How to Become an Entrepreneur: the Number One Skill Required to Succeed
In todays society, we have an unlimited number of career options at our fingertips. One of the options available to many of us now, is the ability to be an entrepreneur. If you have a significant number of business ideas or even just one business idea, you have the potential to start a company, and become an entrepreneur.
How to become an entrepreneur, and start up your own company is a question that many people find difficult to formulate the answer to. Living in London I am surrounded by people starting their own companies; working in the technology space means I've had the privilege of meeting many of these people. There is a lot of money available to fund good business ideas, accelerators (I'll explain later) exist to grow social entrepreneurs through to small business ideas, mentors are rife to help entrepreneurs and many books such as the Lean Start Up have provided a clear path for success.
Despite all these benefits, how to become an entrepreneur is still one of the most Googled terms out there. I am no expert, but my good friend Jenna Brown, CEO and Co-founder of Y Combinator funded Shipamax, knows what it really takes to be a entrepreneur. Here on Wee Scot Finance, she talks us through the highs and lows of running a business, how she took the jump from working at a company to starting her own company, and what she thinks is the number one thing required to succeed at business.
Over to you Jenna...
Starting a Company
Jenna, why did you decide to start your own company?
I've always wanted to start a company. My business partner and I ultimately decided to start after researching the market and realising that the opportunity was too compelling not to go for. At the time, and even now, there was:
- a huge market that no one was addressing, and
- no real competition.
Lets backtrack; what does Shipamax do?
Shipamax, as the name suggests, operates in shipping. There are two types of shipping, being bulk shipping and container shipping.
Container shipping is accessible to many; it's a bit like booking a seat on a bus; ships are timetabled to go from A to B, you can book a spot for your goods to be shipped and the prices are stable.
Bulk shipping, however, is used for raw goods. Typically companies will book an entire ship and fill it with the raw commodity, such as iron ore, grains, fertilisers, oil, coal etc; they literally just pour the raw material onto the ship. In bulk shipping there are no fixed routes, prices fluctuate as they are solely determined by supply and demand and communication problems are rife due to the unstructured environment. This is a trading environment. Competitive advantage is based on market intelligence. The unstructured communication flow of the market means two things:
- It's time consuming to condense all the market information into the most effective trading decision - i.e. making money, and
- There's a huge admin burden with keeping the team updated, again detracting from value added tasks.
At Shipamax, we fix these issues.
I used to work for RWE Supply and Trading in a couple of teams there, but finally in physical coal. My business partner worked as a trader in gas, oil and fertiliser. Logistics is a huge problem; a big part of whether a commodity trade is profitable falls down to logistics.
As with anything, if you know a little bit about the market, you can get a significant amount out of it.
What was the process you went through for setting up your company?
When we started, we built a one page website with our initial thoughts on the problems we wanted to solve on it. At the time, we both still had full time jobs. In the evenings we would call people we knew in shipping, or reach out and cold call people in the industry to tell them what we were doing. We did it until we got enough conviction that the problem was big enough that it required us to solve it.
We've iterated on the product and problem we are solving. Our first attempt at the problem had been looked at previously by other people who had failed to solve the problem; one of the most notable failures was in 2001 where $40 million was pumped into a company in venture capital funding. The company burned through that money and never solved the problem; the company does not exist today.
The second way we are tackling the problem is very different; no one has the exact proposition to solve it.
Talk to me about timelines: from idea to starting a company, what were the timelines.
Nine months before we started the company, my now business partner and I talked roughly about the idea but we didn't do anything about it. Every now and again we would talk about it but we still did nothing about it. In December 2015 we started to call a few people about our idea, and the problem we were solving. By February 2016, we had enough information and feedback to believe that the proposition was strong enough to start a company and we decided to go for it.
We both left our jobs and started full time in April 2016.
Did you go on any accelerators?
(Wee Scot here: a startup accelerator is a are fixed-term, cohort based “growth” program that includes providing the companies with mentorship, education components, sometimes investment, and often cumulates in a public pitch event or demo day).
We've been on a couple of accelerators. We were interested in the first accelerator we joined, as the founders themselves had built up and sol a logistics business; they sold it for $1.2 billion and we were excited to get there take and input on the industry.
