Entrepreneurship & Small Business

The day I've seen every kind of entrepreneur in my industry?

  • Last Updated:
  • Mar 20th, 2017 1:34 pm
Tags:
[OP]
Newbie
Feb 24, 2011
35 posts
Burlington

The day I've seen every kind of entrepreneur in my industry?

You know how you don't have to be an expert in something, but once you have enough experience and fundamentals down, you can look at some new innovation and think, "yeah that doesn't surprise me, that would have been the next logical outcome"?

For example, an employee can tell me some new hybrid technology they're working with that I haven't used before, and I can start saying, "well if that tool can do A), then it probably means it was built with either B) or C) , which probably means with some modification, it can do D) and E)". So even though I don't know that tool specifically, I can start to categorize it and make informed assumptions of how it works and what it can do.

Will I ever get to that same level of comfort when it comes to evaluating first-time entrepreneurs that are asking my team to be partner/shareholders in their business?


I run a software development shop. We attract a lot of entrepreneurs looking to build a business where technology is a big component of the business. These entrepreneurs like to bootstrap their budget, build MVP and then try to get VC funding. Many of them ask us to be a part of the company as some kind partner and get shareholder options. And sometimes we accept. To this date, none of those ventures succeeded.

I've learned a lot from each partnership. And lately, we've encountered another entrepreneur that's making me consider a small partnership with them. This new entrepreneur has qualities I haven't seen before in other entrepreneurs, and I am intrigued. I use to form partnerships with those who have an interesting business propositions, and the owner has good qualities I've never seen before, and do not have bad qualities I've seen in previous failed partnerships. But this approach hasn't gotten me anywhere in the last 10 years, other than more lessons in failures. A quick history on our previous partnerships and their failed endeavours:

1) Way back in our early day, we partnered with an entrepreneur that dreamed big but had little budget. We learned later he had no experience in the industry, and no relationships for channel to market. We built the product, but the start-up didn't go anywhere.

2) A few years later, we attracted an entrepreneur that had some budget, some experience in the industry, but no relationships for channel to market. We learned later he was very lazy. We built the product, but the start-up didn't go anywhere.

3) A few years later, we attracted an entrepreneur that had reasonable budget, decent experience in the industry, had some relationships for channel to market, worked really really really hard. We learned later he was unfocused and started way too many initiatives, none of which were related to each other. We built LOTS of products, all of them half-baked mediocrity. The start up didn't go anywhere.

4) A few years later, we attracted an entrepreneur that had LOTS of budget, LOTS of experience in the industry, had LOTS of relationships for channel to market. We learned later he did not treat his business as a priority, he was unreliable, had unrealistic expectations, and was too conservative in his actions/decisions. We built him a product, but the start-up didn't go anywhere.

And now comes TODAY

5) Today, we attracted an entrepreneur with reasonable budget, LOTS of experience in the industry, LOTS of GOOD relationships for channel to market, appears to be very dedicated and hard working, but their business is a "go big or go home" type of business, and there are some big names competing in this space already (big as in industry leaders in the order of Yelp, tripadvisors etc...). But their unique selling proposition, experience in the industry, relationships and network, and dedicated work ethics makes it very appealing for us to partner with them. We haven't seen this kind of entrepreneur before. We haven't worked with them long enough to recognize their faults. Should we partner with them?

When will be the day I can say, "Yup, I've seen an entrepreneur that's kind of like this person, so we can make some informed assumptions on how to work with this them and prepare for what will happen next". Will there ever be a day that this happens? These days, I feel like I can spot entrepreneurs of types 1,2,3 and 4 pretty quickly. But I'm now in an arena with type 5 entrepreneurs, and they're a quite a different monster. How many more types are out there?
4 replies
Penalty Box
User avatar
Dec 16, 2015
576 posts
202 upvotes
How much have you lost already by doing partnerships instead of getting paid money upfront?
[OP]
Newbie
Feb 24, 2011
35 posts
Burlington
I would say everything combine, I probably lost 2-3 years worth of time.

On one of them, maybe I lost about $60k, while my other partner lost about $60k as well. In this one, it was 50-50 partnership. That was the Type 3.

Actually in Type 4, we made pretty good money for a while. But we are now at a stage where we have plateaued. I think our success was a one-hit wonder. And I'm trying to find something more sustainable. So mabe I was incorret in saying the startup didn't go anywhere. It only feels like it didn't go anywhere because we had a little of a running start and did well in 1 year. But now I see the end.
Jr. Member
Jan 3, 2017
161 posts
125 upvotes
Based on the limited information it's hard to say. But I would be hesitant to partner with someone let alone try and compete in an industry where the giants of that industry are fighting for space already if it's solely a go big or go home type of deal.

it sounds like you are trying to go up vs the Walmart of that particular industry and that doesn't work out well for virtually anyone.
Deal Guru
Aug 2, 2001
13871 posts
4424 upvotes
When I read through your post and the discussion of knowing how to deal with an entrepreneur based on characteristics, I cannot help but think that you are no where near that point because you have yet to actually deal with successful entrepreneurs. By only dealing with ones that have failed you can only draw from experiences that have failed. Perhaps once you have dealt with successful experiences you can draw more unbiased conclusions.

You have some common themes from failed startups, but none from successful ones. I suspect once you analyze the successful ones you will find it very difficult to categorize them because they most likely each bring unique elements to the table that, combined with some luck, are what help them succeed.


I'm not trying to come off as smug or arrogant - but merely just pointing out the limited experience and limited data you have based on the outcomes of your experiences. Each situation is unique and if you are talking about taking on a project that will be a disruptive force in your area you better have the same passion for it that your partner(s) do, otherwise you are doomed to fail.

Top