The Missing Entrepreneur
Market Visionary and Product Picker

Missing entrepreneur? I know what you’re thinking: “Every startup has an entrepreneur.” What I mean is an entrepreneur with a capital E. Let me explain: a lot of people have good ideas, and some are even able to execute on them. But rare is the man or woman who can take an idea and transform it into a sharply defined product and then sell it to top-level prospective hires, investors, and customers. An Entrepreneur, as opposed to their lowercase counterpart, is a product picker and a market visionary. A great Entrepreneur seeks out a great market. A little e entrepreneur, lacking strong product and market vision, burns through cash as the team struggles to define its position.

An Entrepreneur with a Capital E

A colleague once told me that making successful investments is much like going to the horse races. To win, you’ve got to pick the right race, the right horse, and the right jockey. I’ve never been to the horse races, only the startup races, but I still love this analogy when it comes to thinking about how to build a successful company.

I’ve talked at length about the race and the horse. And later in the book, I get into the gory details of teams and how to overcome the challenges of execution and scaling. But in this chapter I want to focus on the Entrepreneur with a capital E because without this individual, startups simply wouldn’t exist.

An Entrepreneur with a capital E is a market visionary and unparalleled product picker. The best Entrepreneurs seek out large markets—to create or disrupt them—and then iterate the product to find product-market fit while not running out of cash. Sometimes they find it out of the gate; other times it takes years.

Entrepreneurs with a capital E often have very wide apertures as they cycle through new idea after new idea; but once they latch onto the right idea, they become ultra-focused. Some entrepreneurs get stuck in iteration mode, jumping from one feature to the next or one idea to the next. Others latch onto an idea too soon, and get stuck at a local maximum—a small market they can never execute their way out of.

Entrepreneurs with a capital E tend to have at least a few other characteristics in common. Many are natural promoters. They’ve had to hustle and sell all their lives, they crave attention, or they have a desire to see the world operate according to their vision of it. Others may not start out as promoters—many entrepreneurs are actually introverts—but ultimately become promoters either out of necessary or because they’re forced into being the visible face of their successful companies. Michael Dell is one famous example.

Finally, Entrepreneurs with a capital E have incredible self-determination. They have a need to challenge themselves and grow, and they’re frequently unwilling to settle. They’re hungry: hungry to prove they’re right, hungry for success, and hungry to disrupt and transform big markets. They don’t stop at being visionaries—they execute on their vision by signing up other people to turn their vision into reality.

Where’s Marc?

Marc Benioff, Bill Gates, Steve Jobs, Larry Ellison, Larry and Sergey, Mark Zuckerberg, and Jeff Bezos, to name a few, are all clearly Entrepreneurs with a capital E. They were instrumental to the creation and success of their companies.

Without Benioff, for example, Salesforce.com wouldn’t have become the category-defining company that it did. So when an entrepreneur starts an investment pitch with a statement like, “We’re like Salesforce.com except for…” the number-one question in the audience’s mind isn’t “How similar is this company to Salesforce.com?” Rather, it’s “Is this entrepreneur the next Marc Benioff?”

Some might minimize the impact of this missing factor on the potential success of their business. But if you look at the most successful tech companies of the last 20 or 30 years, there are almost always one or two key people you can point to who made the company. Conversely, few people remember who was at the head of the failures. Don’t just ask yourself what it takes to pitch like an Entrepreneur with a capital E. Ask yourself what it takes to be one.

An Entrepreneur’s Quest: The Big Idea

If one thing separates big E Entrepreneurs from little e entrepreneurs, it’s The Big Idea. The Big Idea describes the way the Entrepreneur’s company will transform The Big Market. The Big Idea isn’t about the details, the features, or the practicalities of today. It’s about how the world will be tomorrow, after the Entrepreneur’s vision/dream becomes reality.

Some Entrepreneurs set out with The Big Idea, but not all do. Sometimes, entrepreneurs start building product and only later realize they have a vision for something big—something game-changing. That is the moment when they go from being entrepreneurs to being Entrepreneurs. They have The Big Idea, they articulate it, and they do everything in their power to make it a reality.

The Big Idea is what potential employees and investors fall in love with. It’s what motivates them to invest their time and money. It’s what keeps them going even when the day-to-day is a brutal challenge. The product is the implementation of The Big Idea. When people use the product, that is the realization of the Entrepreneur’s dream: the Entrepreneur’s vision has become reality.

