Entrepreneurs don’t win based on raw talent alone. Success depends on talent, hard work, and not-so-dumb luck, according to Clarence Wooten, who’s launched his share of startups including Image Cafe in 1998 and seven months later sold it to Network Solutions/Verisign for $23 million.
Instead, successful startups come from a combination of many things including preparation, sweat and luck, Wooten told attendees of the inaugural MIT Sloan Hi-Tech Conference on Friday. There, Wooten, who is now working on Arrived offered 12 lessons for entrepreneurs. Here’s a summary:
- Paycheck is an addiction. Not unlike crack cocaine. Entrepreneurs have to break that addiction to build an asset that will pay off long-term, not in a weekly paycheck.
- Beware of naysayers. Because 99 percent of this country works for the 1 percent, they have risk-averse employee mentalities. Don’t listen to them.
- Just do it. Be like Nike. There is no roadmap. If you don’t do it, it won’t get done. Work lean. Corporate people are used to resources — HR departments, assistants but entrepreneurs do it on their own.
- Fail fast, fail cheap. You will fail a lot because you’ll need to try a lot things. So do that on the cheap. Instagram’s first product — Brbn — failed but they distilled that app to its bare essence and it caught fire. (Facebook is buying Instagram for $1 billion.)
- Partner pitfalls. It’s scary to be out there alone. You want someone to share the ups and downs. Often one partner will work harder than the other but share the same upside. Share the downside as well and don’t necessarily split equity equally. Set up reverse vesting: When you issue founder’s stock, make sure it vests in case someone leaves they don’t leave with all equity just with what has vested.
- Be naïve. Unlearn what you learned in corporate America about hierarchy. Being naive means being ballsy. Facebook turned down a $1 billion offer from Google and people thought Zuckerberg was crazy. He wasn’t but he may have been naive. That paid off pretty well.
- Business is a team sport. Would you rather own 100 percent of a $1 million-a-year business or 20 percent of a $100 million-a-year business? Everyone needs equity. You need as much brainpower as possible.
- Challenge your comfort zone. I knew I had to put myself out there speaking in public. I wasn’t comfortable with it but I did it.
- Image matters. People judge you when you talk about your company and you have one chance to make a first impression. If you’re nota design person, don’t do your own logo. Crowdsource if you need to.
- Shadow of a leader. You determine what your company culture looks like. Build it as a place you want to work every day. People watch you. At Image Cafe, I brought in a CEO who was religious. I wanted to act like a customer to get competitors’ pricing and she said “absolutely not.” She set the ethical tone.
- Investors want their money back. This is important. Investors back you. Your integrity is on the line. So know your exit strategy. I’ve never lost an investor’s money and I carry that chip with me every day.
- Cash and customers. Lessons 1 through 11 you can learn on your own but for #12 it helps if you have some education and understanding finance and marketing.
Check out a video of an earlier version of Wooten’s speech at Johns Hopkins.