How You Can Win the Entrepreneurship Game

It is high time for financiers to acknowledge the power of African American female entrepreneurs. Earlier this year, Forbes reported Black women are the fastest-growing group of entrepreneurs in the U.S, with companies generating $44 billion a year. Incredibly, the number of African American female owned businesses has swelled to 1.5 million since 1997- an increase by 322%! Similarly, in the past decade, the number of women owned firms has grown five times faster than the national average.

Nevertheless, only 2.1% of the venture capital funding in 2016 went to women-led companies. I decided to investigate tangible steps to address this inequity by speaking with prominent venture capitalist J. Skyler Fernandes. Fernandes is an entrepreneurship guru, as the acclaimed author of The Best Startup Pitch Deck. The guide, available here, has been viewed and downloaded over 450,000 times and is a fixture at many top business schools and accelerators. It incorporates wisdom from leading angel investors and venture funds around the globe. Motivated by the recent birth of his son, Fernandes encapsulated the knowledge he has amassed to create the #1 board game for entrepreneurship and venture capital, The Next Big Thing. Apart from these innovations, he is a top ranked Powerlist 100 VC and the founding Managing Director of Simon Venture Group (SVG). SVG is the corporate venture capital arm of Simon, the largest retail real estate company in the world and an S&P 100 company. In this role, he spends his energy investing in the future innovation of retail technology, rising new brands, and Internet of Things (IoT) for smart cities and smart buildings at one of the top five corporate venture groups in the country focused on retail and commerce.

When one thinks of the crucial considerations for startups to secure funding and yield large financial returns, it is easy to assume the founding team is most important. After years in venture capital, Fernandes has a more nuanced perspective, claiming that he prioritizes:

1. Market size
2. People who comprise the team
3. Products & business strategy

Why? “This is in order of how difficult each is to change from hardest to easiest” he asserts. These three facets comprise the core of what he believes dictates success in venture. Creating a company that has a big market now or will have a big market in the future is essential. Fernandes pointed out the fact that regardless of how amazing a team or product may be, your growth is always constrained by the size of the market. He has noticed that first time entrepreneurs usually overestimate the size of their true target market. Fernandes recommends vigorous back of the envelope analysis, taking the time to honestly ask:

1. What are you building?
2. Who is your target demographic?
3. How big is that market now?
4. Where will it be in the future?

An aspect many entrepreneurs may find difficult to decipher is social media engagement, which Fernandes claims is an indicator of loyalty and a potential fan base as opposed to the actual market size. A loosely related challenge awaits entrepreneurs in infant markets. One illustrative example are self driving cars, a technology poised to take off as an inevitable money maker in the future. Timing is a complex and costly issue because it is difficult to project exactly when the technology will catch on among consumers and what the legislative climate will be at that point.

When assessing a founding team, there are three aspects Fernandes points out as most important:

1. Their ability to efficiently streamline costs and generate revenue
2. The discipline to raise capital every 12-24 months and allocate it to initiatives for rapid growth
3. Perseverance and stamina to continue developing and innovating all aspects of your business

To add to that third point, passion and persistence are absolutely necessary, along with a healthy dose flexibility. Flickr is one example that evinces Fernandes’ views on having a great team and illustrates the ease of changing a product strategy. The founder of Flickr set out to create a board game, but ended up spending nearly all of the money he had raised to no avail. Although no one enjoyed playing the games he created, he recognized that the photo application his team had created to upload photos for the game had potential. Flickr went on to become acquired by Yahoo for approximately $25 million. “It is a roller coaster” Fernandes admits. “Even though everyone thinks you are dead-come back.” He recommends an open mind to exactly where your best opportunity lies, as it may have nothing to do with your original vision.

For females, the best advice Fernandes offers is to diversify the type of startups they are founding. “Men historically have created companies in every sector...While women have been becoming more and more entrepreneurial, they continue to start companies that over index in the areas they know best” he astutely observed. Fashion, retail, and home-oriented businesses tend to be extremely popular choices. Fernandes recommends women try to learn programming or create companies beyond the sectors where they feel they have the most expertise. He also encourages more females to participate in venture capital, as most venture teams are composed entirely of white men.

Fernandes shared most of this information as the inaugural speaker for RocketTalks, a speaker series launched, pun intended, by Rocket Market Development and Spark Labs. These events are meant for experts in marketing, media, and venture investing to meet entrepreneurs and members of the investment community and discuss exactly what it takes to grow your business- how to get started, obstacles to expect, and best practices for market success. These informative conversations will be moderated by Matthew Sawyer, an Executive at Rocket Market Development and a Professor at both Columbia’s School of Professional Studies and at Parson’s School of Design. At Rocket Market Development, the overarching goal is to unlock transformative growth.

Fernandes is a proud Eagle Scout and pays homage to that legacy in his description of the ideal entrepreneur. “In Boy Scouts, there is a thing called a one match fire” he explained. “If you are really good at fire building you can start a fire with one match. I use that as an analogy for being a successful entrepreneur and being good with capital. If you could start a company with the initial capital and not have to keep coming back for money other than for rapid growth, you would be efficiently using the cash, just like an efficient fire builder can turn one match into a bonfire.”

If you truly want to gain an understanding of the ins and outs of entrepreneurship, I highly recommend playing the board game The Next Big Thing. In the same way that we learn about real estate from Monopoly, the board game is intended to get players to get familiar with entrepreneurship at an earlier age. As mentioned, the game was inspired by Fernandes’ son, Mason Summit Xavier, whose name means “builder on the highest point a new house...I wanted to give him an inspirational name, a little startupy, and encourage him to go on to build things,” commented Fernandes. The venture capitalist created the game with his accomplished wife, Jenna. Founders have frequently echoed the feedback, "I wish I played this game before actually launching my company!"

The game helps to perfect the art of creating a seamless money making machine, prioritizing lifetime value over the cost to acquire a customer. This puts your company on a path where all the money going in on one side results in more money coming out on the other. Players of all ages can draw from a pile of founder cards that are evenly split gender-wise, are ethnically diverse, and possess a unique skill set you can use to your advantage. At the end of the game, the winner is the player with the highest final founder’s value. The objective is to maintain as much founder equity as possible in the company that generates both the largest valuation and has the greatest positive impact on the world. Celebrate the holiday season and take the time to invest in your entrepreneurial dreams by purchasing the game, listening to Fernandes’ TED talk, or downloading his pitch guide!