My Startup Lessons by Viktor Cheng - HTML preview

Chapter 12:: The Common Pitfalls That Await the Entrepreneur

“Always forgive your enemies; nothing annoys them so much.”  ― Oscar Wilde

Before I finish this book, I’d like to give you some clear warnings about the common pitfalls that can befall your fledging start-up. It is absolutely critical that you pay heed to each of these, because they can cause you to stumble even before you have left the starting blocks.

Beware of the Enemy Inside

What’s really dangerous is the infighting within your organisation and your team. Contrary to popular belief, most of the battles in business are actually lost on the inside rather than the outside.

In business, we have never been fearful of the competition, because I believe there is always space where my business can fit in, and there is always a way we can fight the competition and remain profitable.

Insiders are often the ones who are more likely to undermine and destroy your business. You need to prevent infighting at all cost and  put out the embers of infighting before they burn down your whole business.

By insiders, it can be team members or investors.

How does this arise? Often with investors it happens with institutional investors, because they are often represented by several board members. It is not uncommon that views will differ between various people on the board. 

Secondly, as your start-up grows, the skillsets and people you need will evolve and change. The pace which you do things will change as well. This can introduce friction between new and old members, or people who feel things should not change.

This difference in philosophy can lead to breakups and politics internally.

I cannot offer you a good answer to solve this problem despite my many years in business. You can do all the right planning and hire the right people; you can do all the education and retraining; you can practice conflict resolution techniques.

Yet it is my experience that there is no real solution to this. Why? Because it all boils down to individuals, and individuals are unpredictable. Everyone has different personalities.

All I can say is that you have to watch out for this problem, and try your best to address it through communication as soon as you are aware of it. Often it may also help to bring in your advisors or mentors at this stage to play a mediation role to promote communication between the various parties.

Of course, you should also practice good governance in your business, such as having contracts with each person and with investors, and making sure that all legal and accounting issues with the various parties are dealt with adequately. But at the end of the day you are still dealing with individuals who are unpredictable.

But the main thing is to prevent insider fighting from happening by taking care of people, by addressing people issues as and when they happen, rather than sweeping it under the carpet. This is the best way to prevent unsavoury insider fighting which could ruin your business.

If people feel they are fairly treated and you are doing things equitably, then hopefully they would be mature enough to understand that things do change in start-ups. Often change can happen more rapidly than even you imagine or plan for. Just be fair and open in your communications.

For example, one of the major potential conflict points is when the founder steps aside and lets a professional manager come in to run the business. This can be a time of massive change. Changes can come in the form of performance expectations and the way things are done.

If the transition is not managed well it can lead to a lot of negative energy, politics and counter-productive activities.

In theory, businesses are run by rules that have been set up. In practice, however, the truth is that the rules are influenced heavily by several individuals, even to the extent of how tables are laid out in the office and what colour furniture is bought. They can also influence how people communicate and how people treat each other,  including how open they are to each other and how much trust they have between them.

The reality of the matter is that most businesses are not going to open their employee handbook when choosing who they are going to hire.

But there are many ‘unwritten rules’ that affect the daily running of the organisation.

When a professional manager comes in to take over the founder’s role of running the business, many of these unwritten rules will change, therefore creating friction in the process. So be especially careful during these periods of transition to ensure your team and investors do not break down.

A Different Type of Competitor Analysis

Many times, we only have to check our competitors internal structure to see how they are operating to know if they will be a serious competitor in the long run. We can tell by the internal politics of their business whether they will remain healthy or will crumble from within.

If we see those cracks occurring within their organisation or hear it on the grapevine, we know they won’t be around for long to fight with us. Because if they are weakened internally, there is no need to compete with them; the rot will start from within their organisation and they will die on their own.

Actually that is one of the things I used to do, when there was a new competitor in the marketplace or we wanted to understand who we were really fighting against. I would spend time to understand the competitor. 

If I find that their internal structure is strong then I know that this is going to be a tough opponent. In my experience, it is not about what they are doing today, it is about their ability and internal strength to deal with us in the long term.

Conversely, if we find out that they have a weak internal structure, based on their people and their relationships, then we know that we don’t need to worry about this competitor and we are then able to refocus our energies on competing with those who are strong. Inevitably, what will happen is that they will break up from within.

You could say this is another form of competitor analysis. Study their make-up and their people and you’ll know the chances of them being a serious competitor or otherwise. This is especially true when you are analysing start-ups. I can almost predict how the business will do based on the make-up of the people in the business. 

If you find a strong, well-knitted team, then you had better be wary of them; because if they choose to enter your space, they could give you a serious run for your money.

Getting Your USP Clear

Apart from the team, being clear about your USP is another big piece.

Like I mentioned in the previous chapter, getting clear about your USP is an important element to finding your winning formula.

Decide what you are and what you are not. What business you will engage in and what you won’t.

Otherwise the big pitfall here is that you will get distracted and lose sight of what makes you different from everyone out there.

I have discussed this in length in chapter 11, but it bears repeating that not being clear about your USP can lead to your company never getting to its true destination.

There Could be no Formula

There’s a difference between running a business vs. running a start-up. A business has a proven model. If you want to follow a business based on a proven model, then if you just follow the parameters then you are likely to make some money. An MBA would be able to run that well for you.