There were positives from doing it and it's always great to get people to test the business ideas. Our next accelerator, Y Combinator, was fantastic to fill in the gaps from the previous accelerator. We were also about to run out of money anyway. Y Combinator for us was transformational. Almost every partner at YC has built and raised funds from VCs which is amazing as we wanted to take the VC backed route, and needed a helping hand in how to execute on this (like many early stage companies).
(Wee Scot here: Y Combinator is one of the most prestigious accelerators in the world; it's run out of the US, and attracts some of the best companies (Airbnb, Docker, Coinbase, Reddit, Dropbox, Stripe all grew through Y Combinator).
Would you recommend accelerators to kick start your company?
It depends. There were a couple of things we really wanted to get out of Y Combinator; you have to be at the right stage in your company to get the most out of it. If you are too early, then better to not do it on Day One. You need to understand exactly what you want to get out of it and whether the people at the accelerator are qualified to help. If not, then you're just throwing away equity.
Leaving the Job
Talk to me about giving up your job?
For me, the one thing that made giving up my job easier was the build up of savings I had. It did not feel like I was taking a huge risk, and I knew I had 18 months of personal runway. I was confident that if my company failed I would get a job, so it didn't feel like a massive jump.
I calculated my runway through taking my savings and dividing it by my monthly costs; these costs include mortgage, basic costs of living, and a couple of small clothing purchases.
What advice would you give to anyone looking to start their own company?
If you've started a company, I would advise when hiring to pay money for experienced individuals. It doesn't have to be ten years of experience but they need to know their field well for us to hire them.
If you're starting a company, be rigorous about the thing that you are building; are are actually solving a problem, and if so, are you building a product that solves that specific problem. In our case, I think we could have got to our second business model if we had been more rigorous on this problem solving.
What have been the top three highlights so far:
- Getting the first revenue in, and having such a happy customer that they will give a glowing recommendation;
- An insane amount of learning; you can look back 3 months ago and almost feel embarrassed about how little you knew; and
- Every inch you get closer to solving the problem is a highlight
What are the three worse parts to starting a company?
- Firstly, we serve large organisations. When people would buy us in the early days they are taking personal career risks to purchase our software. There is a lot of stress involved to live up to your word and deliver your product.
- Secondly, you never switch off, which is challenging.
- Finally, firing people when you have got things wrong is really hard.
Skills Required to Be An Entrepreneur
You're constantly surround by stress; how do you alleviate it?
Going to the gym has been great for alleviating stress. I also try to take one day off a week to relax and unwind.
Has it been easy?
No - it hasn't been easy at all.
What is the number one skill you need to be an entrepreneur?
The number one skill is grit; pure persistence when it feels like everything around you is failing. I've not ever thought about packing it in.
Do you prefer being an entrepreneur to working in a company?
It's all about the context; I can't imagine giving up what I'm doing now unless something came to light that told me what I was working on wasn't solving the problem, or that what I'm working on does not make sense any more. If that came to light, then I would work at a company instead.
What's the end goal with Shipamax?
I'm not entirely sure. We haven't defined exactly what success looks like in terms of an organisation; it's more defined on whether you've fixed the problem or not. You either fix it as a stand alone private company, as a public company or with a bigger partner. It's all about fixing the problem though.
Do you take a salary?
Yes, I do, but I didn't always; we only started taking a salary about the Y Combinator funding.
Do you think everyone should be an entrepreneur at some point?
No, it's not for everyone; you have to have the grit to keep going when it may not make logical sense and not everyone wants to do that every day. Finally, some people are driven by being experts in a particular field. I'd say entrepreneurs are by default generalists. There is also the loneliness as well; sometimes there are negative circumstances which you can't convey to the company. You just have to find a way to continue.
Tell me about your habits for success
I have to make sure I'm on top of everything; I use the app Teux Deux. I have a personally robust operating system to make sure I don't slip. I do ignore emails from people I don't think are relevant to speak to right now. You have to be rigorous on what you spend time on. My co-founder and I regularly take time to step back and assess what we are doing and whether it's the right thing at the time.
Tell me about your current personal finances; do you invest?
I have a private pension and stocks and shares ISA with Nutmeg; they help me maintain a diversified portfolio. I personally have only purchased shares in one company, which was Amazon. I bought them a couple of years ago. I think they are an incredibly impressive company; they have the ability to innovate at scale which is extremely rare. Other than that I don't have any other direct investments; I don't have time to do the research on other companies.
Check out how other people work on their personal financial management at the CFO Series