Picking the Right Product for Your Market

Big E founders have an excellent sense of the market they intend to dominate. There are many different ways to find your market. Some entrepreneurs have an experience with one way of solving a problem and decide that problem should be solved in a different way. Marc Benioff started Salesforce.com for that very reason.

Often, entrepreneurs start with a big market and then stumble around in search of the right opportunity. In reality, that stumbling around is a fundamental part of finding product-market fit.

I remember when my co-founders and I were starting our first company. Our excitement about starting something new was surpassed only by our naiveté. We spent a few months—which at the time seemed like an eternity on the few hundred thousand dollars in capital we had raised—doing what seemed like floundering around.

Finally, we built a system for sending text messages over wireless networks. We went out and talked to customers to see if they’d buy it. Sometimes our text messages went through, other times they didn’t. We were we having a hard time getting customers to buy our product, but we were having an even harder time getting the messages to go through reliably! When we tried to do a demo with a customer and our messages wouldn’t go through, naturally they assumed our product didn’t work.

To address the issue, we built a service to measure whether messages were being sent and received properly. Customers weren’t buying our real product, but one day we happened to mention our measurement system. “We have that exact problem!” the vice president we were talking to exclaimed in front of his team. We had never heard that before, and when we got back to the office we agonized over what to do. We didn’t have enough resources or capital to deliver both systems simultaneously. We had to pick one or the other. We went with the measurement service.

I used to wish I could say we had the foresight to build the measurement service from the beginning. The reality was that we chose an interesting and rapidly growing market. We made an initial assertion about what product to build. It wasn’t what the market wanted, but it was adjacent to what the market wanted.

As a result, we were there to capture the opportunity when it arose. The insight was to take what seemed like our side product and make it what the business was all about. What felt at the time like floundering around was in reality the natural process of finding our product-market fit.

Teams Without a Clear Vision Fail

Small e founders often lead teams that execute without a clear vision. As the old saying goes, if you don’t know where you’re going, any road will get you there. You may wonder how this can possibly happen.

There’s the romantic notion of starting something—be your own boss, run your own show, and build what you want to build. The reality can be somewhat different. A team can start out with a clear vision. But after discovering that people either don’t want to use what they’ve built or want to use it but don’t want to pay for it, the team loses its way. Team members get stuck in a sort of no-man’s land with an existing product and some users, but no bigger picture vision of how they want to transform the market and what they need to build to do so. Some founders aren’t sure what their target market is. They’re stuck being small e entrepreneurs.

This was the situation of Company T, a composite, whose founder built a product and raised venture capital. A great technologist, but not a market visionary, the founder built a product that was difficult to use. He did little to promote a larger vision of how it would transform the market. The company added customers, but its revenues stayed more or less flat. Investors described the company as having gone sideways—it didn’t go out of business, but it wasn’t growing.

At the same time, the founder of Company T didn’t have a clear vision for himself—he vacillated between wanting to raise a lot of capital to grow and staying small so that he could remain in his comfort zone. Meanwhile, his fixed costs (the costs of paying for employees, rent, hosting costs, and the like) stayed the same, chewing through the small amount of capital he had raised.

Several years later, two new companies started in the same space. Their founders articulated clear visions of how they were transforming the space and the key trends they were riding to do so. On that basis and the simplicity of their products, they were able to raise tens of millions of dollars in venture capital.

All three companies went after the same market. The difference? The founders of the two successful companies had very clear visions for themselves and their markets. They built highly focused and elegantly simple products as a result. That enabled them to accomplish their goals and fulfill their aspirations.

Money Doesn’t Help When You Don’t Have Users

Big E Entrepreneurs are all about finding product-market fit. That means they’re experts at building something people want and driving user adoption.

Simply put, there are two ways to make sure you have enough runway to find product-market fit. You can raise lots of money or spend frugally. Even if you can raise a lot of money, I recommend against it until you have product-market fit. Companies have a tendency to spend the money they raise. Lots of capital is critical for scaling when you’re ready to grow. But if you’re still searching for product-market fit, too much capital makes it easy to lose focus. It’s all too easy to hire more resources rather than make hard tradeoffs. In the worst case, it can cause a company’s founders to get comfortable, reducing their sense of urgency. It also makes it too simple to build up a large organization that’s difficult to change when you figure out you don’t have product-market fit.

