Entrepreneurs: The Fallen Stars

ACV
5 min readDec 22, 2020

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“There is only one boss: the customer. And he can fire everybody in the company, from the chairman on down, simply by spending his money somewhere else.” — Sam Walton, founder of Walmart and Sam’s Club

Historically, artists and musicians have been the great idols of the masses. Recently, successful entrepreneurs have also become heroes and role models. The ability to innovate, create a company from scratch, and achieve iconic valuations has made many founders an aspirational benchmark. Names like Steve Jobs, Mark Zuckerberg, Larry Page, Sergey Brin, and Bill Gates have paved the way for new generations of entrepreneurs seeking to transform today's world and revolutionize life.

Just as Betelgeuse the faded star, entrepreneurs can lose their shine for the following reasons:

1. Think global, act local

Sometimes entrepreneurs, in their eagerness to transcend, expand rapidly without having previously consolidated their operations in a specific market. There are also startups that try to aggressively expand in other markets regardless of the competition they will face in those new markets. The most recent case is the departure of Uber Eats from Colombia and Argentina, where the company was not able to keep competing to the local unicorn Rappi.

In order not to fail, hire professionals who know the geography, understand the business culture and regulation, have a wide network of contacts, speak the language and live in the market where you are going to operate. Also, before expanding, evaluate if you have already reached Product Market Fit and traction in your current market.

2. When you build the product think about the whole system and not just a few features

Some entrepreneurs build the product like an onion, in layers. They start by building the base and later add additional features or add-ons. Other entrepreneurs develop the product as a great puzzle, they build multiple elements at the same time with the aim that they fit together perfectly when all are finished. In 2007 Twitter was growing rapidly; however, their servers kept crashing continuously. An untenable situation for the company, which led Jack Dorsey, its founder and CEO, who was fired in 2008.

3. Establish talent recruitment and retention processes

As an entrepreneur, don’t get carried away by pedigree and build a class A team without prejudice. The team is the one who makes things happen or the company to collapse; especially in leadership positions, always seek founders with solid and reliable criteria. Remember the case of Theranos, a company founded by Elizabeth Holmes, at that time student at Stanford University, which fraudulently misled investors and allies.

Recently, “The psychological playbook for VCs and startups” was published by F2 Capital and Vintage Venture Partners, which emphasizes the importance of culture and emotional intelligence of the founding teams and the rest of the organization.

4. Have a sales team that knows the technology and has the skills to sell

Impressive technology, a good value proposition and a great market are not enough if the sales team is unable to communicate these attributes to the customer.

Zenefits, a human resources services company, created software that allowed agents to lie in the licensing process. It was under investigation by regulators, stemming from these scandals, and in February 2016 the Founder and CEO, Parker Conrad resigned.

To ensure the sales process make constant evaluations of the team in relation to their technological and sales knowledge. The results will allow you to make decisions to train, motivate or fire team members.

5. Maintain consistency within the team

To ensure the growth and maturation of the organization, it is important to develop people internally. To do this, maintain an internal culture of constant communication. This should lead to greater commitment to the team, incremental responsibilities, challenges, and adequate compensation.

The culture induced by Travis Kalanick, founder of Uber, fell into nepotism and generated a toxic work environment. In June 2017, Travis resigned. This case is not isolated, it happens in many startups. Defining a culture of inclusion, based on merits and responsibilities is essential to keep a team together.

6. Put the interests of the company before personal interests

The condition of the human being leads many people to consider their personal interests first before the interests of the organization.

An example is Adam Neumann, founder of WeWork, who sold shares, bought buildings and leased them back to WeWork. A clear conflict of interest. In September 2019 he was fired for these and other inappropriate actions.

Always remember “your reputation is more important than your paycheck, and your integrity is worth more than your career” (Ryan Freitas, About.com Co-founder).

7. A founder without financial results is a failure

The founders must deliver results that translate into financial goals. Investors risk their capital to obtain a financial return and not just to fulfill the entrepreneur's dream.

In February 2013, Andrew Mason, founder of Groupon, a discounts program, was fired because the company was not meeting its financial goals. Financial performance and its impact on the share price are the responsibility of the startup founders. It's not just about raising capital and growing a business, but about delivering results, too.

Michael Dell once said: “Ideas are commodity. Execution of them is not”. Many founders act irrationally and cling to the idea of ​​running their business without acknowledging the lack of talent, knowledge or skills they must develop to carry out such an arduous task. Take your time and reflect on your leadership skills-style and ability to run an organization. Sometimes it might be better if someone else helps you and does it for you.

“People don’t resist change, they resist being changed”. Peter Senge

Hector Shibata. Director of Investments & Portfolio at ACV a global Corporate Venture Capital (CVC) fund and Adjunct Professor for Entrepreneurial Finance.

Ana Maury Aguilar. Investment analyst at ACV.

ACV is an international Corporate Venture Capital (CVC) fund investing globally in Startups & VC funds.

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ACV

ACV is an international Corporate Venture Capital (CVC) fund investing globally in Startups & VC funds.