During the London Olympic Games, many commentators tried to analyze what enabled certain athletes to win and others to lose, and what key factors contributed to the victors’ success. Likewise, we can analyze the factors of success in the startup community. What distinguishes a venture that ultimately gets a double-spread article in a well-known magazine, with a title such as: ‘The small startup that became a global hit,’ from the ones that don’t?
A look at the defining characteristics of winners in these two worlds (professional sports on the one hand and entrepreneurship on the other hand) reveals many common success factors, but also one big distinction.
In this post we will use this analogy to examine what leads to success in these two arenas, realize in which aspects entrepreneurs should try to imitate professional athletes, and, finally, identify the major difference between them and its implications.
1. The statistics
Sports: Out of millions of people who practice sports, only a few become professional athletes, and a very small percentage reaches the professional panacea – the Olympic Games. Olympic athletes and coaches have specific parameters for success: Did the athlete qualify for the finals? Did she win a medal? Was it gold or “just” silver? Thus, a small error in a gymnastics exercise, a momentary loss of focus in judo, or a split-second delay in a race can, cruelly, end with an athlete weeping and a coach talking about a big failure.
Startups: Most startups do not produce the desired return on investments, and a tiny fraction achieves economic prosperity. Often one may claim that the startup is not a “failure” even when it does not meet its financial expectations: developing an innovative product, selling products to satisfied customers, and contributing to the advancement of the human race (in certain cases) are all impressive and tangible accomplishments. Yet, from a purely economic point of view, the majority of startups fail (there are different opinions regarding the exact figures).
Insights for entrepreneurs: the statistics should not discourage entrepreneurs – they merely reflect the reality. Acknowledging this reality should encourage entrepreneurs to learn what is necessary for them to become successful.
2. Realizing potential
Sports: There are countless stories, in all sports fields, about ‘the next Michael Jordan’, who unfortunately never managed to realize his/her potential. Evidently, a great physique and a natural talent for a given sport do not guarantee success. Accomplishments depend on how much athletes develop technically, physically and mentally; they must strengthen their weaknesses and acquire essential competitive abilities.
Startups: Entrepreneurs know that investors look for excellent products, large markets, and substantial competitive advantages (e.g. intellectual property, exclusive distribution, or strategic partnerships). Investors also look for the ability to realize the startup’s raw potential and turn it into a successful business while dealing with many future challenges, (e.g. key customers withdrawing from a pilot, forced delays in market entry, or unexpected competitors).
Insights for entrepreneurs: an idea, no matter how good, is far from sufficient. The real challenge is in realizing the potential and turning an idea into a successful business while overcoming multiple obstacles. If a startup’s team does not have the skills to do it, then the venture is likely to face serious challenges in the future.
Sports: Athletes arrive at big competitions after years of preparation. Some of them follow intensive training schedules, starting in childhood, at the expense of social life, hobbies, sleep, etc.
Startups: From the moment when a theoretical idea turns into a real project, there is a need for focused dedication. This may sometimes lead to dramatic actions: Jeff Bezos left a well-paying job in New York in order to establish Amazon in Seattle; Sergey Brin and Larry Page gave up PhD studies at Stanford to found Google; and Bill Gates and Mark Zuckerberg left Harvard to devote themselves to Microsoft and Facebook respectively.
Insights for entrepreneurs: Major commitment is required in terms of time, energy, and loss of alternative income. Entrepreneurs must be straightforward and honest about it with themselves and with spouses, partners, and employees.
Sports: The importance of teamwork in team sports such as football and basketball is obvious. But in individual sports, too, the importance of support staff is tremendous. Coaches, physiotherapists, fitness trainers, psychologists, physicians, nutritionists, and others enable athletes to improve, maximize their potential and reach top shape and performance at the right time.
Startups: Many entrepreneurs do everything by themselves: product development, design, quality control, customer acquisition, etc. However, high-quality support can help them avoid critical mistakes and can ultimately make the difference between success and failure. Such support may be granted, for example, by UX experts who help improve user interfaces, lawyers who help with investment agreements, and mentors who provide leads to strategic partners.
