Despite a few well-known examples of college dropouts who launchworld-changing startups, entrepreneurial research supports the no-tion that the right kind of prior business experience, effectively ap-plied, greatly enhances a founder’s probability of success.8Even inthe technology sector, widely assumed to be the domain of young, upstart entrepreneurs, data point to a strong link between experienceand success.
A 2009 Kauffman Foundation study entitled “Educationand Tech Entrepreneurship” discovered that the majority of success-ful tech founders are “middle-aged, well educated in business ortechnical disciplines, with degrees from a wide assortment of schools.Twice as many United States–born tech entrepreneurs start venturesin their fifties as do those in their early twenties.
Beyond bringing skills and relationships that will help you as anentrepreneur, the value of experience is primarily about patternrecognition. A person who has spent years in a particular industry canmore quickly and accurately connect disparate data points into mean-ingful trends and opportunities, seeing cause and effect where otherssee only fog.
As with motivation, some types of experience are more beneficialthan others. Map your own background and skills against the followingsix areas that prove valuable to almost any startup founder.
INDUSTRY, PROFESSIONAL, OR TECHNICAL EXPERIENCE THAT DIRECTLYRELATES TO YOUR CHOSEN STARTUP –What do you know how to do at thehighest level? What can you do better than most everyone else? How does your technical skill set relate to your new business? Starting a business fromscratch brings enough uncertainty and difficulty as it is without theadded complication of learning an entirely new industry or disci-pline. When it comes to starting a new restaurant, I’ll back the kitchenmanager with ten years at Outback Steakhouse over the career at-torney who loves to cook.
By the time they launched their first ventures, J.C. Faulkner andMark Kahn had been working on the leading edges of their fields longenough to develop deep expertise and perspective. They understoodtheir evolving industries, whose opinion to seek, and what questionsto ask. They knew how to spot important trends and filter out irrele-vant noise. By contrast, despite her twenty years of banking experi-ence, Lynn Ivey was a rookie in the senior healthcare space. Herlearning curve was a lot steeper than it would have been had shebrought years of prior experience in the industry.
SALES AND MARKETING EXPERIENCE – The essence of business is theacquisition of customers, clients, and users. A founder who bringsmarket-facing skills will enjoy a higher probability of success than aperson who lacks these capabilities. Sales skills are best acquiredthrough experience, ideally in the same industry as your new venture.But a strong track record of sales success in any industry implies thatthe founder brings an understanding of the importance of sales andall that it requires, as well as sales skills and habits that will transferto new markets.
Early in the ascent of Modality, Mark Williams realized thatgrowing his business would require a fundamental shift in his prioritiesand time allocation, away from product development and towardgreater immersion in the market of prospective institutional clientsand business partners.
While Mark possessed a natural gift for relatingto clients and partners—he’s often the most intelligent, poised, andhumble person in the room—he was unaccustomed to filtering andprioritizing sales leads or converting high-potential prospects intoclosed deals. He has diligently worked on this skill set as Modality hasgrown, but readily admits that an earlier tour of business-to-businesssales and marketing would have benefited him and Modality greatly.
LEADERSHIP EXPERIENCE – A wide range of prior leadership roles canprovide experience and learning that translate well to the needs of anew venture. Whether in a business setting or not, any role in whichyou have to get things done through others will test and refine yourleadership skills.
At the same time, leadership roles in large businesses usually bringvaluable learning experiences for future entrepreneurs. Every bigcompany contains a wide spectrum of leaders and styles, some bettersuited than others for the startup world, but the skills required to uti-lize the talent and time of others in achieving higher level goals willserve a new entrepreneur well in almost any new venture setting.
As with other aspects of experience, only you can fully assess howwell your prior leadership roles match up with your new venture chal-lenge, guided by the questions: Where have you led? What have you learnedabout how to lead? How well do these experiences transfer to your startup role,and in what ways can you best leverage your leadership strengths?
GENERAL BUSINESS SEASONING AND EXPOSURE – Taking on a range ofjobs early in a career almost always adds valuable business skills andperspective. “I was an English major in college,” says Mark Kahn. “Ispent a lot of time in different jobs at News Corp. and got to touchmany sides of the business.
I think I got a better kind of educationthan one might get at a business school. It was a very good place toget to learn something that I just wasn’t really familiar with, to behonest with you. My father was a physician; my mother didn’t work.It wasn’t as though I was surrounded by business growing up, so itwas my learning ground—and somebody paid me to do it, so thatwas a double bonus.
What skills have you learned through your work experience that will serveyou well in your founding role? Valuable examples include:
- Negotiation (contracts, deals, etc.)