Entrepreneur S was an incredibly talented software engineer who worked at a large Silicon Valley software company. Based on the strength of his reputation and where he worked, when he left to start his own company, multiple investors offered him large amounts of money on great terms. In under a month, he and his team raised $10 million: $5 million each from two venture firms. Entrepreneur S had joined his previous employer early enough to make millions of dollars, and he walked and talked with the swagger of success.

Some investors assumed that Entrepreneur S had played a large part in the success of the rocket ship that was his previous employer. Others believed he had learned enough from working at his previous employer to be able to apply what he had learned at his new company.

However, Entrepreneur S’s previous employer was already a rocket ship by the time he joined. It had exponential growth, users were flocking to it, and it quickly became the dominant market leader.

Although Entrepreneur S led a lot of product innovation, he had not had to suffer through the initial stages of product-market iteration, helping the company find its first users, its first hundred thousand users, and then its first million. He assumed that if he built a great product, users would buy it, because that’s what he was fortunate enough to experience in his career; he knew of no other kind of market.

It turned out that Entrepreneur S told a compelling story and had great product ideas, but he was neither a market visionary nor a better-than-average product picker. He was surprised when users didn’t show up, taken aback that he had to spend money on marketing, and ultimately—as he was forced to pivot from his original business model—aghast that he had to hire salespeople.

His investors brought in a CEO to run the company. In a rare turn of events, the CEO turned out to be very much an entrepreneur himself. Building off the same product, he moved the company up-market to where he smelled money, went out and got specific customer feedback on requirements, and, combined with some good timing and luck, was able to turn the company into a success.

For Entrepreneur S, the result was bittersweet. The company burned through two rounds of funding while it was figuring out product-market fit, and his equity was significantly diluted in the process.

Dave Duffield, founder of PeopleSoft (acquired by Oracle) and now founder and co-CEO of Workday, is one of the most inspiring big E customer advocates around. He’s so focused on customers that he not only goes out of his way to use his customer’s products but also buys their stock. His mantra is that those companies will be more successful as a result of using his products—so he invests in them! In one example, he doesn’t buy shoes just anywhere: he buys them from Zappos, a Workday customer. Of course, this approach makes for great marketing and sales, too; his customers love hearing how he’s using their products and buying their stock.

Hire for Operations

Startup success comes down to right market, team, product, timing, and execution. Little e entrepreneurs miss one or more of these fundamental elements.

Whether they realize it or not, the vast majority of people who work at successful technology companies, unless they started them or joined very early, expect customer demand and business models to be in place already. Their jobs are primarily about execution for growth. They introduce product features, implement marketing strategies, and sell to drive broader adoption around the existing core business, while scaling the business infrastructure to support that adoption. The ability to scale is critical to building a large, successful company.

This is not, however, the primary job of an Entrepreneur with a capital E—not initially, anyway. Being able to hire people who have the experience to scale is what separates those entrepreneurs who are able to scale with their companies from those who aren’t. But hiring those people before you’re ready for them limits your options and creates frustration for both you and them.

Frequently, when investors fire entrepreneurs from their own companies, they cite the founder’s “inability to scale” as the reason. Sometimes this means the company hasn’t found product-market fit and the investors mistakenly hope that bringing in a professional manager will solve the problem. This rarely works because when it comes to startups, professional managers are best at helping startups scale, not doing market discovery. These companies often end up improving marketing, sales, and operations, all while burning through hard-earned capital, only to discover they still don’t have a product that a large market wants.

Other times, it means the company is unable to raise money, and the existing investors hope that potential new investors will back the new CEO—often on the basis of their reputation. But most often an “inability to scale” means an entrepreneur is unwilling or unable to hire the management team needed to scale the company.

The unwilling entrepreneur keeps finding reasons to turn down potentially great hires. Whether they admit it or not, these little e entrepreneurs often feel threatened by those with significantly more experience. And conversely, those with more experience tend not to want to work for these little e entrepreneurs. For other entrepreneurs, it’s a matter of control—they have trouble delegating responsibility to others, fearing that the job won’t be done the way they want.

Then there are those who are propped up by board members just enough so they can get by without the key hires they should be making. This strategy works for a while, but ultimately these companies can’t keep up with the efficiency and speed of their competition, which has the best people working on scaling full time.

