“My passion has been to build an enduring company where people were motivated to make great products. The products, not the profits, were the motivation.” – Steve Jobs
In business and pretty much everything else in life, I believe in aiming for the sky. As the saying goes, “Shoot for the moon. Even if you miss, you’ll land among the stars”. As we are limited to a finite amount of time on this planet, why not focus on larger than life goals and make a significant contribution to our communities?
I was motivated to write this post after reading a blog entry that attracted my attention. Armed with numerous valid arguments, the author convincingly debates “Why everyone should aim at building a billion-dollar company”. The author writes from an interesting vantage point. He is a former Montrealer currently pursuing a MBA at a highly prestigious international school and has experienced the roller coaster ride that life can be working at several start-ups in Quebec and Silicon Valley.
Few people in business would challenge that nothing can be more fun and financially rewarding than being involved in a huge entrepreneurial success. That being said, I have a slightly different take on what has become a relatively common view among venture capitalists and entrepreneurs located in Silicon Valley. I don’t think that all aspiring entrepreneurs should primarily focus on identifying a “billion-dollar idea” to launch a new venture as there are other important considerations. While I generally adhere to “shooting for the moon” philosophy, I am concerned that aspiring entrepreneurs may become solely fixated on finding a “billion-dollar idea” if they start to believe that anything less does not represent a worthwhile pursuit and/or that the billion mark is a prerequisite to raise financing. If you think this statement is counterintuitive, please stick with me as I explain my position. My objective is to foster a constructive discussion and I hope to read your comments on the subject.
Everything else being equal, between two opportunities sharing similar risk profile and execution ability, I would obviously recommend entrepreneurs to follow the path that has the greatest financial return potential (easier said with 20/20 hindsight than in reality). To generate a substantial return on investment, many believe they absolutely have to find a large and rapidly growing market to seduce venture capitalists (hence, the magic billion-dollar number to capture the imagination. If it doesn’t do the trick, I wonder what will!). However, should entrepreneurs focus solely on finding a billion dollar idea, they might a) never find IT and remain on the sidelines forever searching for the perfect business idea b) miss smaller, but relatively attractive and actionable opportunities that could become successful businesses or c) miss underappreciated opportunities having significantly more long-term potential.
Believe in the Snowball Effect
I will give some examples that highlight how some great businesses can arise from experimentation or pivoting from an initial idea that didn’t necessarily target the typical, high flying “billion-dollar industries” seen on the cover of popular magazines. I have discussed with many entrepreneurs and I am truly amazed by the sheer number of thriving entrepreneurs that focused on a niche and never imagined how successful their business would become when they founded it. I have also realized that you do not necessarily always need an amazingly unique idea to prosper. Sweat and a strong focus on execution can take your business very far!
Facebook: As we have witnessed in the movie The Social Network, the project that Mark Zuckerberg embarked on was not truly motivated by the desire to create a for-profit business venture in the first place, but rather a personal quest. We all know the rest of the glorious story of Facebook.
eFundraising.com: As vice-president of finance for McGill’s Commerce Society, Eric Boyko developed a simple scratch card to raise money for the 1992 Commerce Games in Quebec. Raising $10K over a two-week period, the idea was such a success that other faculties and universities started contacting him for help with their own fundraising programs. However, the business really skyrocketed 6 years later when he adapted his concept to the Internet and started providing customizable online fundraising programs. In 1998, the company was renamed eFundraising.com and became one of Quebec’s 10 fastest growing companies. Two years later, the company was acquired by ZapMe for $27 million. When the technology bubble exploded, Eric Boyko reacquired the company for $2 million and flipped it to Reader’s Digest a year later – once again, raking profits along the way.
Stingray Digital: Boyko is now leading a roll-up of niche media properties. After successfully selling eFundraising.com for the second time, he settled on three ideas with online potential and made bids for different companies: a karaoke, a bird-watching site and trivia company. Fast forward a few years after acquiring the karaoke library belonging to a relatively modest North Carolina company, Boyko is now at the helm of several TV properties watched by 60 million subscribers in 45 countries worldwide. It is a pretty impressive achievement for a dot-com entrepreneur who apparently practically stumbled into TV by accident. Who knew karaoke could become such a profitable business!
Cora: In 1987, Cora Tsouflidou, a single mother with three teenagers to support, bought a small 29-seat snack bar in Montréal. Over the years, she created a new breakfast concept and, 25 years later, her company has grown to a small national empire of over 120 franchised restaurants. At the onset, we can easily assume that Cora was more motivated by creating a living for herself that gave her flexibility and sufficient income to provide to her family than by building an empire. Did you ever imagine that maple syrup, pancakes and French toast could take an entrepreneur this far?
The Conclusion: Start by Identifying your Passions
I do not believe the key to finding a good business opportunity is by restricting yourself to “billion-dollar ideas”. Otherwise entrepreneurship would be limited to a small group of individuals and many flourishing businesses would never have been established. Instead of focusing obsessively on the elusive perfect idea, let your passions and personal experiences guide your entrepreneurial quest and you will achieve ambitious goals over time.
The Bottom-Up Approach to Venture Creation
Instead of focusing on large macro trends, I suggest targeting a problem, an unmet consumer need, or an industry you are passionate about. Start generating ideas through personal introspection. Identify your strengths, interests and personal experiences. What do you know better than everyone else? What will be your competitive advantages? Putting yourself in the shoes of your end consumers is a good way to challenge your ideas. What value or new ideas will you bring to the industry? Identify your strengths and focus on actionable ideas. The combination of your strengths, resources and ability to execute your business plan will make the difference between an idea and a genuine business opportunity worthwhile pursuing. If you are creative and have been able to list several ideas you would like to pursue, start prioritizing them. While not the key determinant of success, large and rapidly growing industries with low competitive intensity are preferable to smaller, more mature and highly competitive markets, and should be higher on your list.
Pick one idea and get in the game. Aim constantly to be the best you can in the area you are passionate about and not on being the absolute wealthiest entrepreneur in the world. The rest will take care of itself.
In the upcoming Part II of this article, I will demonstrate how aspiring entrepreneurs can discover unsuspected opportunities that have significant long-term potential by focusing on underappreciated markets or industries.