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Mediocre But Arrogant

I was having coffee yesterday with my friend. Till 8 months ago we were pursuing some entrepreneurial ideas. My friend is a successful entrepreneur and in his last startup, he successfully raised 2 rounds of funding and created some niche products. For various reasons, the startup closed down 2 years ago. Since then, we’ve been toying with different ideas.

My friend is a technical person and his passion lies in the technical domain. In his previous startup, he was, besides being a co-founder, the CTO and VP of Engineering. I have seen him sit down with the developers and get involved in the nuts and bolts of product development and engineering. I have also seen him talk to VCs and pitch the idea from a business perspective and win 2 rounds of funding from well-respected VC firms.

We got together about 2 years ago to brainstorm on new ideas. Somewhere along the way, we were joined by 2 friends from HBS and CBS. Together we threw ourselves into creating the idea, the product, the revenue model, the monetization plan, the business plan, etc. Naturally, the HBS and CBS guys were more focused on the business side of things, while my friend and I were more focused on the actual product development and product management.

As time went on, we noticed a disconnect between the business and product development sides. The business-guys did not really get product development and were trying to solve product development problems through business solutions. Eventually, things came to a dead-end and we decided to drop the startup, while still remaining close friends.

Yesterday over coffee, my friend and I did an impromptu post-mortem of the whole experience and this is what we came up with:

  • The business guys had too many ‘cool’ frameworks to come up with an idea for a startup; most times, all that’s really needed is just plain intuition.
  • The business guys were more focused on providing a service, while the development guys were more focused on creating a product. Instead, the focus should be on how the product is going to provide a service that can be used by many people. Surprisingly, this concept is harder to implement than understand.
  • The business guys vastly underestimated the efforts of development; analyzing a problem sitting 50,000 feet high doesn’t make the problem smaller.
  • The business guys were far removed from development (even though they had a choice of being involved). Not being involved created many assumptions in the minds of the business guys and this led to wrong business strategies and internal confusion within the team.
  • The attitude of the business guys was that development is a commodity to be used and discarded. What they failed to understand is that product development is very tightly coupled with business strategy.
  • Every idea was always focused on the monetization plan and seemingly good ideas were thrown away because there was no clear monetization model around it.

I purposely did not go into the problems generally posed by developers. There are many like the one where developers are usually blind to business needs and timelines; where they do not see the bigger vision of the market; where developers do not know the trade-offs between a ‘perfect’ product and a ‘ready-to-market’ product, etc.

My reason for focusing on the business folks is because I’m going to b-school now. These are some of the things I do not wish to forget after INSEAD. It is extremely important for an entrepreneur to be the creator AND executor of his/ her idea.

Too many MBAs these days have forgotten this and want to be just the executors of someone else’s creation. That would be all right if they at least gave the creator(s) the creative license to go about developing the idea freely. Business folks need to understand, appreciate and respect the efforts involved in idea-development. This holds good whether you are starting the next Starbucks or the next Google. You damn well better know all there is to know about coffee as you better know all there is to know about search algorithms and load-balancing techniques. Not everything has to have a clear revenue model at the outset. Look at Twitter. These guys still don’t have a clear monetization plan, but they are valued at $1 billion. If I had to come up with the Twitter idea, it would probably have been shot down since there is no clear way to monetize it.

It’s fine to know all there is to know about all those consulting frameworks, or knowing how to slice and dice derivatives, or knowing how to read an annual report, or being able to smooth-talk an investor (though this is infinitely harder these days). If you want your startup to succeed after an MBA, get ready to forget all that money spent on b-school, be prepared to throw that ego out of the window, garbage those gloves, coz’ the only way you’re going to be successful is if you get your hands downright dirty.

Don’t believe me? Show me one successful entrepreneur who did it without getting his/ her hands dirty.

Update 1Nov09: Read Paul Graham’s latest essay here. He’s captured the whole startup scene better than anyone else. For those who don’t know who Paul Graham is, please do a Google search.


6 Responses

  1. Indeed I totally agree on your comments. Although I want/ desire to go to a good B school, I just realised that there are too many of such folks around. Talk is cheap, to be able to produce is real.

  2. Really good post! I had two similar experiences recently…

    1) I met an HBS grad who gushed to me about his idea for new business venture in my industry. He seemed to have only a vague understanding of the workings of this field, which I’ve spent the last 5 years in. His business plan was essentially, “let’s povide an outsourced solution, but be way more efficient than anyone else.” Who needs details?!

    2) I sat through 6 IT sales presentations from Microsoft, SAP, GE, IBM, Siemens etc. Each presentation was dreadful. They all had a cookie cutter product that they wanted to sell, with no interest or attempt to understand our business model.

    I was pretty shocked at how unsophisticated their sales team was. It was as though they had learned 5-6 buzzwords or analogies in our industry and they thought they could appear credible by repeating these stories.

    • MillionDollarSpatula,

      Good to see you still around in the blogosphere! Pity you stopped blogging. Anyway, there’s something about HBS grads isn’t there? ;p

      It is indeed shocking the way people dare to make a pitch without understanding the business completely.

      I suspect they do this because a) they are too lazy to get into details, b) they think it’s beneath them to get into the details (ie. commodity to be discarded), c) they’re out to make a quick buck and exit as quickly as possible before anyone realizes they are incapable, and d) they think they are smarter than they actually are and are too egoistic to realize otherwise.

      The “outsourced solution” you talk about seems to be the favorite of MBAs these days. They think they can get some schmuck in India, China or Eastern Europe to do the dirty work and they will reap in the millions. When has that ever worked?

      I’m seeing an alarming rise in the number of such “startups”.

  3. Loved the post. I was just about to write “people are too lazy” when I read your response.. hehe can’t be more right. It’s just like everything else in life: people don’t want to get their hands dirty, but think they’re entitled to a life of luxury. And oh, can they get any more ignorant.. I understand that a business model should be worked out, but dammit, why is everyone so hung up on it?! If you’re not doing it ‘for others,’ out of altruism, forget it, you’ll never see that million. Something tells me that most of them won’t ever get it.

  4. It is not necessary to have MBA for running startup. You do need have yearly exp in that field in order to run a startup successful.

    If I were planning to run startup, I would not waste my time and money in B-school.

    To me, B-school is a ticket to go upper stairs of large corporation.

    I can’t deny some successful startup entrepreneur have MBA degree but I don’t think that is necessary.

    As a successful entrepreneur, you have to be skillful in all perspectives and those are usually able to be build within 1 year of MBA program.

    I think myself is a very good innovator but not a very good executor. So startup is not for me unless I have a perfect team to match my weakness.

    The reason I think I am better fit for an innovator role in large corporation umbrella is I don’t have to worry about the execution too much since are enough resource (both manpower and money) to support my innovation or strategy. A well-known tool is acquisition.

    Just my two cents.

    BTW, I can’t find your “own INSEAD interview(s) experiences, and a whole post on interview tips with a pdf attached”. Did you remove it? Can you email me?

  5. Fin video made by INSEAD students highlighting the diversity.

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