Why entrepreneurs tend to succeed on their third venture.
Originally published 2005
It’s a rule of thumb that entrepreneurs succeed on their third venture. During my own startup adventure, I figured out why:
- The first venture is based on a brilliant idea, but insufficient attention is paid to what people really want (or how to make them realize they want it). Investors shy away but, motivated by passion, the entrepreneur presses on anyway. In this attempt, the entrepreneur makes every mistake its possible to make without money, and rarely if ever succeeds in getting any.
- Older and wiser, the entrepreneur has developed a keen sense of marketing. With the savvy to know what people want, and what investors want to invest in, the entrepreneur succeeds in acquiring the financing necessary to start the business. This time, the entrepreneur makes every mistake it’s possible to make *with* money. (Every once in a while, though, someone beats the odds. That’s why the investors are there.)
- On the third try, the entrepreneur knows how to define a salable product, and knows how to get money. Once acquired, the entrepreneur knows how to conserve it where possible, and how to spend it wisely to get the people and resources that are needed to be successful. This is the venture that is likely to succeed.
That’s one reason that investors prefer an experienced management team above all else. They know the ropes, they know how to get things done, and from experience, they’ve learned the mistakes to avoid.
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