Here's one secret to building a billion dollar company – it has never involved a set pattern. The only thing that drives the success of such businesses is the vision of the founder and his dedication to “make it happen”. But the recent trend of startups – serial entrepreneurship – tells an altogether different tale. Entrepreneurs these days set up businesses only to be sold at a later stage.
Serial entrepreneurship, as inspiring as the term might appear, has become one of the most abused terms in the millennium. Anyone who has ever started a company or a website only to have shut it down or sold it is a serial entrepreneur. The real essence of being an entrepreneur is to start a business with a vision to meet the needs of society and make a profit.
According to David Friedberg, CEO of Climate Corporation, “There’s a 0.00006 percent chance of building a company that will grow to be worth more than a billion dollars. Even if you do raise money and sell a company or take it public, your median time to doing that is probably 49 months. Assuming there are three founders, your median expected payoff would be $300,000 each — that’s the equivalent of $73,000 a year. And the probability of making nothing is 67 percent. So if your motivation for doing a startup is financial reward, you’re better off going to Google, a hedge fund, choosing a career with stable income potential.”
But how many entrepreneurs are making profits these days? Or rather, how many actually start a business with sustainability as a focal point? Remember, bootstrapping and sustainability are two different sides of the same coin, and when you dig deeper, you realise that both of them have their own special characteristics that cannot be neglected at any point in a business's tenure. Here are two tell-tale signs that you are not here to stay for long:
You’re not providing any solution to a deserving problem
Saying, “I want to start a startup.” without any passion to serve the society is as meaningless as saying, “I am going to go bungee jumping without any safety gear.” What would you call such a person? Moreover, why would anyone want to put all their energy, time and efforts in working for a business model that is not doing anything to make lives simpler? Businesses are complex, and adding one more meaningless venture to the already complicated economy is only going to add to the woes of the ecosystem. If you want to build a billion dollar company, you have to start with a problem that really impacts people’s lives and then present a solution they actually want.
For instance, many new education startups are coming up with breakthrough ideas to make education accessible to kids living in remote, underdeveloped areas of the country. Even if these startups are not making any profit initially, they are definitely bringing a change that is not only serving the society but also making a stronger case for its own sustainability. Such startups will always find venture specialists to fund their initiative.
You never gave importance to facts and figures
Of course, you did your market study before starting out, you got all numbers in place and you even incorporated them in your business plan. But are you really following them? Do you know how many people are genuinely interested in your product? Are your marketing efforts in sync with your target audience or are you simply following the mass trends? There is a reason why concepts like Big Data exist. Such information helps your business create strategies that are aligned with the preferences of your product, industry and end users. If you have stopped giving weightage to the data, facts and figures, chances are you are far off the track, or even worse, on a verge of failing abruptly.
“Identify the unknown. Mitigate the unknown. Only then can you enable the outcomes you want, and that’s how you increase the value of your company,” says Friedberg.
The idea is to use the data and statistics to eliminate the risk factors. Once you have clarity of the business model and how it will impact the lives of end users, that’s when you start working towards the idea that’s statistically remodelled to sustain and make profits. You need to work on developing systems that ensure superlative customer experience, real traction and sustainable growth.
Self-awareness is the mother of all leadership skills, and establishing a business requires nothing more than experience and wisdom to understand what's about to come. Making a billion dollar company takes time, but once you get on the right track, the journey will be nothing short of adventure.