New Venture Lab: Equipping Christian Entrepreneurs

As a student of entrepreneurs, I love to hear their story of how they launched, and as a teacher of entrepreneurship, I love to turn that into a roadmap of sorts (see a detailed example below).

Let's start with a brief sketch of how Reid Hoffman (pictured above), founder and Chairman of LinkedIn created his personal plan to prepare himself to be an entrepreneur per a recent Forbes article:

In the ranks of social networks, Facebook has the most members, but Reid Hoffman's co-creation LinkedIn is where 50 million executives get down to business, hunting for job and sales leads. Hoffman left PayPal (now a division of eBay) to start LinkedIn in his living room in the fall of 2002 and works today as executive chairman, cooking up the next big ideas for the company.

"When I was at Oxford studying philosophy, I decided what I wanted to do was change the world in scale. Being an academic wasn't the right pattern. So I went back to Silicon Valley and decided to be a software entrepreneur and basically networked my way to a couple of venture capitalists.

I remember having breakfast at Hobee's with one of these venture capitalists. And he said, 'Look, let me explain to you what you're trying to do. You're coming to a VC like me and saying you're a bright young thing and you've worked at Xerox Palo Alto Research Center and so forth to get millions of dollars to build a software company. But you haven't yet had experience shipping a product. Go get experience shipping a product, then come back and talk to us.'

That was part of what made my decision to go into software entrepreneurship, for example, rather than management consulting and that sort of thing. Because it was the, 'Oh, I want to get experience building things.' And I was trying to figure out what the right pattern was.

What I realized was that if you can have experience building very compelling software, you can scale it to hundreds of millions of people. Software is very easily scalable. And what I needed to do to make my career work was generate a checklist. Meeting with that VC propelled me to create this checklist. When I went and got my first job at Apple and then my second job at Fujitsu, I was literally working off a list of all the things I need to do in order to become a software entrepreneur."

(by Reid Hoffman as told to and edited by Bruce Upbin)

Source: Forbes

In a similar way, I encourage young aspiring entrepreneurs to prepare themselves by creating their own roadmap to equip themselves for entrepreneurship.  That roadmap might consist of academic preparation in a formal classroom setting such as a degree in accounting, finance, marketing, etc. (with specific goals to intentionally acquire specific skills), online classes, mentoring and apprenticeship programs with experienced entrepreneurs in the targeted industry, and specific job opportunities such as Reid mentions above.

Let's say a young aspiring entrepreneur wants to be a commercial real estate developer where he will raise capital from investors to buy raw land and develop it into commercial real estate projects.  That is a complex business model that requires a lot of experience, skills, and credibility.  What might a roadmap look like for him?

