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How to Avoid Mistakes in Business - Five Biggest Mistakes
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Lesson Series:
Entrepeneur Advice |
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 Tutorial Information: |
Jerry Kaplan - First, write out your goal. You can never succeed without having a clear goal for you company.
Mistake 1: Now writing your clear goal on a paper.
Mistake 2: Trying prove you're smart. Share credit with other people.
Mistake 3: Greed - Don't do it for the money. People try to do things without spending any money. Is my company going to worth more when it's successful? Company is like an engine. If you are successful in company, you will just do fine. If you pile up your equity, it's going to smell bad. Not giving and sharing your equity is a big mistake.
Mistake 4: They hire people that they like. People who graduated from great colleges. Company is not a social club. If you hire only people you like, you're not going to integrate in to activity that you're involved with.
Mistake 5: Not learning to let go. Learn how to let go of things. Value changes. Company is like children. One of the most important things is to figure out your strong points. Recognizing your weakeness and finding people who could fill that need for the compnay can be very important.Transcription
Let me start with the five biggest mistakes that entrepreneurs make. The first is having unclear goals and an unclear mission. Now I know it sounds like something you might find in a text book, but I found it very valuable when I founded a country with co founders to literally sit down and write out what are our goals, what do we intend to do, and in particular, what is our measure of success. When do we say yep thats a successful company. I'm thinking up anecdotes while I'm doing this so last time I did this was for the on line auction company. And I remember I sat down with my co founder and we said jeez you know the other goals that we had, one of them was if we can ever build a company up to be worth twenty million dollars and we can sell it, thats a terrific success. And he brought that to me and reminded me that they are market capped at two billion. So sometimes you don't meet your goals. But its very important to understand that because you'll find that even when you think everybody has the same goals and they want to do the same things, sometimes they are not. And you write it down, you can always bring it out and read it off. Thats the biggest mistake, not being clear of what your goals are. The second, a very common error I see, is trying to prove that you are smart. You are really doing it for ego gratification, and not for building a company or you want to do something greater or solve some particular problem or bring technology to the world. And trying to prove you are smart is a really bad reason to start a company or undertake some project. One of the problems that occurs under the circumstances is typically you don't want to share the credit with other people. And other people will very definitely be do credit under all circumstances. And by not sharing your credit you don't get their help and you don't get their support. Greed, doing it for money. This leads to a couple of key mistakes that I've seen people make. Probably one of the most common is not raising enough money. Oh we can do it cheap, we don't really need that much capital. And the reason people try to do that is they are trying to keep their equity. My god I'm working so hard I should have one hundred percent of this pie. But the truth is the question you should ask whenever you go out to raise money is is my company or my organization going to be worth more after I raise the money, is my share going to be worth more than it is worth before I raise the money. Because a company is really like a little engine. It takes in resources and it puts out value. And if you can take in a million dollars and you can convert that two million dollars in value, everybody wins regardless of how much of the company you have to give up to get that million dollars. So not raising enough capital is very important. The second is not distributing the equity as widely as possible. The truth is that if you are successful at all in your company you will do just fine. There is an old joke in the valley, I don't know if this has circulated around here, that equity is like shit. If you pile it up it just smells bad. But if you spread it around lots of wonderful things grow. So hoarding the equity and being stingy about giving it out is a big mistake. If you focus on success in your organization than the money will come. The fourth thing is, one mistake that Ive seen people make is that they hire people that they like rather than people that they need. Many companies have started right here at Stanford by people that are graduating from whatever program. And there are some friends who say Lets go start a company so we can stay together, work together and succeed together. I got news for you. A company is not a social group. And the problem is that if you hire only people you like you will not be hiring people the critical skills that are needed to build a company. And you will take the hired people that are like you and don't bring anything new to the table like different skills and points of view which are so critical in being able to integrate into the activity that you are involved in. One of my greatest accomplishments I think in the past twenty years. Ive worked with people that I truly despised and have done so successfully for a long period of time and its been great. You have to learn to respect people that you don't like. The fifth biggest mistake that Ive seen entrepreneurs make is not knowing when to let go. Now building a company is very much like raising children. Anybody here have children? Oh my gosh thats terrible. We used to have a class on contraception. Student and a parent at Stanford? Thats really rough. Anyways children as you've learned if you raised them is they change as they get older and the relationship changes as well as the values and the way you relate to the change. The thing about companies is companies are like children. Even if you were the startup CEO of a company, doesn't necessarily mean that you will be a good CEO of a one hundred million dollar company. One important characteristics that you need to have is a truthful self assessment. Find out what you are good at and hire people that have the skills you don't have. So that you know when to step aside and let someone more skilled do the job. One of the finest comments Ive ever heard here in the silicone valley is my ambition in life is to be a vice president of my own company. I think thats a goal. For your company to get big enough so that your skills will be best applied in a particular role and for the other jobs to be taken care of by other more skilled people. Ok those are the five big mistakes Ive seen entrepreneurs make.
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User Name |
BusinessTips |
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Total Shared |
lessons |
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Added On |
2008-07-13
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Duration |
07:45 |
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