Whether you are an entrepreneur, an employee, or an angel investor, there is one thing that is almost guaranteed to make you successful.
Is it your ability?
No, it is not.
I’ve known many outstandingly able and energetic people who have started a new business and failed. Who have worked in large companies for decades without making it to the top, or to any role that really satisfied them. I’ve known many investors who have very high IQs but never become rich.
And I’ve known many people of average ability who have been extremely successful.
Is it how hard you work?
No, it not how hard you work.
Most people in a new venture work long hours. They put their heart and soul into it. And more than 19 out of 20 of these people never make it big.
Is it having the right mix of people?
There is something to be said for this.
All new ventures need at least one forceful optimist and one forceful pessimist. Someone who can step on the gas when fortune is running at full flood, and someone guarding the brake pedal, ready to slam it on when the business might run out of cash.
And it’s very useful to have a visionary – an entrepreneur – plus a an expert and practical operational person – the doer – plus someone whose talent is organizing people and running the show – the manager.
Yet this is not the determining factor. Many ventures have a good balance of people and yet don’t grow to any great size. And most new firms struggle to find the right mix of leaders – some succeed despite this; others would probably have failed anyway. If you don’t have the right mix of people, you will experience turbulence and conflict; but that is not necessarily a bad thing. The great business can win despite a lopsided team, and most perfectly balanced businesses don’t make it anyhow.
Is the key to success the people you select as partners and early employees?
It’s a tempting thesis. Most venture capitalists believe this strongly, and they get most things right. Even in a poorly positioned venture, really resourceful leaders will zig-zag and bounce around until they get it right, ditching a losing strategy and inventing another on the hoof.
True, but largely beside the point. There is a better way to succeed that relying on your assessment of the calibre of the people – which in any case is suspect. You can know the quality of people very well, with hindsight. Before a venture succeeds or fails, it is sheer guesswork.
The answer is not to start, work in, or invest in, the great majority of businesses. The key is to select the ventures that are likely to succeed anyway. Without super-humans. Without perfect balance. Without blood, sweat and tears. Without the need to keep chopping and changing before the correct formula emerges.
The useful answer is not ‘people, people, people’. The really potent, consistently successful answer is ‘positioning, positioning, positioning’.
Provided the positioning is truly successful. Provided the venture is a star business.
What is a star business? It has two attributes.
One, it operates in a high-growth market. You can spot a star business easily, because it will be growing fast. You don’t really need to know why. Most businesses don’t grow at 20%, 50% or 100% a year. Star businesses do.
Two, it is the leader in its market or niche. It is bigger than any rival.
Star businesses are rare – maybe 2, 3 or 5 in 100. But not so rare you can’t find them.
Work in one, as one of the first 20 employees, and your will prosper. You will gain responsibilities hitherto denied to you. You will discover skills you didn’t know you had. And, very likely, you’ll love your work. Quite possibly, you’ll make a small fortune too, far more than you ever expected.
Invest in a star business, and you will probably make many times your money.
Start one, and it could be the time of your life, and give you freedom you never dreamed possible.
Tune in again same time next week, and I’ll explain the power of the star idea, and how you can benefit from it.