Quiet Desperation of a First-Time Entrepreneur

Quiet Desperation of a First-Time Entrepreneur

10.17.2006

 The phone call came at around 3pm last week. It was a business associate of mine from five years ago. Back then, he was a partner and potential client of my previous startup. Now, the roles were reversed. He was asking for my help and I couldn't help but notice a quiet desperation in his voice – the same quiet desperation I had felt nearly every day in my previous company.

My associate had just spent the past year and a half building a simplified project management system on the web to help improve efficiencies on projects for contractors, architects, and owners. His problem was two-fold. First, there are 50 different parties (contractors, engineers, architects, owners) on a given project, all with different systems who do not want to adopt a new system for each project. Second, most construction professionals do not value technology. In fact, they seem to be allergic to using a Web-based system. I should know this because my associate's product and business model are very similar to mine of five years ago, except he has a much better shot at succeeding (my first startup failed) because he has 25+ years of experience and connections within the industry. I was an outsider.

I listened closely to the types of words and phrases my associate was using, words that cemented in my mind his uneasy feeling of desperation: "We just need that first big project. I have a nationally recognized partner but they have been testing it internally the last few months." After two years of blood, sweat, cash, and planning, the product was built but the customers were not coming. The discussion continued. He wanted my help on ideas for online marketing to get the word out about his product, but what he was really asking me, entrepreneur-to-entrepreneur is: "Am I crazy?"

The answer, of course, is: "Hell yeah, you're crazy." All of us entrepreneurs that leave our jobs, invest in the unknown, and make something out of nothing are crazy. It is not a sane journey to take. The question he should be asking is: "How long do I keep beating my head against a wall trying to get customers before I adapt my product and business model to bring in sales immediately?" We entrepreneurs evolve and adapt on a daily basis, and we do it faster than most others because we have to do it to survive. However, a major adaptation and shift in business models is necessary if people are not using your product, even when it is free.

I know every business is different, but my advice is to make a major shift sooner than you are comfortable with doing it. In my failed startup, it took us a year to build the product and a year and a half to realize that it was the wrong product for the wrong market. I wish I could have recognized that six months into the sales cycle instead of waiting 18 months – I would have saved myself more than $100k in cash and 365 days of desperation. I kept asking myself, "What can I do to bring some dollars in the door to stop the flow of red ink to employee and overhead costs?" Nothing I did brought in a sufficient amount of revenue because I did not step back and open myself up to make a major change to the business model.

I am one of the more optimistic people you will ever meet, but let me tell you about quiet desperation as an entrepreneur. It sucks. Inspirational speakers tell us to embrace the pit in your stomach when all the odds are against you. Let me give you a caveat – if the pit in your stomach turns to bile, make a change. Make a major change and you will be surprised by your ability to uncover that hidden treasure, by the new market will discover it.

Ryan Buchanan is the President and CEO of eROI.

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