Everybody loves a rags to riches entrepreneur; the unexpected genius from the remote village that built a start-up worth millions. Such stories, valid as they sometimes may be, fuel the myth of the entrepreneur, blurring the realities more closely associated with running your own business. What other myths lie on the path to start-up glory?
'Investor capital is a must for success'. On the surface, one of the truer myths. While no business enterprise can succeed without funding, the funding craze paints a chaotic picture of the start-up scene and distracts would-be entrepreneurs from recognising a broader definition of "capital". The myth is mainly perpetuated through fear - knowing that successful start-up A raised $1 million in round B of funding understandably raises the temperature.
But start-ups can survive outside mainstream funding routes. An example is Github, a development platform funded entirely by the founders. More importantly, and related to the initial point about the broader definition of "capital", funding is often not enough. Juicero, a start-up initially thought to be at the forefront of the "Internet-of-Things", folded even after receiving $120 million in funding. Why? The product itself had very little value-add.
Again, funding is critical for any business – new or old; but budding entrepreneurs need not eye that as the X-Factor for their success.
The second myth is that 'strategies are globally applicable'. Assuming that start-up strategies are easily transferrable across countries ignores the peculiarities of each ecosystem, as suggested by this Tweeter. Strategies created to solve local problems cannot be expected to travel well. Moreover, it falls into the same trap businesses have made for centuries.
Notable start-ups, such as Uber and Jumia with their respective cash option and cash on delivery policies, have shown the flexibility to tinker with business models to ensure adaptability across different countries. And of course, countries like Nigeria have much harsher business environments and peculiar cultures that often pervert the most simple of business practices.
Don’t just do it
In the age of virality, there's a tendency to fall victim to the marketing hype. Unsurprisingly, the third myth is the ‘just market it' which suggests that success is only ever one marketing strategy away. Of course, nobody still believes that the world would flock to your doorstep simply because you build a better product. At least, almost nobody. Marketing is a necessary feature of nearly every enterprise, but its independent potency can often be overestimated, leading entrepreneurs to devote more time to packaging than the product.
TSTV, the newest kid on Nigeria's Pay TV block, may have inadvertently written the manual on this. Despite a heralded nationwide launch on the back of an aggressive marketing campaign, the product never quite got off the ground. Even in its marketing campaign, the company failed to address Nigerian's enduring fear of start-up cable networks, opting instead to shroud its affairs in secrecy.
Related to the marketing hype, the fourth myth is the 'just do it', better known as Action Bias. This human tendency is most dangerous in business as it makes newer entrepreneurs more trigger-happy than they ought to. Plans never changed an industry on their own, but the bias towards acting first and strategising later is a leading cause of start-up mistakes. It's also partly responsible for the high churn rate of products that don't quite solve any problem.
In Pursuit of The Happily Ever After
The final – and my favourite – myth is the idea of a 'happily ever after'. As highlighted at the start, few things move us as much as feel-good stories of those that rise to the top, but looking at stories of success is a poor way of assessing your options.
The problem is that when we look at Jason Njoku or Iyi Aboyeji, we fall prey to the survivorship bias. This concept is memorably illustrated in a story about how British World War II commanders figured out where to add reinforced armour on their bomber planes. After initially deciding to reinforce the parts of planes that suffered the most hits or damage – based on the planes that made it back – they were soon shown the error of their ways. The planes that made it back were a poor sample because the fact they made it back despite the damage sustained indicated that those areas of the bomber did not need extra protection. The commanders had to think about the damage on the planes that never made it back.
Similarly, budding entrepreneurs need to pay more attention to the stories of those that never made it. Indeed, this is an idea propagated by Jack Ma, founder of Ali Baba. The success stories may show us the happily-ever-afters, but failure teaches us the truth.
As this brilliant article suggests, the graveyard houses more musicians than the stage, but few people are interested in stories of failure.
Despite this, entrepreneurship holds many of life's best pleasures, even in failure. And though employers and employees each have a role in any economic system, the entrepreneur – the original risk-taker – has a special place in the machinations of a capitalist system. But the road to start-up glory is paved with gross misinformation, and though these myths may sometimes apply, their representation as truth acts as stumbling blocks along the way.