But a start-up is about disrupting the market. It is about finding a formula that perhaps doesn’t exist yet. And because you are the first to find the formula and you are the first to replicate the formula in a fast and rapid manner, you are able to make tonnes of money from it.

But the risk is because this formula is not found yet, there is a possibility that this formula doesn’t exist! You could just be wasting your time and money to chase a rainbow.

That’s why many start-ups die, is because they thought there was a formula but actually there is no formula. So they will spend years doing it and end up with nothing.

But if you truly believe that you have the means to find that formula, then you will be rewarded handsomely. But the problem is you are against the norm; because there is already a proven and accepted way of doing things and you are trying to disrupt the old way. The truth is, you are really going up against a giant from day oneone.

Many entrepreneurs do not understand what they are up against. It is important for you to be going in fully aware what is against you and the risks you are taking, but yet at the same time be willing to bet that you can find that formula which will reward you to the level that others can only dream of in their lifetime.

Make no mistake, it is a high-risk, high-reward game.  The chances of your start-up dying are very high.  But because you’ve got the smarts, have a dream,  have a super team behind you that can move very fast and you have a high pain threshold, you are willing to give this path a go.

If you are not willing to take the risks and endure the pain, then you might be better off getting qualified and work for a large Multinational and live a comfortable life, following a proven model. Make no mistake, it is not easy down the corporate path either; you will probably end up working like dog too. However, everything in that world is figured out and predictable. 

In the start-up world, nothing is figured out and nothing is proven. But if you can create a formula, then you will get all the rewards that come from that, and no one can deny the fact that you deserve it.

That’s why it is important to be a daydreamer to be in this field of starting up a business in the technology space. Because if you are not a daydreamer and believe enough in your dream to pursue it, there will never be a start-up. There will be no more dreamers who create new products that can change the industry or the world for the better and, in doing so, perhaps create a legacy that could be remembered for generations.

This is the journey of the daydreamer entrepreneur. The journey is littered with endless tombstones of failed start-ups. Yet there are many who have found a winning formula and created empires lasting generations.  And there are many smaller successful stories that most of us have never heard of, yet changed the lives of people within an industry or a niche market.

If you match the profile of a daydreamer, then perhaps this life will make you happier. If happiness is important to you, then perhaps you should consider this path.

In my case, if I had to live my life all over again, I would definitely choose the same path, even though I didn’t end up a billionaire and perhaps I could even have been richer should I have chosen a different path. Simply because the personal satisfaction and the excitement of the journey has made my life a very happy and fulfilled life, I can truly say that I have lived with no regrets, never wondering, “What if” or “What could have been?”  

Perhaps this is the journey you are considering, the journey to be happy, living a life of no regrets and perhaps changing the world at the same time.

If so, I would like you extend you my invitation once again to join our community.

Our community will give you the environment to socialise with other like-minded people, so you know that you are really not that ‘weird’. You are not alone.

The Odd Ball

I always felt I was the odd one out, and I know I would have had a lot of encouragement and support if I were to hang out with other daydreamers.

For instance, my dream was to become a world chess champion. So when others were studying for their Cambridge O-Level exams, I was out playing chess.

Then after I realised that I would never be a world champion at chess, I discovered programming. So while others were studying to do well in all subjects for their A-levels, I only focused on programming. Then when I discovered catalogues for programmers, I thought ‘This is it! If I can create programs and the world buys it, that would be my dream come true.’

Then after I made programs and advertised them in the catalogue, I didn’t sell too many, so that was the end of that dream!

But the beauty of programming is the ability to build something with very low capital. Compare it to property development where you’ll need tens or hundreds of millions to get that dream happening. With programming, I can still be building something great, but I only need time and my laptop.

Without programming it would have been close to impossible to create and build my daydreams into a business. I didn’t have tens of millions of dollars to get into property development. But I had enough skills and knowledge to build my intellectual property for commercialisation.

Programming enabled my daydreams to be materialised.

So you may be a daydreamer, dreaming of a business that will change the world or revolutionise an industry. But you are constantly told by your peers, your boss, your colleagues and your family that you are crazy and just being silly. You are told every day that you should just do what you are told to do because that is how things work. You have been told that you need to follow a template, a process or guideline.

Yet deep down inside, there’s a spark that’s telling you there could be something to your daydreams, that there is something more than what you have been told.

That’s why we set up this community for daydreamers…to keep your dreams alive, so that you don’t let anyone kill your dreams. 

It is also to keep the flames of your daydream alive. For too long I have seen smart young people get their self-initiative and daydreaming abilities destroyed once they graduate and join the corporate world. So, this community is set up so you can take charge of your life and rekindle the dreamer within you again. 

Being part of this community will also help foster your daydreams and give it support so that you can have a better chance of finding your own winning formula.

So I hope this book will merely be the first step of your daydreaming journey as an entrepreneur. I hope you can join us on this ‘entrepreneur-SHIP’ and hang out with other like-minded people.

History has been shaped and changed by daydreamers since the beginning of time.

The caveman who dreamt of creating fire kept us in existence. Columbus dreamt to a new trade route to India; Edison dreamt of an electric lightbulb; Steve Jobs dreamt up the Smartphone.

Whether you have smaller dreams or bigger dreams, you all are welcome to join our daydreaming community, and perhaps together we can play a small part in changing the world for the better.

After all, I am allowed to have daydreams for this community, right?