Seven Lessons Every Entrepreneur Must Know

This article is republished from MIT Bootcamps.

Entrepreneurs are not born; they are made. Managing director at the Martin Trust Center for MIT Entrepreneurship, Bill Aulet, not only gave this invaluable insight but also broke down a strategy for launching and accelerating startups in a Bootcamp in Rio de Janeiro, Brazil, in July 2018. The MIT Innovation & Entrepreneurship Bootcamp in Rio gathered 122 participants from all over the world. They came to learn from Bill Aulet and other distinguished experts on how to develop world-changing and sustainable businesses during an intense week-long program.

“Anybody can be an entrepreneur,” said Aulet, who has raised over US$100 million in funding for his ventures, such as SensAble Technologies, a two-time Inc. Magazine 500 Fastest-Growing Private Company. Aulet acknowledged, however, that entrepreneurship is not easy, and that hard work is not the only key to thriving. “The question is: can entrepreneurs work hard and work smart?”

His comprehensive framework for innovative enterprises proves this is possible. “The common idea that 90% of startups fail is not true,” said Aulet, who is also the author of the best-seller Disciplined Entrepreneurship: 24 Steps to a Successful Startup. “We did research and found that 75% of the companies that we helped, which went through the process, continue thriving five years later.”

Born and raised in New York, Aulet did not come from an entrepreneurial family and only ventured into entrepreneurship after over a decade of working at IBM. “My mother didn’t know the difference between being an entrepreneur and being unemployed,” he joked. “When I became an entrepreneur, nobody understood it.”

But the world has changed. Entrepreneurship is becoming an increasingly robust body of knowledge and learning its key concepts can give innovators a significant advantage. That is why Bill Aulet took Bootcampers through the proven framework for developing a new venture through in-depth lectures with case studies and exercises.

Learn a few of his lessons taught during the MIT Bootcamp Rio.

1. There are universal truths

Entrepreneurship education has been rapidly advancing over the past few decades. As the body of research grows, it not only becomes clearer that entrepreneurs are not a rare species born with special talents but rather that successful innovation-driven ventures tend to follow certain key processes.

What is more striking, according to Bill Aulet, is that the systematic framework, starting from market segmentation to developing a product plan, can work regardless of the region or the field of the venture. “There are different contexts in which you will have to customize [your business], but there are universal truths in entrepreneurship,” he said.

The result is twofold: the more the framework is proven to work, the more it is widespread. In turn, the more the key concepts are disseminated, the more it allows for information exchange and improvement.

“Terms such as beachhead market, primary market research, persona, total addressable market, etc. became a common language that created communities,” Aulet said. “As we speak the same language, we can learn from each other.”

2. Entrepreneurship is a craft

Entrepreneurship is neither a science nor an art. It is not a science because it does not follow a logical system with predictable results. Learning the best practices are essential, but they do not ensure success. It is not an art because it is not a talent limited to a few gifted people.

Therefore, entrepreneurship is something in between. More specifically, and according to Aulet, it is a craft like pottery. It is an accessible skill that anyone can learn while also allowing crafters to build their unique creative projects.

In entrepreneurship, as well as in pottery, time helps to perfect the technique. However, the theory needs to be directly tied to practice. “You have to do it to learn it, and then you need to go back and forth between the theory and practice,” he said.

3. Communities are powerful

Change-makers need what Aulet called “the four Hs of entrepreneurship:” heart (spirit), head (knowledge), hand (capability), and home (community).

First, they need the fearless spirit — or heart — of a pirate willing to take risks to do things differently. However, this is only the beginning. Great entrepreneurs also need the discipline — or head — of a Navy Seal to learn key concepts and processes so they increase the odds of success. Third, this knowledge cannot be only in theory, but it must be built into practice — or hand.

Finally, building communities — or home — is at the core of the prosperous entrepreneurial journey. Although this was not clear to Aulet five years ago when his book was released, he realizes today how much innovators can accomplish even with few resources.

“Don’t underestimate how important that is. Entrepreneurs end up being very successful because they work with each other, they have people that they can connect with to get things done,” Aulet said. “Therefore, it is not just about mindset, not just about skill set, but it is about operating a community in a very dynamic way.”

4. Who is your customer?

Before launching a business, what is the most important question to ask yourself? According to Aulet, that question is “Who is your customer?”

Many technologies and ideas come to a sudden halt in the face of this question. Having a paying customer is the single necessary condition for a new venture. You will have a potential business, Aulet pointed out, on the day someone pays for your product or service, not before this. “Don’t start with the product; start with the customer,” he said.

Aulet suggested a step-by-step approach aimed at helping entrepreneurs through identifying prospective customers, interviewing, and selecting them.  These first steps to building sustainable businesses include defining the market segmentation, beachhead market, end-user profile, total addressable market, and a persona for the customer.

“There is a sequential nature of what we are doing. People who try to jump steps end up becoming extremely inefficient,” he said.

5. Startups break habits

A well-developed business plan is not always sufficient to ensure the customer adopts a certain product or service.  In these cases, the answer might be in their behavioral patterns. “It’s very hard to break habits,” Aulet said. That means customers can make buying decisions simply as a result of a settled practice or tendency.

But could entrepreneurs break or replace people’s behaviors? Yes, very often. “Startups are changing people’s habits because we are bringing new products to the market,” he said. “The real value [of the innovation] is there, but the perceived value [by the customer] may not be there yet. If you can change the habit, the real value will turn to perceived value as well.”

For transforming customers’ habits, entrepreneurs need to understand the windows of opportunities and triggers that can drive this change, Aulet explained. Events of the first job, first house, move, marriage, and pregnancy, especially when it is the first child, are some of these cues.

6. Define a strong core

After focusing on meeting the needs of a well-defined target market, entrepreneurs must look at the future of their ventures and determine what makes them better than anyone else at producing a specific solution for customers. They must define a strong core of the business.

“The core is the asset that allows us to give value to our customers in what they care about most, that nobody else can,” Aulet said.

There are three dimensions for great cores. First, it is unique — difficult for anyone else to duplicate. Second, it grows over time, which means the gap between you and the competition should increase over time; third, it is really important to the customer.

“When you know what your core is, you will build a resource plan to support it,” Aulet said. “If you are really good at something, you build up the capability, and you bring the best people to come to you. You have to focus on being just absolutely the best in that.”

7. The company is you

Bill Aulet’s presence at the MIT Bootcamp was also a rare opportunity for Bootcampers to receive feedback on their startup projects and to interact with the world-renowned expert. He walked around, had lunch and informal talks with Bootcampers, and inspired first-time and repeat entrepreneurs with this final advice:

The company is you, and you better take it very personally. You should not be looking to maximize how much money you make this year, you should be trying to build as many skills as you can because they will pay off for the rest of your lives. Build your skill set, think long term. I tell people don’t focus on financing. Focus on building a great company. There is a lot of money out there, but there aren’t a lot of great opportunities to invest in. Think about who are the people you are working for when making a career decision, think if the person you work for is a great manager, a great mentor. That’s better than working for a great company. Get involved with other things for distraction. Go teach a class, give presentations, sit on the board of something, be a judge, be a mentor. Start writing, you’ll be amazed how much you learn by writing, it helps to keep thoughts together. The first stage of the company is to fight for existence. In that stage, there is no delegation. You must do and get it done. And make sure it is done with quality, so the company will continue to exist. There are two types of people in the world: there are people that make excuses, and there are entrepreneurs.