Make a success of your start-up with the entrepreneurship equation

Everyone wants to be an entrepreneur. And for good reason. Apart from sticking it to The Man, you can work your own schedule, create your own destiny and have a go at changing the world. So how can you take all the advice out there and distil it into a few salient points for your own venture? John Bates is Fellow of Strategy and Entrepreneurship at London Business School (LBS), and the founder and a director of Sussex Place Ventures, the School’s in-house venture capital fund manager.

“The whole ‘overnight success’ thing beloved by the media is rubbish,” he says. “It’s been done a million times before and it’s not interesting anymore. It’s also not true. Entrepreneurship is a long hard slog.” 

The lists of five or 10 top tips that abound on the internet or in business magazines are often of the ‘get rich quick’ variety, repeat themselves and boil down to the same essential points, leaving the original question of ‘what can I do that’s different?’ remaining.

Flexibility + Persistence = Judgement

Judgement + Luck = Success

As a faculty member at LBS since 1993, and the leader in the School’s initiatives to develop entrepreneurial firms, Bates has met his fair share of both budding and fully-fledged entrepreneurs. A handful of these embody the entrepreneurship equation. Dr Paul Atherton MBA26(1989) is one of them.

Reach for the stars

When Atherton was doing his PhD in Astrophysics at Imperial College London, he started building instruments to look for dark matter around galaxies. The universe being a big place, the wider the slice of it that an instrument can see, the better. When Princeton University heard that Atherton’s solution was the best in the market, they gave him the money to make them one too. On the back of that, he formed a company with three other academics, each putting in £350 to start it up, and hiring technicians to do the work at weekends. After turning down a professorship at the University of Illinois to work with NASA building a system to go on the space shuttle, he did an MBA at LBS.

“It was transformational,” Atherton says. “I didn’t know what I didn’t know. It was like being in the psychiatrist’s chair.” Armed with the tools to succeed in business, he took his considerable knowledge of space technology to the marketplace. “There were a number of product lines that we made from the instruments we produced,” says Atherton. “One of those was fibre-optic filters. We lugged them around for 14 years trying to sell them, making no money, but people liked them. In 1993 people started buying a few of them. In 1996 Lucent [an American telecommunications company] said ‘we might want loads of these so get ready to make more.’ So we made more, but in the end they wanted so many we got bought out.” The deal netted him US$50 million.

Flexibility + persistence = judgement

“I think persistence and patience bring luck,” he says. “But big wins come from changes you can’t predict. We couldn’t have imagined how big it [the filters] would get. We were standing on the beach for 14 years waiting to ride a wave. When it came, it was a tsunami.” Nearly twenty years later, Atherton has created and sold four more companies, all in the tech sphere.  For him, it’s no coincidence that doing what he loves has brought him success. “Do the things that you’re good at doing and that you love doing. Money isn’t the goal.”

It’s a sentiment that rings true for skiing fanatic Richard Downs MBA98, who in 1998 founded Iglu, the UK’s first online ski holiday booker, in the last year of his MBA at LBS. Frustrated with brochures and British travel agents hundreds of miles away from the action in the ski fields, he wanted to give people real-time information. By 2003, Iglu was the UK market leader.

Downs says he was “fortunate” to be doing a job in finance when the dot com wave started to swell, and that using the first internet browser, Mosaic, at work, gave him insight into what was going to be possible with the world wide web. “We were riding Moore’s law in tech and innovation,” he says. So: right place, right time. But in 2000, two years after he started the business, the dot com crash ate all the lucky people for dinner and left the good ones to fight on alone. How did he make it through? Flexibility and persistence: “Instead of building platforms and investing, we quickly shifted resources from investment to bringing in revenue. We cut our French and German operations and focused on the UK. It was a hard period. It was a fight, but it wasn’t a blind fight. We chose which fights to have.”

Choosing battles

Downs admits that others would have given up when he persisted through the crash. “As a team, we stuck with it. There’s a culture of resilience here. We focus on what we can control and try not to worry about what we can’t control.” This is where the judgement part comes in: if an entrepreneur spends all his or her time preparing for disasters that may or may not happen, they haven’t got much left over for making a success of their business. You could argue that in business, good judgement is the be-all and end-all trait that underlies all the others. What’s the good of being flexible if you don’t know when to be flexible? What’s the good of persistence if you can’t recognise when it’s really time to move on? Over the course of a career, it’s the sum of a leader’s judgement calls that will define the legacy they leave.

Downs credits his team with the persistence Iglu needed to get through 2000. Having the right team is possibly the most important product of good judgement. If you don’t build a team of people around you who are energised by your vision, your company won’t be resilient enough to survive testing times. Good people help leaders – fallible human beings – make good decisions by giving valuable perspective and input. And if bad decisions are made, the right people can fix the mistake quickly. If the people aren’t right, mistakes will keep on happening, no matter how good your judgement in other areas is. It’s a message that Downs practiced throughout the early days of Iglu. “We were a small team of pioneers,” he says. “We all believed in concentrating on the customer, and testing and learning has always been a massive part of what we do. We were big on feedback, and we still are. At the time of the crash, as a small team of like-minded people, we were nimble and agile. It was a hard period, but it was exciting.”

The element of luck

The truly successful among us are often the most humble. Could it be that this humility is an essential part of success? The stereotypical image of a leader is someone with charisma and strength, and an ego to match. But that’s a top-down, old fashioned view of leadership, and one that’s hard to find today. Atherton is almost indignant in thanking fate for his enormous success, admitting very little in the way of his own talent, intellect or drive. “Big wins come from changes you can’t predict,” he says. “It’s sliding doors syndrome. One different turn or moment and it would have been a different story. We made our own luck to some extent with being persistent and patient, and waiting for all those years, but we’d have done it anyway.”

Atherton had no idea the internet would take off in the way it did, or that his filters would become such a fundamental part of it, so in a sense it’s true he owes his success to luck. We know that like love alone not being enough for a marriage, luck alone is far from enough to be a thriving entrepreneur. But like a marriage with no love, entrepreneurship without luck, is nothing. “Most people won’t admit the luck bit,” he says. “It diminishes their part. For me, there was so much luck.”

Whether it’s Uber, Iglu, or your local doggy washers going nationwide, what’s certain is that as an entrepreneur, there’ll be no success without flexibility, success, judgement and luck. How big a part does luck play? You’ll have to ask a successful entrepreneur. But the best among them appear to have something curious in common: without luck, they’d be nowhere. According to them, anyway.