A huge lesson is to raise money at the appropriate time. We didn't understand our value proposition. We didn't even have a fully baked-out product. We weren't ready. So we failed.
Every time I started a business it was because I saw them as good short-term financial opportunities. In hindsight I realize none of these businesses lasted because it wasn't authentic. I didn't feel like they were my legacy or something I could really leverage my strengths with.
Lessons in raising money and making money were shared by the guests on today's Entrepreneurs are Everywhere radio show.
The show follows the journeys of founders who share what it takes to build a startup - from restaurants to rocket scientists, to online gifts to online groceries and more. The program examines the DNA of entrepreneurs: what makes them tick, how they came up with their ideas; and explores the habits that make them successful, and the highs and lows that pushed them forward.
Clips from their interview are below.
David Comisford is an entrepreneur currently focused on higher education and ed tech. David was named to the 2016 Forbes 30 Under 30 for his work in launching the EduSourced software platform. His previous startup was Frewg, a regional online textbook rental service.
While building EduSourced, David learned some lessons around getting funded:
David: We weren't ready to scale when we first took investors money, which tells me that we took the money too early, but I didn't know that at the time.
Taking money from investors meant that there was pressure to scale, and pressure to hire, and that hire included a high-powered sales executive, but we did this without understanding our own value proposition.
Steve: You mean that's who your investors were telling you to hire? Go hire a sales exec to scale?
David: Yeah. I can understand from the outside looking in, that would seem to make sense, bring somebody in who's done that before, but we didn't understand our value proposition. We didn't even have a fully baked-out product. We weren't ready to layer a sales team on.
The huge lesson for me was to raise money at the appropriate time (or from people who have patience at the appropriate time).
Earlier in his career, Omar had a series of what he calls side hustles, including a fashion company. The experience taught him that being a founder isn't just about the money:
Omar: Every time I started a business it was because I saw them as good short-term financial opportunities. Then I realized none of these businesses were having any kind of longevity because I can't add value to them in a way that it has meaning to me.
I didn't really ask, "How can I add my strengths to any business?" I just saw an opportunity and ran with it. It was working and it was profitable so I continued to do it.
Then I realized I don't want to do this anymore. It wasn't authentic. I didn't feel like this is my legacy or something I can really leverage my strengths with.
To hear the clip, click here
David launched his first startup, Frewg college textbook rentals, while in college:
David: Initially Frewg was a hobby. Over time it became an online book rental platform serving Ohio. We developed a simple algorithm for pricing the textbooks, predicting when a price would fluctuate, when a book would go out of print, that kind of thing. We weren't reliant on a wholesaler, which was interesting. Most people in that business work with wholesalers.
Steve: How did you learn about the economics of the business?
David: Initially we learned by doing simple stuff like going to the bookstore and getting information out of them about what do they pay for a book. I took 5 or 10 different textbooks, got their pricing, and then went and compared it to what I could sell them for.
Between Frewg and EduSourced, David tried starting a startup dedicated to digital textbook content. Here's why it failed:
David: No one really cared about our solution. That was the biggest reason why it wasn't going to work. I don't think I would have known that if I hadn't talked to people.
Steve: No one cared, meaning the students?
David: The students weren't my market. It was the faculty that had to adopt the textbooks.
Steve: So this sounds like a multisided market. There were students, there was faculty, there were content providers, there were re-sellers, there were authors. There were about 20 moving parts.
David: Exactly. I didn't know when I started how far in over my head I would have been.
It was interesting learning to recognize defeat, and not even think of it as defeat, but think of it as, "I tried this. I had a concept. I developed it as much as I could."
To hear the clip, click here
Omar was a teacher before becoming an entrepreneur. Here's why he left his teaching job:
Omar: The moment that really clicked for me is I was asking for a promotion that I thought I deserved. The person I was replacing, I was already doing their job for over a year.
I realized that, hey, what if I left today? I put in so much work into this institution. I've put in policies. I've built structure to this place and I can't take anything with me. I have no legacy, I have nothing to show for it."
As a founder, Omar learned to leverage his strengths. Here's what happened with a podcast he launched before the $100 MBA:
Omar: I realized I'm not a good interviewer. I didn't take it as seriously as I should have. I thought podcasting was a great idea. I believed in the medium, and I just said, hey this is easy. Just get on the mic and talk to people. I didn't really have a strategy.
After 46 episodes we decided to close it down. I realized I wanted to utilize my ability to teach. I never saw a business podcast that teaches. I saw interview podcasts. I saw discussion podcasts with panelists.
But I wanted to do what Coffee Break French or Coffee Break Spanish does, where they have a regular 15-, 20-minute lesson on how to learn that language.
I knew that if I was on the mic teaching, I would have a competitive advantage.
Tune in Thursday at 1 pm PT, 4 pm ET on Sirius XM Channel 111.
Want to be a guest on the show? Entrepreneurship stretches from Main Street to Silicon Valley, from startups to big companies. Send an email to firstname.lastname@example.org describing your entrepreneurial journey.
Steve Blank's blog: www.steveblank.com