- Organization, planning, and project management
- Problem solving and decision making (critical thinking skills)
- Financial acumen (financial reporting, accounting, etc.)
- General technology skills and knowledge
- Networking and developing business relationships
- Effective communication and public speaking
- Interacting with and influencing senior executives
- Whatever your skill set, identify significant gaps between yourown capabilities and what your venture will require, and ask yourself:Who has the necessary skills that I’m missing? Who might bring the patternrecognition that I don’t possess?
PAST ENTREPRENEURIAL EXPERIENCE – Many successful startups arelaunched by founders who have learned from prior entrepreneurialefforts, and a range of experiences qualify—being a member of astartup team, for example, or launching a new venture within a largercompany.
Both J.C. Faulkner and Mark Kahn started small businessesduring college (a pizza parlor and a storage service, respectively). Although dealing with fewer zeros than in their later attempts, they gained invaluable experience for the future. Also, they both workedwith or ran new ventures within their employer companies prior tomaking their startup leaps. When it comes to prior startup experi-ence, success or failure is less important than the experience of goingout on a limb, with something significant at stake, and making deci-sions in highly uncertain environments.
ADVERSITY – What have been your toughest challenges, professionally and per-sonally? How did you handle them? What did you learn from them and howmight these lessons apply to your new venture? Answers to questions likethese can build your confidence and prepare you for the most chal-lenging moments to come along your startup path.
Chris Holden continued to watch with interest as his former em-ployee, Mark Kahn, built a series of specialized websites on the wild-west Web of the late 1990s. He recalls Mark’s entrepreneurialadventure:
He used his casino winnings to pull his team together, with nopay, and got the thing ready for prime time. One year into it, at theheight of the dot-com bubble, he signed a deal with Martha Stewart’s company OmniMedia. They were going to buy the business for $16million and the deal was fully negotiated. He signs the contract andsends it back to them for counter-signature, and it was the day the bubble burst, spring of 2000.
The CFO of OmniMedia calls him upand says, ‘Hey, everything’s fine. We’re just going to sit on this. We’rebusy with some other stuff. The markets are doing weird things.’ Longstory short: They never signed the deal, and the whole thing crashedto zero. So, he had $16 million in hand, from his blackjack game tothat point, then all to nothing.
Mark Kahn soldiered on. “Even during that time, we didn’t say,‘Oh, the e-commerce market is blown up.’ We tried to ride it out. Wehad 35 meetings (with VC firms), even though 35 said, ‘No thank you.’You go to the next one and the next one and the next. That’s what youhave to do if you are committed to the business.
Unfortunately, the business ran out of money and stalled. MarkKahn, needing to support a growing family, got a marketing job withanother startup in New York City. Chris Holden joined a venture cap-ital firm specializing in digital media investments and continued towatch with impressed fascination as his former colleague picked him-self up and moved forward.
A few years later, when Mark Kahn had an idea for his next ven-ture, to create an Internet marketplace bringing online advertisers andpublishers together, Chris Holden brought his firm, Court SquareVentures, to the table with startup capital. He had seen Mark Kahndeal with crisis and failure and come out the other end as a stronger person.
Right now it’s one of the most successful investments we’veever made,” he says of TRAFFIQ , Mark’s newest venture. “Heplowed through his first failure, dusted himself off, and he did it again.And, he’s so good at taking all the lessons he learned along the wayand packaging them within himself. He truly is—I hate to be so ex-treme—but he’s close to being the perfect entrepreneurial CEO.
To this point, our discussion of your readiness as a founder has fo-cused on who you are, your motivation, personality, skills, and knowl edge. The objective is not to be perfectly rounded in all areas—nofounder will be—but to be well aware from the outset what you bringto the startup effort, where relevant gaps exist, and how to addressthose gaps. Consider the founder who plans to introduce a new tech-nology into the medical field, bringing deep expertise in technologybut no experience in healthcare.
Clearly, she will benefit from work-ing closely with partners who bring experience and relationshipswithin the targeted medical markets. Or if an entrepreneur is highlyconceptual and independent, but not very focused or socially in-clined, he or she will likely thrive in product development and plan-ning roles but may be less effective driving execution, leading teams,or building customer relationships. These are generalizations, so thekey is that you apply the above questions to your specific situationto best align your strengths with the needs of your venture.
The realization that you don’t have to be a superhero in all areasis tremendously liberating, as J.C. Faulkner discovered in building hisfounding team at D1. “One of our philosophies,” he said, “was to ex-ploit each other’s strengths and forgive and shore up each other’sweaknesses. We came to the conclusion that each of us doesn’t haveto be well rounded. The team has to be well rounded, but as individ-uals we don’t have to be perfect.