The best entrepreneurs attract great people, and they make it their mission in life to bring great people into their companies. When they meet a great person, their first question isn’t “What open role do I have that this person could fill?” Rather, it’s “How do I get this world-class individual involved in my company?” They take great pride in attracting the most talented people and convincing those people to come work at their companies. That is, they see highly qualified, experienced individuals as assets, not threats.

How to Hire Great People

Entrepreneurs often ask me how they can recognize a great executive if they’ve never before hired a VP of sales or marketing, among other roles. I remember one entrepreneur who told me it was very easy to hire engineers: simply give them a tough problem and see how they solve it!

But hiring executives for other roles seems much more subjective. A lot of times, people who look great on paper aren’t so great in reality. This is often the case with executives coming from big companies who turn out not to be able to adapt to the realities of startups, as well as executives who have spent their entire careers in very small companies and don’t know how to scale any more than the founder does.

This is where board members and advisors—but perhaps most critically, simulations—are invaluable. One of the best executives I have ever worked with, having narrowed the potential hires down to two, brings them both in for full afternoon sessions with the team. This isn’t a one-on-one interview—that has already happened. Rather, it’s a real live discussion as if the potential hire already had the job. For a VP of sales, that means a full pipeline review; for a head of marketing, working through an actual marketing plan. Is this approach time consuming? Absolutely. But it’s far less time consuming than making the wrong hire.

By going through this simulation with both hires, the hiring executive and the rest of the team also have a live point of comparison; they’re not trying to make a decision in the absence of any reference point or in comparison to a potential hire they saw weeks before and who they therefore may be remembering incorrectly. The cost to you and the organization of churning through a mis-hire is very high; so too is the cost to the person who is hired and then let go. Experienced executives know this, and many have experienced that organizational cost themselves. As a result, the very best executives are no more eager to land in the wrong job and have to restart than you are to hire the wrong executive for the job.

One of the biggest struggles I have experienced personally and have seen other founders go through is the challenge of hiring people outside their founding team when the founding team itself is unable to scale: a new head of sales, a more experienced VP of marketing, and so on. Entrepreneurs by nature tend to be incredibly loyal, and the challenge is finding a balance between that loyalty to the original team and bringing in executives who can help scale the organization.

Before a company is scaling, the answer to most questions is, “Figure it out. Try something else and see if it works.” But when your company is starting to scale, the answer to the question “How do I do X?” is almost always “Hire someone who knows how to do that.” Do what you’re good at—hire for what you’re not. Again, this is how Entrepreneurs operate.

Always Act Like an Entrepreneur

At some point or another, some Entrepreneurs stop acting like Entrepreneurs. They stop taking the big risks because they have invested so much in the current path that they become concerned about deviating from it. I remember a call from an entrepreneur who wanted my advice. He had been able to raise a lot of capital on the strength of his vision and his team. He was generating a lot of buzz, receiving a ton of PR coverage, and getting meetings with potential customers and partners at the very highest levels. What he was doing had the potential to be incredibly strategic.

He confided in me that he had a terrible feeling that his current strategy wasn’t going to work. This was more than just a moment of self doubt. Founders have a way of knowing when something fundamental is wrong—from a bug causing a slowdown in their web site to their overall strategy—even if they can’t articulate exactly what it is. He had that feeling.

During the phone call, he asked me questions he never would have asked when he was starting out. “What will people think if I totally change the strategy? What will my board think?” And, of course, there was the question he left unasked—would his investors fire him because he had raised money on one strategy and now wanted to implement a different one?

I asked him why he was hesitating, when he already knew the decision he had to make. By this point, the company had more than 50 employees, and he had just hired a senior sales executive who had relocated to close the deals he hadn’t been able to close himself.

“I’d have to tell the board we were changing the strategy, fire the sales exec I just hired, and lay off 20 people. And I’m worried about the competition.” Silence hung in the air. I had never heard so much fear and worry in this entrepreneur’s voice before. His psyche was eating him up. It was no time to mince words. “It’s either that or lay off the whole company after you burn through your cash,” I replied. He called a special board meeting and took action.

Focus on What You’re Great At

Should you spend time improving your weaknesses or focus on what you’re great at? Although it may be deceptively appealing to try to improve the areas you and your company are weak at, in competitive markets, startups win on being better and being differentiated. You can’t differentiate by improving your weaknesses, either as a company or as a person. As an entrepreneur, your company lives or dies based on whether it can be great at one thing—not whether it can be good at many. Plus, you can hire to backfill your weaknesses.