Insights for entrepreneurs: Despite limited budgets and a common tendency to bootstrap, entrepreneurs must have access to the knowledge, skills and experience of various experts. They may do this in several ways: internally (hiring the experts as employees), externally (as consultants or coaches), through mentorship, or by forming a board of advisors. The appropriate form depends on the specific circumstances.
Sports: some young athletes often relocate to remote countries in order to realize their potential. Maria Sharapova moved at the age of 7 from Russia to a prestigious tennis academy in Florida; martial artists travel to learn from masters in Japan. They do so to enjoy tradition, expertise, professionalism, and years of experience in talent development.
Startups: The business world, too, has clusters of knowledge and expertise. Silicon Valley is the most prominent example: huge companies like Apple, Intel and Hewlett-Packard, great universities such as Stanford and Berkeley, leading venture capital funds, and others are there contributing to an ever-growing virtuous cycle. Of course, one must not relocate to the Silicon Valley to enjoy a productive environment: many cities worldwide have become major startup hubs, and many others offer entrepreneurs open houses and shared office space where entrepreneurs can enjoy mutual feedbacks, access to mentors, investors and various professionals and exposure to the latest relevant developments.
Insights for entrepreneurs: entrepreneurs must seek a supportive environment rather than operate independently. They can, for example, share space with other entrepreneurs, attend conferences and meetups, or join relevant internet communities.
The big difference between athletes and entrepreneurs
There’s one major area where the two groups differ – the adherence to workplans.
Sports: athletes preparing for the Olympic Games need detailed workplans for various topics: the physical fitness, nutrition, tactics, etc. Athletes train for months and years in order to reach tournaments in top shape, ideal physical ability and strong mental state. Tournaments’ ultimate results depend, of course, on many external factors (such as the competitors, the weather, or injuries), but this does not reduce the importance of specific and detailed workplans to achieve top form at the right time.
Startups: Innovative startups operate in great uncertainty. The business plan of a new product, usually based on many assumptions regarding the future, will never fully materialize as planned. There will always be uncertainty, usually in one of two categories.
The first category: technological feasibility of the product (e.g. bio-tech projects, medical devices, renewable energy and other complex developments). For this category of uncertainty, each enterprise requires a specific examination.
The second category: difficulty to forecast customer behavior (e.g. regarding new websites or applications for smartphones), even when conducting market research in advance. Even if one displays prototypes to potential customers and runs focus groups, the behavior of real customers with the actual product, ‘outside of the laboratory’, remains uncertain.
Further, external changes can render plans irrelevant quickly. Such external factors may include, for example: changes in social networks, developments in mobile phone technologies, economic crisis, and regulation.
So, how does one deal with this kind of uncertainty?
What entrepreneurs must do given the uncertainty of markets and customers
- Make sure that customers are satisfied with the product
If they are not – improve the product. If still not – improve again. Without happy users, a startup cannot succeed.
- Design a business model and check its validity
Many entrepreneurs do not pay enough attention to the business model in the early stages, believing that it could be improved after product development is done and the product is released to the market. Well, it may be too late then. Attention should be given to the business model early on, taking into account the customer needs and behavior, the business environment, and the competition.
- Choose appropriate performance metrics
B2C ventures, for example, may like to measure their customer acquisition and activation using parameters such as the number of users visiting their websites, number of registered users, number of paying customers, etc. B2B enterprises, however, will have different parameters that reflect long and complex sales cycles, and therefore their metrics may include the number of prospects, number of leads, and the concrete opportunities.
- Measure the metrics and adapt quickly
It is necessary to drive forward while constantly and gently adjusting the steering wheel. For example, a slight modification of the features, UI or design might be necessary. Re-check the results after the change.
- When necessary – pivot
When it is clear that the current path will not lead to success, one must stop, analyze, review existing alternatives, and take the most suitable direction (which will then be tested all over again). Pivoting, as thoroughly explained by Eric Ries, may mean making a major change in the product, in the distribution channels, in strategic partnerships, or even in the target customer segments.
This post was published in Hebrew at Newsgeek.
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