Why Don't Entrepreneurs Scale?

I think the question on whether the entrepreneur is the one to take the company forward to an IPO or large scale venture is a complex one. It firstly has to start with what the individual’s aspirations are and whether they will feel comfortable taking on this role. This is not so much how capable they are, but how dedicated they are, and how much their values and long term goals fit with this role. This is separate to the needs of the business, as it might be in the best interest for the business if the inventor is the public face of the company, if these two sides are opposing, this could cause a conflict with the business.

A lot of the time the choice as to whether the entrepreneur runs the business isn’t up to the entrepreneur at all. If the venture succeeds in getting investment, or has the possibility to go to an IPO then the choice will be out of the entrepreneurs hands and be up to the board of directors, and usually ultimately the investors.

John Hamm has some interesting views on entrepreneurs and how they have difficulty transitioning from a start-up to a large organization. His main point is that the qualities entrepreneurs have to enable their ventures to succeed initially are the exact qualities that cause them to fail during the later stages of a business. These four tendencies are:
• Loyalty to comrades
• Task Orientation
• Single Mindedness
• Working in Isolation

Each has its benefits when working on a startup and can allow the startup to thrive
in its early stage. However as the business grows and the pressure from all areas increases, the entrepreneur will fail unless they are will to learn and adapt to their new situation and change their behavior. This is probably difficult to do from within, as the entrepreneur has to give up doing something that has been successful, but if they are willing to listen to their advisors and strive to understand the best way to behave there is no reason why they shouldn’t succeed.

Facebook has had to go through many of these issues, but has overcome everything that have currently been thrown at it, and Mark Zuckerberg has successfully navigated the company into new markets and successfully created a very lucrative revenue model for the site. I think it’s been successful by staying true to its core market and focusing efforts on rapid development and the user experience on the website. Areas such as photo sharing have proved far more popular than they could imagine, but the experience has been tweaked to make this the best they could make it. The user created applications have also been a huge help with its success, although it’s teetering on the edge of going too far with these applications.

There doesn’t appear to be a magic formula that will predict whether an entrepreneur will succeed into the future, it doesn’t matter what education, or even experience they have. The important factors, as echoed by John Hamm are they have to be open to learning and rise to the challenge.

iRhythm

In the afternoon we a meeting with Uday Kumar from iRhythm, who have a revolutionary cardiac-rhythm monitoring device. Uday was very enthusiastic, and showed that even with no knowledge of the business world, it is possible to form a great team, and start up a successful company. His dedication showed, and it was an inspiring talk, especially as he is coming from a similar position to myself, with lots of specialist skills, but little business background.

I have learnt from Uday's first hand expereince that dedication, hard work and enthusiasm for your idea are a great place to base a business from. Along with a lot more hard work it is possible to start a business in a short space of time, and raise significant funding, and also build a team.

Uday was very inspiring and a businessman who is less than a year down the line from where I am now, so he had lots of relevant knowledge, albeit in another field. Overall he had the right mix of technology speak, with business insights and really inspired enthusism from me and the group.