| The Perfect Software Entrepreneur
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| by Michael Tanner, Managing Director, The Chasm Group, LLC
Recently I visited a conference in San Jose that targeted entrepreneurs in the technology industry. You might think that after all the torrents in the public markets and the high-tech meltdown during the past couple of years, such a conference would be pretty lackluster. With rumors of Prozac sales in Silicon Valley skyrocketing, you might even think that the place would be downright depressed. But in fact, at this conference there were over 2000 entrepreneurs of all sorts, a flurry of name-brand executives, top-tier VCs and analysts at the podium and all types of deal-making around the conference center. The aura around the San Jose convention center this particular morning was down-right jubilant. It was as if through some freak of quantum physics I had been transported back in time to 1999. And, I did not want anyone to beam me up. All of this unabashed optimism, and 2000+ entrepreneurs got me thinking about the most successful entrepreneurs I've known and worked with. I often hear the mantra in larger organizations to "become more entrepreneurial." So I started reflecting on the truly excellent entrepreneurial executives that I've met in my life. It started when I was a child observing my own fathers associates, progressed through two startups myself, 22 years in technology with seven years as a consultant working with hundreds of executives. For some, success created vast wealth. Many are multi-millionaires and a few are even billion-airs. Then again, some have lost it all through bankruptcy, got it back, and then lost it again. Some grew their companies into well-known publicly and privately-held firms while some are now intra-preneurs just working to reinvent the corporations they work for. I've been privileged to meet so many of this particular genre of person that I've compiled a list of what I think makes a good entrepreneur, and what makes a really great one. Few if any have all of these traits. However, each one comes from a "best in class," successful entrepreneurial leader that I have known. Here's my list: 1. Good entrepreneurs are optimists. In fact, some of their more pragmatic employees might even say there is a "reality-distortion zone" that floats in their general vicinity. When others worry about "what-if," most entrepreneurs worry about "how-to." Their mantra is like the motto of the Marine Corp Seebees - "The difficult we do immediately. The impossible takes just a bit longer." But the truly great entrepreneurs are also realists. They know that unabashed optimism, left un-tempered by realism just isn't sustainable. They set personal and corporate goals that are aggressive, almost over the top, but doable. 2. Good entrepreneurs are incredibly driven, ambitious people. Some are driven because of experiences they've had in their lives or things they've seen. Others just seem anatomically driven by an innate sense of hyper-competitiveness. In general, the best entrepreneurs I've met just can not stand the idea of losing. But believe it or not, even in today's 24 x 7 economy, the truly great ones also maintain a sense of balance in their lives. They may often work insane hours, but somehow they manage to make time for their families, show-up at important events and maintain contact with "regular folks." They are coaches, board members of charities, heads of foundations or just regular bridge-players. 3. Good entrepreneurs are visionaries. You can pretty much call central casting in Silicon Valley to fill this trait. Entrepreneurs see what the future can be and they create its vision in a compelling way for their stakeholders. They may be introverts or extroverts, but in their own way they sell the vision like nobody else. What's even more interesting to me is how the greatest entrepreneurs I've known are also quietly pragmatic at the same time. They have the knack to create enthusiasm for the vision, but they seem to be able to switch personality types to tactically manage the company against the myriad of small steps required to achieve it. They don't mistake their own mental expectation of dramatic growth, broad market acceptance and changing the world for what has to be done right now to get things rolling. 4. The best entrepreneurs I know are good strategic thinkers. They do not delegate but lead that activity for their businesses. Because change is constant, they constantly use day-to-day information to evaluate the success of their strategy. They are focused - on specific goals related to market penetration, earnings, and key-accounts. Moreover, they stick with their focus and are good at knowing when something is defocusing. The truly great ones also know that strategies are not sacred but directional, and that the scarce competency is creating a team that can manage change. A truly great entrepreneur does not shift strategies lightly, but will shift the entire company direction and focus when the either the market or an unforeseen pathway demands it. 5. It's passé to say that leadership is lonely. But good entrepreneurs don't go it completely alone. They create a network of other executives they can trust, and actively collaborate with them. They work closely with their boards. While many of their directors may be thrust upon them as a result of their financial partners, they do everything possible to create strong, balanced boards, and they take the time to lead upwards as well as downwards within their organizations. They seek out directors who can be mentors. The truly great entrepreneurs are such exceptional communicators to their boards that there are rarely surprises in board meetings. One of the secrets of their communication is that they find ways to leverage the active participation of their directors in the business on a regular basis. 