It’s almost a cliché to talk about the importance of failure in entrepreneurship. The principle is simple: disasters (in business and elsewhere) offer lessons that are unpleasant enough to be unforgettable. This means the toughest defeats lead to the best thinking, and every jolt or upset offers a chance to reach an evolved mindset. Those who take these opportunities get better. Then they go again.
I explored this idea back in September. Since then, the economic headwinds facing aspiring entrepreneurs have picked up and research points to an atmosphere of defeatism in the wider business community. At the start of December, The Institute of Directors revealed that optimism among those who run the UK’s biggest companies was at its second lowest ebb on record (April 2020 still holds the top – or rather, bottom – spot). In this scenario, people with world-changing ideas need to find extra resolve. More than ever, entrepreneurs need to embody two qualities: hunger, and depth.
The combination of hunger and depth is what propels people to create the world’s most innovative companies. Hunger is about conviction, grit and an internal fire to see the world altered. This hunger is infectious. It stirs audiences at conferences. It persuades at pitches. It tells compelling stories to the press. It exhilarates team members when things are going well and provides strength when they aren’t. After all, a bit of failure is essential.
The hunger factor isn’t enough. If it is impossible to create a meteoric business without stamina and commitment, it can’t happen without depth either. The best businesses offer simple solutions to complex problems, but creating simplicity is immensely hard. It’s only by diving deep into a market, a customer need or a specific predicament that a founder can unpick their way to a set of choices that result in a flourishing company. When your job involves bringing an entirely new product or service to market, there’s no roadmap to follow. As Ben Horowitz correctly notes in The Hard Thing about Hard Things (one of the best books I’ve read), there’s no shortcut to knowledge.
Depth is about experience and insight, but it’s about principles too. It’s perfectly possible to be hungry, ambitious – and totally shallow. The right kind of entrepreneur understands that businesses which deliver customer value at a great human cost won’t make the world better. Hungry entrepreneurs have the temperance to treat their team, clients, suppliers in a socially minded way – to be a good actor in the market.
We have entered into a new economic phase, where smart investors and founders are switching from hubris – think big funding rounds, and a grow-at-all-costs mentality – to reality – a solid grasp of fundamentals and emphasis on profitability. Want to thrive in this market? Get hungry, go deep.
By Rishi Khosla, Co-founder and CEO of OakNorth