After over a decade working in startups, Andrew Yang has learned many important lessons about what it takes to build a business. But according to him, what entrepreneurs really need to found a successful organization is patience and willingness to dedicate time to the idea.
In his recent article in the Huffington Post, Andrew discusses how in business, there’s no such thing as an ‘overnight success’, and how hands-on experience is the only way to understand what to expect when building a company. For more from Andrew Yang, you can check out his other Huffington Post articles here.
By Andrew Yang, CEO and Founder of Venture for America
One of my mentors once said to me, “It takes at least four or five years to see if a company is going to work. Generally more. If you’re really fast, maybe you can get a sense of where things are going by the end of Year Three.”
This surprised me at the time. But I’ve come to realize that he was right.
There have been many recent accounts of companies becoming immediate successes, particularly in the Internet space. But for most businesses, ‘overnight success’ is an outlier. Generally, a company makes progress incrementally, and the overnight success was years in the making.
Even for the rare product or software app that does become a rapid hit, it often took the programmers or product developers or designers time to build up the necessary expertise. In many cases, they might have worked on some earlier product that no one ever heard of, learned from it, and came back to build something great. Rovio was around for six years and underwent layoffs before the ‘instant’ success of Angry Birds, for example.*
Think about what goes into a company. First, the founders are on the drawing board developing the concept, testing ideas and preparing the offering. Sometimes this takes months in itself. They have to spend a considerable amount of time gathering resources (people, capital, know-how, sourcing, vendors, infrastructure). Then, the company has to land its first customers who kick the tires and make suggestions.
Sometimes these initial customers aren’t paying. The feedback the founders get at each stage can take months to incorporate. A company can set off in one direction, figures out that it’s not the right way to go, and then go in an entirely new direction. Over time, the product or service improves, and the company gets better at executing and delivering.
Eventually, the initial customers are happy enough that they tell their friends, and word of mouth slowly spreads.** Vendors begin assuming you’re going to pay them. The company may even start generating enough revenue so that it can invest in sales and business development, perhaps migrating to multiple locations or new distribution channels.
All of the above typically describes a painstaking, multi-year process. Most businesses require a complex network of relationships to function (e.g., staff, investors, suppliers, vendors, partners, customers), and these relationships take time to build. In many instances, you have to be around for a few years to receive consistent recognition. And it often takes time for staff, and founders, to become effective in their roles.
Experienced entrepreneurs have a number of advantages where pace is concerned. First, they know roughly how long it will take to get something done if they’ve done it before. Second, they can move faster because many of the necessary relationships are already in place (e.g., they can call people they’ve worked with, use the same lawyer/accountant/P.R. firm, draw on earlier investors, reach out to past customers, etc.). Third, they can proceed more decisively because of greater confidence in their judgment, both internally and externally.
Still, if you’re building a new business, you should expect it to take time, as in several years at least. If you’re not prepared to fully invest yourself in the business for 3 -5 years, you might not want to start down the road, particularly if you’re planning on having other people rely upon you. Prepare yourself for the long haul, and maybe you’ll surprise yourself if it develops faster than you think.
* There’s a story about a woman asking Picasso for a drawing. He drew a quick sketch on a napkin, and said to her, “That will be $5,000.” She exclaimed, “But that only took you one minute!” Picasso replied, “No. It has taken me my whole life to draw that sketch.” The one-minute sketch is generally years in the making.
** Despite the advent of social media, most things gain traction and spread at a deliberate pace. Even if someone likes your service, it’s generally not going to be a priority for him or her to go around telling his/her friends about it or liking your service on Facebook. Think about your own behavior – When’s the last time you went around telling everyone you know about something you liked, even if you genuinely enjoyed it? People should do this more often. Spread the word about something you like today!