The Essence of Entrepreneurship (Part 2)

Many successful startups and their respective entrepreneurs have things in common. What is the X-factor that turns a small company into a massive corporation? Hustle Crew, in this blog post, we’re going to show you the deciding components that set apart the good from the great as well as a couple tips from the experts to help kickstart your business.

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So you’ve officially established yourself as an entrepreneur and are beginning to create a business model as the next step in your journey. As you navigate this lengthy process, a thought comes to your mind - what do successful startups have in common? After all, startups don’t skyrocket out of sheer luck. Let’s take a look at what the experts have to say. 

I recently got the chance to speak with Joel Podolny, the CEO and founder of Honor Education, during my time with the Wharton Global Youth Program (stay tuned for a post on this!) His analogy of success in the world of entrepreneurship was broken down into two simple everyday items - vitamins and painkillers. He defined “vitamins” as businesses that are, well - nice to have, but not particularly needed in a market filled with competitors. Painkillers, on the other hand, directly address an urgent need or “pain” and fill a void that has not yet been addressed by other companies. As most markets today are highly saturated with companies offering similar products or services to each other, the painkiller business models are the ones who emerge from the pack. 

But that is far from the only thing that drives a successful business. A painkiller business model alone isn’t enough to find immediate success. In this TED talk, Bill Gross, a famous investor and founder of PIMCO, broke down the top 5 factors of success in hundreds of startup companies. The study covered all types of companies, from the ones that made it big to the ones that fizzled out quicker than expected. Gross and his team found that the biggest factor in the success of startups was actually timing, with timing creating a 42% difference between success and failure. Following timing are execution and the idea, with those two creating a 32% and 28% difference between success and failure, respectively.

Let’s look at Airbnb as an example. Airbnb was founded in 2008 during a period of economic recession, where many individuals were looking for ways to gain extra income. On the other hand, there was a plentiful consumer base at this time of people looking for cheap accommodations or alternatives to hotels. Despite the initial MVP (minimum viable product) being very small, the timing of its creation was the factor that pushed it over the edge and caused it to skyrocket much quicker than expected. In just under 3 years, Airbnb was valued at over a billion dollars, and today, it is worth about 94 billion. 

But even when just about everything seems aligned, not all businesses find a path to success. Setbacks are inevitable in the world of startups - in fact, over 3,000 startups filed for bankruptcy in just the year 2023 alone. On top of that, 10% of all startups fail within just one year, and 45% of all startups fail within five years. The chart below, published in this article by Josh Howarth, co-founder of Exploding Topics Trend Analysis, displays the top reasons startups can sometimes fall through.

These issues will be covered in future entries, but for now, let's focus on what to do when things aren't going to plan. A common expression in the world of startups is the "three Ps" - persisting, pivoting, or perishing. Whether it's persisting with the idea even after a slow start, pivoting to a different business model after careful analysis, or having the startup as a whole perish in order to move on, these three Ps should be kept in mind if something's not working. Renowned politician and entrepreneur Kerry Healey said in this video that the most important part of her entrepreneurial and political journey was "encountering failures" but "[learning] from each of those and then pivoting and moving on to the idea that works." It might sound cliché, but experience is key - in fact, business owners who failed to start a business previously have a higher success rate their second time around compared to first-time business owners. 

And last but definitely not least, the most important part of entrepreneurship (or any career path, really) - enjoyment!. Enjoy the process - you won’t always have that excitement of finally getting started with the idea you’ve dreamed of. Mike Bloomberg, co-founder of Bloomberg and politician, once shared that his biggest regret was not cherishing each moment, especially at the start. That first mile really is everything.

That's all for this blog post, Hustle Crew - stay tuned for the next entry, featuring the components and strategies within a business plan!

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About the Author

Brandon Yeh is an entrepreneur and student who currently resides in Northern California. In addition to working on his latest business ventures, he enjoys playing golf competitively and is an avid Bay Area sports fan.