6. All the really good entrepreneurs I know are excellent team builders. In the startup phase, they tend to be deeply involved in execution at all levels and can be sometimes accused of micro-management. But they focus on results - and not tasks, and learn to delegate when they have the right people in place. Then, they actively work for those they delegated to and become a part of the team as only the CEO can. The truly unusual, great leaders among the entrepreneurs I've known have been able to create incredible bonds of personal loyalty. They may, or may not be particularly charismatic. But their actions with employees at all times engender trust, and they take a genuine interest in their people. Such entrepreneurs have the ability to remain tough executives. But behind the scenes and unknown to most, they don't miss sending flowers to the lowest-level employee when a relative is sick, writing personal congratulatory notes to associates or otherwise taking time-out to speak with employees at a personal level. 7. It's rare that I find a company that doesn't declare that "our people are our best asset." The great ones take this to heart when the CEO personally hires executives that are better than themselves in a particular functional area, and then insists that their team do the same. They create a culture of hiring and supporting "A" players while insisting on a rapid exit for the "C" players. They don't hire unless they have exactly the right fit. Then, they provide compensation that includes broad and performance-based equity sharing. As a result, the very best of these entrepreneurs have companies with low turnover. They even have managed to resist over-ramping their staff during the recent venture bubble at the insistence of their boards and investors. As a result, they currently have cash in the bank. 8. Successful entrepreneurs are different from a lot of corporate managers because they never fail. Or, it might be that they fail all the time. The difference is in the way that you look at it. While typical corporate managers view not meeting plan as a failure, a lot of successful entrepreneurs never really expect a plan to come out exactly right in the first place. They expect to deal with ambiguity. So they look at initiatives as a series of small experiments, each of which provide clues as for success. Each "failed" experiment creates for them new information and opportunities. Therefore, they make it their way to fail quickly and explicitly, but then to rebound through learning and persistence. Of course, not adapting to failure is also the unhealthiest form of entrepreneurship. But the truly great ones craft their plans so that they can adapt by failing over and over on the little things, and then making their corporate plans as a result. Of course, outsiders rarely hear of the "failures" that created overnight success. 9. Good entrepreneurs are great at raising capital (or getting funded within a larger organization). They understand this to be the single-biggest impediment to early success so they get personally good at it and never rely on a third-party to do it for them. The great ones are willing to spend money to make money by focusing on things that are strategic. But they make their capital last by implementing tight financial controls and understanding the margins on every aspect of their business even during the startup phase. As the business grows, they continually seek out and eliminate activities that don't directly contribute to creating competitive advantage. The very best raise capital when they don't need it. 10. Finally, the successful entrepreneurs I know and admire the most have a highly refined sense of ethics. More than just being just trustworthy, they see their businesses as extensions of themselves. They create a culture of being above board and they lead by creating win-win business relationships as example. The truly exceptional entrepreneurs I know also have another intangible quality that goes beyond just ethics. It can be best described as a kind of code of honor. As there is no rule book for this, I'm sure that in each case it comes from a personal code of behavior. Nevertheless, it is there, and it permeates the relationships with their customers, employees and stakeholders. The beauty of our high technology industry is that we can rest assured that even in the down-times, innovation and the entrepreneurial spirit remains constant. The next generation of entrepreneurs is busily creating the future right now. The best of them share many of the qualities above. These are special people with special talents. I am grateful for them. A Managing Director with The Chasm Group since 1995, Michael Tanner provides advisory and consulting services in the areas of market development strategy, building competitive advantage, positioning and new business planning. His clients are in the IT infrastructure, B2B and communications technology markets. Michael is also a regular keynoter at both public seminars and corporate events in the US and Europe where he speaks on topics of strategy, competitive advantage and managing for shareholder value. |
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