What Does it Take to be an Entrepreneur

Given the opportunity, just about everyone would want to be an entrepreneur and startup founder. Being able to take destiny into your own hands, be your own boss, and solve the real-world problems that no one else can is the promise of entrepreneurism. The fact that if you hit it big you can catapult yourself into the one percent is certainly an additional aspirational goal.

Of course, it’s not easy. As Jessica Herrin, the founder and CEO of Stella &Dot famously said:

"You have to see failure as the beginning and the middle, but never entertain it as an end."

Successful entrepreneurs have boundless optimism, and that isn’t an attitude that everyone can adopt. If that is you, however, now is possibly the best time to be an entrepreneur that we’ve ever seen.

The current state of the startup ecosystem

In the US alone, there are record amounts of money being pumped into startups. In2021, VCs invested $328.8 billion into the US market. Meanwhile, while some of the larger traditional economies have been flat or declining, growth is explosive in other parts of the world. Where I’m based—Vietnam—the economy is projected to grow by 7 1/2% this year, and that is driving a lot of enthusiasm for investment in local innovation.

The startup opportunity is global, and well-funded. For perhaps the first time in history there is a genuine opportunity to find investors at the pre-seed stage (beyond the traditional “family& friends” resource). This enthusiasm by investors at all stages of the startup cycle shows just how good of a time it is for the right type of person to launch a company.

The question is, of course, just what the “right type of person” is.

What does it mean to be an entrepreneur

As a Swede, I naturally like to reference ice hockey, and this is a good analogy for entrepreneurship: an entrepreneur is the one who lets go of the sideboard and skates out to the middle of the rink. Even if they’re not that confident in their skating skills.

The startup founder is the person that wakes up one day and decides that they’re willing to be accountable. And it means that you’re willing to do something different, and personally challenging, if it means that you’ll be able to drive towards the vision for the company. So, for example, in the last venture that I took on here in Vietnam, I realized quickly that I was going to get so much more information out of the team if the meetings were held in Vietnamese, rather than English. It was on me to make the changes that would allow for the better outcomes.

Additionally, a startup founder needs to understand people, and what motivates them. Whether it’s the co-founder, or the first employees, those first people in the office are going to be so critical to the success of the business, but they are going to be there for different reasons. It’s up to you to develop the managerial experience to understand their needs as individuals and make that fit with the company goals.

To summarize, it might almost be a cliché to quote Oprah Winfrey, but she certainly understands success. Her statement: “don’t worry about being successful but work towards being significant and the success will naturally follow,” certainly applies to entrepreneurs of all kinds. You need to be willing to continue to learn, adapt, and do what you need to to build those around you. If you can have a great reputation from day one, and attract great people, then you’re putting your startup in a great position from the outset. It’s not easy to do any of this, but the rewards will speak for themselves.

How to know if you’re ready to go from employee to entrepreneur?

Perhaps the best way to know if being an entrepreneur is for you is to try something small scale and on the side first. Statistics suggest that over one half ofAmericans either have a “side hustle” currently running, or plan on starting one. This is an excellent—and low-risk—way of getting a feel for entrepreneurship. Does managing people and invoices (whether that be contractors or a small team), and considering the profit and loss of the project appeal to you? If not, then you’ve learned something, and the experience from the side project will benefit you in your preferred career as an employee.

If you enjoy that side of the side-hustle, however, then you’re already in the right mindset to be an entrepreneur.

It's better to discover whether this life is not for you before it becomes your entire focus.

If you discover that you enjoy the process, responsibility, and challenge of running a business, then all you need is the idea for your startup. When your daily life starts to be consumed with an idea (whether that be your “side hustle,” or something new that has come to you), then that’s a good indication that you’ve discovered your startup foundation.

What are the critical skills and traits of being an entrepreneur?

You may assume that an entrepreneur should have expertise in sales, marketing, strategy or finance. Interestingly, all of these skills are considered to be rather low priorities across successful founders who lead technology ventures.

Research conducted by HBR in 2017 instead suggested that the most important skill for a founder is the ability to build the right team. Leadership qualities around communicating a vision, managing culture, having a strong moral core and being able to address conflict came in second. Rounding out the top three, founders need to have product management skills around prioritizing features, A/B testing, and working with engineers:

No wonder the two Steve’s at Apple did such a good job in those early days: SteveJobs knew how to pick his starting line-up, and had the leadership qualities in spades, and Steve Wozniak knew products like none other!

One thing that is interesting to note from this, is that the skills that tend to rank as priorities tend to also be the ones that are more inherent than learned. The skills required to find a team and lead them ethically and with strong conflict resolution will all be natural. You can work hard to improve them, but no course is going to teach you them in the first instance. Instead, to borrow a quote fromBrian Chesky, the CEO of AirBnb, you’re going to have to “learn how to learn,” which means figuring out how to develop these personal skills while building the startup.

