Becoming a successful entrepreneur is a challenging endeavor. Some studies show that 65 percent of new businesses don’t make it, while others put the failure rate closer to 90 percent. Either way, the hard truth is that the majority of entrepreneurs invest large amounts of time, money, and emotion into projects that ultimately fall short.
How can you be the entrepreneur that beats the odds? One way is to look to the tech industry. The tech space, especially software tech, is incredibly friendly to entrepreneurs for a host of different reasons.
Why the Tech Space is Entrepreneur-friendly
One of the reasons that the tech industry is so entrepreneur-friendly is that, on a basic level, it is a space where anyone with a laptop can become an entrepreneur. In the planning phase, your laptop connects you with a wealth of information and knowledge, all of which can be had for free. A search on YouTube will lead you to find endless videos on business ideas, pitfalls, and success stories, all of which offer you insights that can contribute to your success.
Once you have developed your business plan, your laptop gives you access to all of the tools you need to launch it. It gives you access to servers, which are far cheaper compared to 20 or 30 years ago when a tech startup would need to set up its own servers. Now, you simply rent servers on AWS, which typically also gives you access to startup programs that can further boost your business.
Additionally, your laptop gives you access to all of those things from anywhere in the world. You could be a travelling nomad and go to a coffee shop anywhere in the world, connect to its wifi, and build something of value with only your laptop. There are entrepreneurs who are making millions every year, without a single employee, who built their entire business from their laptops. In some cases, all they did was build a website, add Stripe, and start collecting money. If you create something of value, there are millions of potential customers out there, all of whom you can connect with through your laptop.
Scalability is one other reason software tech is especially friendly to entrepreneurs. Software is highly scalable. It may take you months to build, but once it is deployed, software can attract a ton of users very quickly. Unlike tangible goods that must be produced, selling 10,000 copies of your software does not require you to produce ten thousand individual items.
One downside to the tech space for entrepreneurs is that it is heavily network driven. If you are driving your business from a laptop in a remote location, you will probably not be attending the events that help you build your network. Without that network, you will have a harder time getting access to investors.
How to Grow a Business in the Tech Space
The first step to growth is to find product-market fit. Essentially, this means identifying a product or service that answers a need or addresses a pain point in the market. Your business won’t succeed if you do not offer a product that people want to pay for.
The tech space is littered with items that were built because they seemed cool but turned out to be something nobody would actually use. Developing something that solves a pain point is critical. You want something that is medicine to the market rather than just a vitamin.
Another critical step is developing a great team. The ideal situation will involve the right group of people self-selecting into the culture and mission that the founder has established. If you have a bunch of people who are missionaries — meaning they are aligned with and committed to the mission you have determined — you have a team that will go above and beyond to help further that mission. If you have a team of mercenaries who are just there for a paycheck, success is going to be harder to achieve.
The other big step toward growth that new businesses can take is securing funding. Taking this step can help you to achieve greater success, although it is not without its downsides.
When you secure funding, you give away a large chunk of your company. Your investors are people who are, to some degree, controlling you and your business decisions, making funding is a double-edged sword.
What Pitfalls Should You Avoid?
The top pitfall that tech entrepreneurs should work to avoid is designing and building their tech in a vacuum. When you think that you know what the market needs, build it, then expect people to buy it, you set yourself up for failure.
Success comes from market research. Talking to as many people as possible is one of the most valuable things an entrepreneur can do. It is the way that you uncover what people need, which leads you to understand the product-market fit.
Another dangerous pitfall is failing to experiment in the design process. Developing a successful product involves testing and iterating — over and over again. I’m a big fan of really fast experiments, in which you put something together with minimal effort and get it in front of people to see what they think. If it resonates with people, you’ll know. If it doesn’t, you can continue to iterate. Spending years on a product before the public ever sees it is not the best approach.
A third pitfall is focusing too much on vanity metrics, such as employee headcount. Hiring 500 people and having an exponential employee growth chart does not mean you are making money — revenue is the metric you want to be tracking. Too often, entrepreneurs focus on vanity metrics to hide the fact that their business is not truly growing.
What Success Looks Like
Every company has a mission. As an entrepreneur, you decide what that is for your company. Making money is part of your job, but your ultimate job is to further your mission.
Success in the tech space is surviving as long as possible to further your mission. Market share, number of employees, growth rate, and industry awards are all only mile markers on the way to success. You need revenue, but revenue is ultimately the fuel that enables you to stay alive as a company in order to further your mission.
Overall, the most important step to forging success in the tech industry is to get started. There are a lot of aspiring entrepreneurs who have yet to launch a business because they are waiting for the right time, the right idea, or the right opportunity. I would advise them to not wait any longer.
Start now with the idea you have because your first idea probably will not be successful anyway. Your first business will most likely fail, but it will teach you a lot. You will walk away with the skills, experience, and character that you need to ultimately be successful. Think of it as entrepreneurial training and get started on it as soon as possible.