Consider Google: great at search. Facebook: great at connecting people. Before these companies were great at many things, they were great at one thing. They did that one thing better than any other company in the world. Later, they added lots of features and improved in related areas. But they first became the best at one thing.

Investors often argue that a startup that is great at just one thing is a feature, not a product or a company. The reality is, many of the most successful companies are features, but features that address market needs so vast that huge, valuable companies are built around them to support that one feature.

Starting vs. Leading

Because you have to hold so many jobs when your company is starting out, it’s easy to believe that you have to improve your weaknesses to become a great leader. The reality is, after you’re done starting and once you find product-market fit, you just have to be great at leading.

That’s easier said than done, of course. Starting is about failing at lots of different approaches quickly, until you find the right one. Leading is about taking what’s succeeding and growing it. Not all company starters enjoy leading.

Starting gives an Entrepreneur a clean slate. Although the vast majority of people may find a clean slate terrifying, for the Entrepreneur, a clean slate is the great liberator. There are no legacy users to support or old features to maintain. There is no organizational history, layers of management, extreme compensation differences, or political jockeying for position.

Leading requires getting people to set all those differences aside to work together as a team. Leaders can’t just build—they have to be available to those they’re leading.

Entrepreneur E was an extrovert in the most extreme sense of the word. He thrived on being out with users and customers, talking to people, and selling. It didn’t matter whether he was selling to potential customers, hiring employees, speaking at conferences, or pitching investors. He loved being out there—and he thrived on and needed the attention that came with constant pitching and selling.

Entrepreneur I was an introvert. A talented engineer, he had been head of engineering at a large company where he had risen through the ranks to manage a large team. But he never had to set company direction; whenever questions came up about product or company direction, he leaned on the direction the CEO had laid out.

Both Entrepreneurs E and I were terrible leaders. Both told their people that they were always available and people should feel free to talk with them directly at any time. But Entrepreneur E was so outwardly focused that he spent little time in the office. He lacked empathy, and his own people were afraid to work with him or bring up issues for fear that they would bruise his ego and he would fire them. Conversely, Entrepreneur I would sit in his office with his headphones on, working on the product. In their own way, each lacked engagement with their companies once they started to scale, and they failed to be leaders as a result.

Going from a starting role to a leadership role is one of the toughest transitions any entrepreneur has to make. What if you’re not a great leader? Either put your mind to becoming one, or hire someone who is.

Fail Fast

Entrepreneurship involves repeated failure, and sometimes very public failure. Your response to this failure determines your survival as an entrepreneur.

To be an entrepreneur, you must internally believe that you’re right, even in the face of many smart people telling you that you’re wrong. By implication, then, entrepreneurs must have large egos; whether they expose those egos to others in the form of arrogance is, of course, a separate question. For some entrepreneurs, because so much confidence is required to keep believing they’re right, confidence in one area is often accompanied by immense insecurity in many others.

The challenge of being an Entrepreneur with a capital E ultimately comes down to managing your own ego or finding a belief system that supports it. Rather than seeing more experienced hires as threats, for example, those hires are ego builders. Bad at lots of things? No problem. Startup success is about being great at one thing. In large part, then, the art of being an Entrepreneur with a capital E is figuring out how to manage your ego not through the highs of success but through the lows of failure.

Failing fast is healthier for your ego, and it’s also healthier for your company and your wallet. I recall one company that spent more than $100 million and 6 years before admitting its product was a failure. You may wonder why the company’s investors continued to fund it all that time. The simple truth: They didn’t want to admit failure either.

To be an entrepreneur requires stubbornness and persistence. Sometimes, however, this persistence can lead entrepreneurs to try to make a bad product or a bad market work for far longer than they should. The faster you figure out what the market doesn’t want, the sooner you can figure out what it does want. That, of course, leads to success.

Summary

An Entrepreneur with a capital E is at the heart of any new company. As the old saying goes, if you don’t know where you’re going, any road will get you there. Startups that have great execution but lack a clear vision can make short-term progress but can never obtain long-term success.

Be an Entrepreneur with a capital E:

• Be a market visionary.
• Disrupt and transform a big, existing market, or create a new one.
• Relentlessly pursue product-market fit.
• Deliver a product that addresses the market need.
• Promote your vision to support your business.
• Use failure to get to success.
• Start—and then lead.