Entrepreneurship is not for everyone, nor is it an easy path to success. When it comes to the number of startups that achieve success, more than two-thirds of them never deliver a positive return to investors, according to the Harvard Business Review.
Now, in any other area of our lives, if the numbers were working against us so clearly, we’d probably take a hint. If, for example, I told you that if you stand in a certain place, there is a 66 percent chance you won’t survive, would you go ahead and stand there? Probably not. However, if I tell you that there is a 66 percent chance your startup will fail after years of hard work and millions of dollars of someone else’s money invested, for some reason founders still do what they do.
If the odds scare you away, entrepreneurship is likely not for you. With that in mind, here are four additional reasons that being an entrepreneur is not for everyone.
You need money to build a product and you need a product to get money.
This paradox is something I hear regularly from first-time founders. Of course, there is a real response to this challenge and it’s called a prototype. You can’t build the entire product without money, but you absolutely can build a prototype, a minimal viable product, without breaking the bank. You can then take that working product to an early-stage investor who deploys capital at this stage of the journey.
Your product needs a value to get users, but you need users for there to be value.
This challenge is not relevant for all startups, just for ones that depend on users. In other words, if your product stands on its own even if there is one user, you can ignore this one. However, if there is a social component of any kind to your product, you might be in trouble.
Imagine you’re building a social network and you have one user. Well, that user won’t stick around for very long unless others join. If no one else joins, what you have on your hands is a ghost town. No one likes ghost towns.
So what’s the solution? Figure out a way to give your users real value even if they are the only user on the platform. Once you figure that out, users will join and the value of your product will increase, then more users will join, and then your value will increase some more.
You need experience to have a track record but need a track record to get experience.
Something you hear from many tech investors is that they invest in people. In other words, many investors look for second or third-time founders. The assumption is if they did it before, they can do it again.
However, much like applying for a job, how are you supposed to get experience if no one will hire you? And if you don’t have experience, then no one will hire you. The same is true for startups.
You need a track record for many investors to even consider you, but if no one is willing to invest, how can you get a track record? The solution is building some trust in other ways. It’s true that you don’t have a track record, but if an investor gets an intro from someone they trust, or if they Google you and see all the content you produced about your space, they might consider you for investment even without a track record.
You can’t gather feedback without talking about your product but talking about your product is risky.
This one is really challenging. Getting feedback on your idea or your initial prototype might be one of the most important things you do in your entire entrepreneurial journey. Asking people in your industry whether they think your idea is viable or if they think your product has a chance is incredibly valuable.
However, talking about your product before you hit critical mass is dangerous. I say it’s dangerous because if you have no barrier to entry, anyone can steal your idea or copy your product.
So, do you talk to people or keep your idea under wraps until it is too late for anyone to copy it?
The answer is somewhere in the middle. Talk to people, but not just any people. Find people you trust, preferably people who know your space. I wouldn’t ask them to sign an NDA since you are asking them for help and making them sign an NDA is basically saying that you don’t trust them. I would, however, ask them for discretion.
Another way to secure yourself while showing your early product to people is by limiting exactly what you show. For example, I wouldn’t give them access to your code but I would speak in general terms or even give them a basic demo in order to get their opinion on your chances of success.
