For those looking for insight into how to become a successful entrepreneur, Harvard Business School’s Working Knowledge (A FREE Website and on-line weekly newsletter loaded with wonderful information) provides excellent insight in what and what not to do.
Ideas From Those Who ‘Made It’
A March 21, 2005 article entitled “Lessons of Successful Entrepreneurs” offers lessons that emanated from a panel discussed take took place at the Entrepreneurship Club at Harvard Business School. Included on the panel were several entrepreneurs who “made it.”
“The common themes:” writes Sean Silverthorn, “jump in, take risks, challenge yourself, trust your instincts, and learn from both experience and the experienced.”
One of the panelists, David Fialkow, managing director of General Catalyst Partners, suggested using the “earnest young man routine” to gain insight into an industry. He suggests getting an interview with “an old guy in the business” and visit with this person and be prepared to listen and learn. Fialkow, a college dropout, helped create UPromise and other successful ventures.
Fialkow also suggests getting to market as quickly as possible with an idea. He further urges entrepreneurs to recruit smart people and use their minds to create the business model.
Andrew J. “Flip” Filipowski, whose sold his PLATINUM Technology start-up to Computer Associates for $4 billion, believes that one ingredient for success is doing enough deals so that every once in a while you get lucky.
A third panelist, Steve Hafner, founder and CEO of Kayak.com, an online travel information site, suggests securing distribution through partnerships as an alternative to developing one’s own customers. A key to Kayak’s success was a partnership with AOL.
Constance Bagley, a senior lecturer at Stanford Graduate School of Business, wrote an article for Harvard’s “New Business” in 2003. At the time, she was an associate professor at Harvard. In the article, “Top 10 Mistakes Made by Entrepreneurs,” she pinpoints the following major entrepreneurial pitfalls. The following information is from an article that ran in the March 3, 2003, issue of Working Knowledge.
Promising more in the business plan than can be delivered. She warns: If somebody promises to do something and knows they can’t perform that promise, that’s considered fraud. In a business plan, one must make an honest appraisal of what’s doable and set forth their assumptions, so that the person putting up the money can judge whether they are reliable.
Starting a business while employed by a potential competitor. She points out that the law is clear that if someone is currently working for a company, particularly if he/she is a key employee, they cannot operate a competing business. Even just incorporating may invite a trade secrets lawsuit. She suggests going to one’s current employer and either resigning or explaining the plan and ask them if there are interested in investing.
Disclosing inventions without a nondisclosure agreement. Especially if patent protection has not been obtained, the nondisclosure agreement is the only protection to maintain something as a trade secret, according to Bagley. She emphasizes that is particularly wise to get a potential venture capitalist to sign such an agreement.
Hiring a lawyer not experienced in dealing with entrepreneurs and venture capitalists. She maintains that many venture capitalists say they often judge entrepreneurs by their choice of legal counsel. She adds that lawyers who lack such experience and insight will likely focus on the wrong things and overlook the more subtle potential traps.
Thinking any legal problem can be solved later. While pushing for funding, Bagley points out that many entrepreneurs live with the mistaken notion that once funding is secured lawyers can then be hired. She strongly suggests retaining legal counsel from the get-go. She adds that excellent legal talent can be obtained for relatively little money up front in the early stages of the venture. It will cost much less to get it right at the beginning, she maintains, rather than try to fix the mistake later.