My lessons as a late starting entrepreneur

I started my first start-up at the age of 50. I had just left the World Bank Group (WBG), a wonderful, well-protected, highly regarded, and well-paid job and the choices before me was whether to do more of the same or to follow a dream. I kind of convinced myself that if I didn’t give it a go at becoming my entrepreneur then, I probably wouldn’t be able to do it at a later age. So, it was my kind-off last chance saloon. Also, I knew that while I would forgive myself if I failed, I may not forgive myself for not trying. My liabilities were light – my mortgage was more-or-less paid and the bills for my kids’ school education were tailing off rapidly and my balance balances, thanks to the years of tax-free dollar salary from the WBG, were on a stable footing. So, I took the plunge.?

It was five years of grit and graft. Five years of travelling in the cheap seats at the back, on the least convenient flights, staying in economic AirBnBs, as opposed to my WBG years travel in comfort and class, with ever increasing air mile balances, and loyalty card status upgrades. Five years of working the job of three persons but getting paid the salary of a third of one person. But it paid off. In five years, I was able to take a Powerpoint presentation and convert it into a 50 person, $50m valuation company (I didn’t do it alone, of course). My financial rewards were good, but the real reward was my self-validation. The affirmation that one’s ideas weren’t just flights of fancy, the confidence that there was more to me than just a corporate cog-in-the-wheel, the satisfaction of having created real tangible value, for myself and for society, through my graft and my ideas.

Along the way I also collected some invaluable life lessons. After my exit, I came across this excellent article by John Thornbill in Financial Times of the lessons he learnt as a late starting entrepreneur. His learnings so resonated with mine. I could simply refer you his article and say “ditto”, but his article is behind a pay-wall and maybe adding my own lessons to his would create a bit more value. So here are my lessons from my journey with due reference to John’s article.

1. Ideas mean little. Execution is everything

Only if I had a dollar for every time someone came to me and said, “I have a great idea”. This belief that the secret to becoming a billionaire, unicorn-style tech tycoon is just, just having an idea, which no one has thought of before, and will disrupt the world or at least some part of its economy, is simply put, bonkers. Ideas are cheap. I get a couple myself every day. If it is a good idea, the chances are, and should be, that someone or more than someone, has thought of it or is thinking of it in the 8 billion strong population of Homo Sapiens. If no one has, the chances are that it doesn’t work. Besides good, successful businesses don’t get to be good, successful business by just having good ideas. The secret of any successful business is good execution. You may start with a crappy idea, but if you are good in execution, you will pivot, and pivot, till ultimately you are successful. You will need time enough to do so of course, but more on that later.?

2. You are not the boss, the customer is

A lot of people want to be entrepreneurs because they want to be their own boss. Well too bad. You can be your own boss when you have your own money and don’t need any one else’s money. Till then those who provide you the money – which is your customers (and if you are pre-revenue, your shareholders), are your bosses. You better listen to them and give them what they want (not what you want to give them).

3. Find fellow travellers

Someone once told me that being a CEO is a very lonely job. This is very true, and being an entrepreneur is an even more lonely job. My first start-up was, actually, my second attempt at entrepreneurship. In my first attempt, which was before my WBG days, I did an “entrepreneur-lite”. I had a paid (though not very highly paid) salary, owned no equity had very well-funded shareholders. I ran a distressed, broke company but more-or-less had a free run of the land. I did feel very lonely. Josh Leslie sums up this situation very nicely in his blog on Business Insider here. The issue was, as Leslie says – the CEO has no peers. I had good juniors but no peers. The CEO holds secrets / knowledge which he has no one to discuss with and carries the can ultimately, if things go wrong. So, when I went into my own start-up, I made it a point to seek fellow travellers, and at least one peer. I felt this to be so important that I offered my cofounder the CEO role and accepted a lower CFO role on the understanding, that titles besides, we would be equals and my remit would extend to all areas not just my CFO function. This worked well (initially at least. It caused some grief later, but that is fodder for another blog) we got the project off the ground, and I went to sleep every night knowing that no matter how bad the situation was, there was another soul equally worried about it as I was. The comfort of that is more valuable than you imagine.

4. Focus on your runway

As I said earlier, success is dependent on execution. If you have good execution, even if you start with a bad idea, you will change and change till you get it right. The crucial factor is here is time. It takes time to figure out what’s working and what’s not and it takes time to fix what’s not right. Time is your runway. This word "runway " has come into vogue now, but I have been talking about this for quite some time. Given an infinite runway and decent execution, every venture would take off. But alas, runways are not infinite. A company’s runway is the cash it has divided by the cash it is burning. To increase your runway, you can either increase your cash or reduce your cash burn. Ideally do both. Keep a decent cash balance – enough for the next twelve months and spend like a miser.

5. Constantly raise capital

One of the best pieces of advice I received in my start-up journey was from a friend, Ramesh Awtaney , who himself is a very successful entrepreneur. He told me that the main job of a start-up CEO is to constantly raise capital. Cash is the key to your success, lack of it will be the cause of your failure. So as a CEO you must get up every morning and think where, when and how you are going to raise your next round of capital. Capital raises take time typically six months or more. Your investors will more readily give you capital if you don’t desperately need it tomorrow (or today) than if you do – in which case you probably won’t get it. Don’t worry too much about optimising your capital structure – that’s for companies which have infinite access to capital, not for you.

6. Focus on the exit

Start with the end in mind. What your investors want is to get their money back together with a fat return. That happens only happens on exit. Timing is everything for any exit and planning is what gets the timing right. The exit is your prize, your payback for all those long hours, travels in uncomfortable airline seats, sacrificed holidays, unread books, stressful moments, years in start-up penury – for you and your family. I quote here from John’s article “stay humble, keep your eyes on the prize and never stop telling your story to anyone who will listen, over, and over, and over….”

To end I will again quote from John, because I simply cannot put it in better words.

“Creating a new business only ever happens one small drop at a time. The process can, at times, resemble Chinese water torture. But there are few activities in life more rewarding than providing an opportunity for inspirational employees to turn a burning idea into a reality. You need a patient family, indulgent friends, supportive investors and a high pain threshold. But look down one day and you may be lucky enough to see that you have etched something meaningful into stone.”

I know every word of the above paragraph is true because I have lived it right down to the last sentence.