By
Peter Cohan for Inc.
Think
you're ready to start up? Put yourself to the test. Check out the five crucial
keys to knowing you'd be a great entrepreneur.
Andy
Palmer has started at least five companies by my count--and I'd guess he has
invested in dozens of others. Based on that experience, I'd consider him an
expert when it comes to deciding whether you have what it takes to be an
entrepreneur.
After
graduating from Bowdoin with a major in English, History, and Computer Science,
the passionate Rugby player was injured and decided to become serious about a
career. So he got an MBA from Dartmouth's Tuck School.
From
there, Palmer went on to be part of the founding team of five start-ups:
Austin's Trilogy; pcOrder.com, a Trilogy spinoff for buying PCs and software
online, that was spun back in; Bowstreet, a "portal-based tool provider," that
IBM acquired in 2006, Infinity Pharmaceuticals, a cancer drug developer that
went public 2000; and Vertica Systems, a database company that Hewlett Packard
bought in 2011.
Now
Palmer spends half his time on life sciences and half on tech start-ups. He has
invested an average of $75,000 in some 30 ventures; is a founding board member
for six companies; and works on more altruistic projects--such as collaborating
with MIT's Broad Institute to help develop a genomics information system.
Here
are five thoughts Palmer offered on what he would tell a young person
considering whether to become an entrepreneur.
1. Know how good you really are. Palmer pointed out
that potential entrepreneurs must know where they are on the "bell curve." As he
said, "Some people like Steve Jobs or Bill Gates are destined to be
entrepreneurs and nothing will stop them. Others are one standard deviation out
of the bell curve. They could be entrepreneurs under the right circumstances.
But most people are just average when it comes to their entrepreneurial
potential."
This
self-assessment has important implications. If you are destined to be an
entrepreneur, there is no need to ask anyone else's opinion. You will start
companies. If you are one standard deviation out, then you need to find the
right circumstances--meaning you must pick the right opportunity to target and
figure out which key entrepreneurial talent you bring to the party and partner
to find your missing piece.
2. Be willing to team up. This brings us to
Palmer's idea that the idea of the hero entrepreneur--Larry Ellison against the
world--is outmoded. He looks at Google as a model which is run by a troika of
Larry Page, Sergey Brin, and Eric Schmidt. Each of them have different strengths
and they are willing to work together to apply those strengths to helping the
company grow and adapt to change.
For
most technology start-ups, there are two skills needed at the beginning,
business (which includes sales, marketing, and handling capital raising and
accounting) and technology development. If you are excellent at one or the
other of these skills, you should find a partner who excels at the other
skill.
For
example, when Palmer started Vertica, he was in charge of the business side and
he partnered with a database expert, Michael Stonebraker.
3. Share the right values. How does the business
person know which technology person to partner with and vice versa? Palmer
believes that values make all the difference. He argued, "It is a big
responsibility to be developing a new product for a customer. As a business
person, I want to make sure that potential customers do not get an overly
optimistic view of where we are in our development process."
Palmer
wants a partner who shares his belief in the importance of setting realistic
expectations. "Simply put, I want to partner with a technologist who shares the
value I place on giving potential customers an intellectually honest set of
expectations. It is too easy in high tech to exaggerate your
accomplishments."
4. Have unquenchable passion. Palmer argues that an
entrepreneur must know why he is starting a venture. "When it comes to figuring
out where you are on the bell curve, it is essential that you ask yourself
honestly why you want to start a company. If you are doing it to get rich, you
should not proceed. The best reason to start a company is because you are
passionate about it," said Palmer.
This
passion was something that drove him to join the start-up team at Infinity. As
Palmer explained, "By the time I joined Infinity, I was feeling that the
software companies I had started were not going to make the world a better
place. But when I went to work for Infinity, I believed that I was helping to
solve a big societal problem--curing cancer."
5. Fit your operating style to the opportunity.
Palmer has seen two kinds of start-ups: blessed and bootstrapped. And
they demand different operating styles.
A
blessed start-up has access to the most capital, the best investors, the best
executives, and top talent at all levels. "Before I started Vertica, I was an
executive-in-residence at Kleiner Perkins. Ray Lane told me that he was
expecting me to build it into a billion dollar company. If you're in a blessed
start-up like that, you have to get used to the enormous pressure to achieve
excellence and react accordingly," said Palmer.
But
a bootstrapped start-up is very different. It makes "every dollar an investment
that yields a five-fold return" quipped Palmer. "In one start-up we had a
conference room that contained all our servers, and it was hot in there. And our
other conference room had a big glass window so it was always cold. We channeled
the heat from the server conference room to warm up the cold one."
If
you can pass these five tests, you may be ready to start-up. Otherwise, think
again.
Source: Inc.com
