there is a line between what you can gain (your turnover, profit, etc) and what you can lose (your investment). The only thing of which you can be certain, is what you can lose. No-one knows for sure whether he/she will make EUR1, or EUR100,000 or EUR100,000,000, and in which timespan. What you do know, is what you can lose when things go wrong: your reputation, your self-image, your full investment.
Now what are you willing to lose? That is hard to answer and can be different for everybody. For me, I was willing to risk my personal savings and one year of my time: no salary paid in the first year. Had things gone wrong, I would have learnt a lot during a year and that’s what it was worth to me. What I was not prepared to risk, was a personal bankruptcy: having personal bank debts for another fifteen years or so, or taking a loan from my parents and then having to explain to them that the money they invested is gone. When things go wrong, you want to seek comfort and shelter with your parents, you want to be able to look them in the eyes and say hello, not sorry.
At the very start of EcoNation, we (the founders) found a bank that was willing to give us a loan. We did not give a personal warranty, yet we promised to work one year for free – that was our investment. The Belgian/Flemish government was willing to give a warranty to the bank to cover 75% of their risk – it is a mechanism which runs through PMV (a government based investment company) and is really a great tool for start-ups! (in Belgium, entrepreneurs tend to complain, about costs and wages and administration and bureaucracy and much more, yet for start-ups, we really live in paradise.)
Eventually, we did not lose; we made money and were profitable. Yet it’s just something you don’t know for sure upfront. The question is not: how much money will you make. The real question is: what are you willing to lose?
3. The pizza experience
In a start-up, everything is new, much is disruptive, often you are unexperienced and surprises are everywhere. It is crucial to have your team of founders right. You will have so many tough decisions to make, so many crossroads to pass and preferably you don’t lose too many friends along the way.
I once heard the ‘pizza’ story but it’s so true. You will work many late evenings in the first years. You will order many pizzas. If during such a late evening, you want to order pizza for all of your founders, and you need to order more than one pizza in order to feed them all, your team of founders simply is too big. Two or three founders, that works great. Four or more most often means misery, especially when crucial decisions have to be made.
4. Listen first – speak later
That’s something I really had to learn. You want to go fast, because you want to grow big, but you can’t grow before you learn. And you learn through listening. Listening to your team, to your experts (I hired Boudewijn – he had more hair than me but his hair was all grey and grey hair is what you need to balance a young entrepreneur, it brings in the industrial experience you most surely lack – it has been a crucial move), to your Board, but most of all: to your customers. They are the ones who really drive and define your business. Listen to them. Understand them. Learn from them. There is more than enough time to speak later.
Online by Dec 8
5. Cash cash cash cash cash cash cash cash cash cash cash cash
6. You can sell a share only once… (angels and devils)
7. People, people, people!
Online by Dec 15
8. Think big – spend small
9. Misery vs. dream (get some sleep)
10. Sales. Fixes. Everything.
by Maarten Michielssens
Founder and CEO