Entrepreneurs are known to have many qualities—persistence, leadership skills and a never-say-die attitude, to name a few. But even with those skills, even the most successful entrepreneurs have made their share of mistakes—and sometimes catastrophically. Robert Jordan, author of How They Did It: Billion Dollar Insights from the Heart of America(RedFlash Press $24.95) spoke with 45 successful entrepreneurs to gain an understanding of what it takes to successfully launch and grow a business.
Among those featured is Joe Mansueto, founder of Morningstar, who sold the company for $2 billion, Raj Soin, who launched Modern Technologies Corporation (MTC) before selling it to BAE Systems for $425 million, and others who have taken their companies public in billion-dollar transactions. To be included in the book, they had to launch, grow and sell a company for approximately $100 million or go public for at least $300 million and had to be self-made, according to Jordan. “So the range ended up so that at the low end, Viresh Bhatia sold InstallShield for about $78 million and the high end was Dane Miller, who took Biomet private for $12 billion.”
But what mistakes did these multi-millionaires make along the way and what can be learned from them? Read on… —Alan Hughes
Being afraid to take the leap: “The biggest mistake I think people in business make is they don’t take the leap and this is the main thing I wanted to know from the 45 entrepreneurs I interviewed,” Jordan says. Even Soin, who started MTC with $1,700 and sold it for $425 million, was hesitant at first. Before starting the company, he tried dipping a toe in the water, operating the business as a side venture and it was an utter failure. It was only at the point when he decided to jump in with both feet that it worked.
Hiring the wrong people: Building these kinds of scalable, growth companies are never solo affairs. “Even the solo founders, essentially created partners and management teams who were great,” says Jordan. He points out that Thomas Parkinson, who founded Peapod online grocery shopping and delivery service finally figured out that he had to hire people who aren’t too good for anything. “They initially hired these MBAs and they were mistakes because they didn’t want to get their hands dirty.”
Not wanting to give up control: There are two types of control—equity and operational control. You have entrepreneurs who believe so passionately about what they’re doing that it makes it hard to give up that hands-on control. “But there comes a point when you have to let people who are better than you at certain things to do those things,” says Jordan.
Becoming complacent: Jordan says some believe that once they achieve a degree of success, that they’ve reached a point of safety. But the Great Recession proved that there is no such thing as safe. Jordan uses software giant Microsoft as an example. “The entire planet uses Windows Office, but then Google comes out with cloud-based computing and you can work on documents in the cloud and it’s free. Nobody is safe and you have to keep innovating.”
Failing to see new opportunities: Jordan points out that most of the entrepreneurs he highlights in his book were doing things that a lot of people could have or should have seen but simply overlooked. “It wasn’t so much the intellectual property was to the degree that there would be no competition,”he says, “but they looked at things in a different way.” His example: Jim Dolan bought a legal newspaper and found out the main reason people read it was for the foreclosure notices. That led to the creation of a real-time national service where a credit card company could find out almost instantly if someone was going to declare bankruptcy could immediately cut off their credit cards to avoid being ripped off. “That asset was already sitting there and he looked at it differently.”