What are the most important attributes you need if you want to successfully launch a new business?
Narrowing it down to just a handful of characteristics and behaviors is difficult — there are so many one needs to succeed as an entrepreneur.
But if I had to choose just two, the ones that nearly every successful entrepreneur I’ve encountered has exemplified, I’d pick focus and tenacity.
I learned the importance and challenge of focus early, when I served as CEO of a startup called Intralinks. The company makes digital workspaces for large financial transactions. When I took over for the founders, it had $3 million in annual revenues and was losing $18 million a year. At that point it had seven different products, and it was on the verge of going out of business.
The lack of focus was one reason why.
The first thing I did was figure out which of the seven products we could shut down, and why this made sense strategically. One of our products involved loan syndication. It provided a solution for a very complicated process, one involving dozens of entities and hundreds of participants. We decided to shut down the other six products and focus on this one, since it solved the biggest problem.
When I sat with the team to explain the decision, I told them it is really hard to be best in class at one thing — and it’s impossible to be best at seven things. By trying to do so many things, we were unlikely to succeed at any. The team took some time to absorb the difficult message, but eventually they understood and bought in.
The board of directors, mostly VCs who’d never run a company, were aghast. They felt shutting down possible options for revenue at a time when the company badly needed it was insane. I argued that making choices and achieving focus was essential. Ultimately, they agreed.
This focused behavior is particularly hard for certain types of entrepreneurs. Many of these people are super-creative, get bored fast, or are comfortable juggling lots of balls. These types of entrepreneurs need to be sure they have more focused people around them as cofounders, directors, or advisers.
Tenacity is the other most important entrepreneurial virtue. Albert Einstein is credited with saying insanity is defined as doing the same thing over and over again and expecting different results. Well, sometimes that is exactly what’s required to successfully launch a venture. Ross Perot referenced this when he said, “No doesn’t mean no — just ‘not now.’”
Later, Intralinks decided to try to IPO. By then we were growing very fast, from $3 million in revenue in 1999 to $20 million in 2000. We went on a public road show in August 2000. Stock markets were tanking as the dot-com bubble was bursting. We did the standard 75 or so presentations to investors. We settled in at JPMorgan, in lower New York City, to “price” — that is, to work with our bankers to settle on the price per share at which our stock would open trading. We decided not to price due to falling markets: we had a book, but it wasn’t considered strong enough to withstand the selling that would occur. So we decided not to IPO. It was a hard decision — I’d been planning to personally ring open the NASDAQ market the next day. Now we had to stay private, at least for a while.
After that, one bank stepped forward to lead another private round of funding. We made another 50 presentations to investors, but due to a conflict that bank had to drop out. Another bank came forward, another 50 presentations — and then one of that bank’s clients decided to make a bid to buy us, forcing that bank to drop out. (The buyout didn’t happen.)
We then found an amazing VC firm named Rho Capital. After eight months and more than 215 presentations we closed on a $50 million round. Were we insane for taking 215 meetings and hearing “no” after almost every one of them? No, we were simply exhibiting tenacity, which is what it takes to succeed as an entrepreneur.
Jim Dougherty, a veteran software CEO and entrepreneur, is a senior lecturer at MIT Sloan School of Management.