1. Make sure that is really what you want to do.  First of all, I would encourage him to go find a like-minded commercial real estate developer in his area and offer to buy them lunch so you can spend an hour with them to ask them what life is like as an entrepreneur focused on commercial real estate development.  If everything clicks, you might then want to offer to work for free for him doing tasks he needs to have accomplished and in exchange you get to learn and ask questions.  Given a month or two of this type of close observation, you should be in a position to come to the conclusion of whether or not this is really the kind of work you would like to spend the rest of your life doing.  It should be very helpful in giving you perspective and in providing plenty for you to pray about as you seek the Lord's will on your direction.  And don't sweat it if you need to do this three or four or more times with different entrepreneurs in different industries.  And you may need to do this at several different points in your entrepreneurial career.  This is all part of your targeting, refining and reforming strategy.  Any entrepreneur will tell you that there have been many twists and turns, flawed ideas, and failures along the way.  The important thing is to really study your target enough to know if you have a passion for it, because without passion, it will be mere drudgery.
2. Study the dynamics of the target industry.  Once you find an industry/entrepreneurial pursuit that is line with your heart's passion (Step #1 above), you should now check in with whether or not it makes sense from a business model perspective.  God does call Christians to be diligent, wise and fruitful, so we might as well be in a high-growth, high-profit industry or business model if we can, compared to a shrinking, low-profit industry or business model.  We've designed the Venture Analysis to assist you with thinking through this step with full analytic rigor.
3. Study the formula for success in the target business.  Once you come to the point that your passion, your intellect and God's calling are all pointing you towards a specific type of business, now it is time to really study the dynamics of that business to ascertain the critical success factors or the formula for success.  If we go back to our example of commercial real estate development, I would then urge the aspiring entrepreneur to go interview and research as many highly-successful commercial real estate developers as you can of all stripes and try to understand which skills they used that were most critical to their success.  They would likely say things like: "the ability to sell", because everything they did was related to selling ("selling" the landowner on the idea of selling his land to them, "selling" the banks on why they should lend him the money for the project, "selling" the prospective renters on why they should rent from him, "selling" employees on why they should join his company, etc.)  They would also likely say "the ability to analyze a project", because so much of what they do is related to making the commercial real estate deal "work" financially in terms of the debt covenants, return analysis, cash flow analysis, occupancy assumptions, property management cost assumptions, etc.  You get the idea, but let's run with those two key skills: selling and financial modeling/analysis.
4. Create a plan to acquire the critical skills.  As mentioned above, there are many ways to equip yourself, so now that you know the two most critical skills you should set out to acquire them.  Many commercial real estate developers have a path similar to the following: 1) Got a college degree in finance, 2) Took a job with a real estate development firm as a financial analyst, 3) Got promoted to a senior financial analyst, 4) Got promoted to a controller (with interactions with lenders and learning that part of the deal), 5) Expressed an interest in project management and got promoted to managing a project, 6) Eventually struck out on my own, using my savings and my contacts to take on my first deal, etc.  Others might have come at it from the sales side as follows: 1) Got a job in commercial leasing as a lead chaser making cold calls (usually requires some type of college degree at a minimum), 2) Got promoted to a lease agent managing the leasing for a project, 3) Expressed an interest in project management and got promoted to managing a project, 4) Eventually struck out on my own, using my savings and my contacts to take on my first deal, etc.  Others might have started at the bottom of commercial real estate and worked their way up without any academic training, but rather the school of hard knocks and experience.  The important thing is to create your plan for the skills you need to acquire through the various means and then acquire them.
5. Gain the right experience.  Raw skills such as sales and financial analysis are one thing, but there is no substitute in working directly for the kind of entrepreneur that you want to become where you can observe and learn.  Once the military recognizes the potential in a young officer, part of his grooming for promotion is the role of a "General's Aide" where he works directly for a General Officer where he can be mentored and learn via observation.  Most of the top Generals in U.S. history all spent time as an aide to a General themselves when they were young Lieutenants or Captains.  Business should be no different.  If you can land a role working for a like-minded real estate developer -- not just as an intern -- but in a major contributing role of lease agent, financial analyst, etc. you will be learning skills and context that are a direct fit with your next steps.  You would ideally hold multiple roles in multiple disciplines in order to fully prepare yourself.
6. Prepare for your launch.  You should develop and refine your plan on your own time during Step #5 and when the timing and opportunity are right, you will be much better prepared to take it on.  You may even be able to turn your employer into your initial investor on your first project when you strike out on your own if you are diligent and communicate your intentions openly and clearly.  It is very frustrating for a boss when an employee quits without warning to compete with them, but if you communicate your intentions fully, you can hopefully win an important ally.  Be sure to share part of the upside with them as part of their compensation if it is appropriate.  The key here is that you are working to learn, not to merely be an employee.  I like it best to have this communicated up-front prior to even hiring someone.  I have great respect for an employee candidate that lays out a plan to work for me in several key roles and then launch out on their own after several years of such preparation.  I immediately start laying out scenarios of what I think their preparation should be.  While this type of communication from a young job applicant does not turn me off, it may backfire with some prospective employers.  The more entrepreneurial the owner/employer is, the more they should appreciate hearing your plans for following in their footsteps and including them in your plans.

All that said above, the young aspiring entrepreneur might say to themselves "there is no way that I want to do all of that or wait that long before I launch my own business."  Fair enough.  If you are launching a lawn mowing business, much less is required and by 16 years old you can be in business.  You will not have a very exciting business model, but you will be in business.  The more complicated and the more lucrative the business model, the more skills are required and the more preparation is required.  Just make sure you go through a roadmap exercise to understand the full picture.