The good, the bad and ugly of launching your own business

Understanding how to manage the positive and negative dynamics of running a startup is important in understanding whether you have the qualities to be a startup founder yourself.

Entrepreneurs are motivated by the “good”, and have the resilience to handle the“bad” and the “ugly.” If the highs don’t sound like much of a goal to you, or you know you’d find the lows overwhelming, you might struggle with the motivation and commitment to be a successful entrepreneur.

The good

The business is your baby, and while that might be an overused analogy, it’s also true. A startup requires a lot of patience and commitment, but the reward is an inescapable sense of pride that you’ve achieved something great.

The fact that you can make good money from successfully launching a business is almost secondary. It matters, since no one puts themselves through the kind of work a startup requires to not come out the other end with a big exit, but the key here is that you’re profiting from your passion. Not just profiting.

The bad

Most entrepreneurs can overcome three things that would cause someone unsuited to launching a startup to throw up their hands and walk away.

1) High risk: There are no guarantees that your startup idea will result in a successful business. You can do everything right and follow all the rulebooks to give yourself the best possible chance to succeed, but there’s still going to be risk involved. Often that will be to your personal finances and relationships.

2) High pressure: By founding a business you have an obligation to your investors and employees to do everything that you can to shepherd it to success. You are responsible for your employee’s incomes, meeting the expectations of customers, and growing the business rapidly so it can become sustainable.

3) Mental exhaustion: Add #1 and #2 above together, with long hours and inevitable setbacks along the way, and being an entrepreneur can be very mentally draining indeed.

The ugly

Finally, there’s the reality that for the startup to succeed, it’s going to need capital to stay afloat. That will mean pitching to investors, developing an MVP as rapidly as possible, and looking at where the first customers will come from.

It will almost certainly mean many rejections, too, and this can be difficult to stomach—particularly when the startup is as close to home as it will be for you. It’s hard not to take it personally. And yet, that is what a successful entrepreneur will be able to do.

How much should founders pay themselves?

Another common question that entrepreneurs and founders ask is what they should pay themselves. The answer to this question also has implications on whether you’re the right kind of person to be able to launch a startup, at that stage in your life.

What a person needs to earn is greatly dependent on their circumstances. If you’re living in the heart of a city in America, Australia or the UK, and have children that you want to provide a good education to, then the money you need to earn is different to when you’re childless and living in an emerging economy.

You should calculate what is the minimum that you’ll need to sustain your family situation and a reasonable lifestyle. This may well mean that you can afford not to pay yourself at all. If your spouse makes a good income to cover you both (and understands your ambitions), or you have a financial reserve that would allow you to work while still being covered for the “rainy day,” then that’s fine.

It's also fine to provide yourself an income that means you don’t need to exist on instant noodles, assuming that your startup is able to raise the funds to cover that income.

But you need to be prepared for the extravagances to come later. If you’re not in the position to do that, then perhaps you’re not in the ideal position to be an entrepreneur at that point in time.

What do investors look for in startup founders and entrepreneurs?

It’s amazing how much you can tell from the marshmallow spaghetti tower game. Tell people to build a tower out of nothing but spaghetti, and with a marshmallow up the top, and you quickly discover that children are the ones that handle the challenge better, because they go in without any preconceived notions, and are willing to try things, be creative, and if it doesn’t work, try the next thing.

What raises a red flag is when a founder is given a similar challenge, and ends up complaining that the rules or structures to the activity aren’t clear enough. As an investor, one of the things that I always look for is a founder that is willing and able to be flexible, think on their feet, and make the most of a situation, even if the circumstances are less than ideal.

In terms of positive qualities, as investors we always like to see people that are willing to move mountains to make something work. There are some founders that see a problem in the market and have the ability to solve it, and are able to build a company around that without passion. However, what inspires us as investors are the entrepreneurs that are like Jack Ma, from Alibaba, who once said “the most important thing is to keep doing what you are doing right now with passion.” They’re the people that you know setbacks won’t crush and that they’ll explore every avenue without throwing in the towel.

Bottom Line

Not every startup offers a smooth pathway to success. Those are actually the exception to the rule. There are also no guarantees in entrepreneurship—it requires a leap of faith, as the co-founder of Litton Industries, Roy Ash, once acknowledged with the now-iconic quote: “an entrepreneur tends to bite off a little more than he can chew, hoping he’ll quickly learn how to chew it.”

If you make that leap of faith strategically, by picking the right startup opportunity, problem in the market, and founding team, then being an entrepreneur is also not beyond anyone.What’s more, the knowledge that you’ve done something that matters and materially improved people’s lives with your ideas and ambitions is an incredible feeling. It offers a kind of personal and professional fulfillment that is almost impossible to find as an employee for a big, traditional enterprise.