Why those motivated solely by money are the least likely to attain it

The Entrepreneurial Paradox
When it comes to entrepreneurs about to launch new start-ups, at the very beginning, many are focused on the end

When it comes to entrepreneurs about to launch new start-ups, at the very beginning, many are focused on the end. They begin the process with thoughts of champagne corks flying at their IPO or cashing that check full of zeroes when they get bought out by one of the goliaths in the industry. While this practice of “keeping your eyes on the prize” could be seen as an exceptional motivation technique for budding entrepreneurs, many experts in the field believe this is a mistake.

David Skok is a Boston area entrepreneur who has founded four start-ups and writes a regular blog touching on relevant topics to people just like him. Skok is one of the experts who is skeptical about using external factors such as accumulated wealth as a driving force for beginning entrepreneurs.

“The big lesson I learned was that, in the start-up world, if your primary focus is on making money, you usually won’t make money.”

Many Turtles Hatch – Few Make It To The Sea

Getting in for the right reasons is so critically important when you consider the monumental task at hand in launching a successful new business. Anyone who has been in the start-up field for any length of time understands exactly how difficult it is to achieve a certain level of success.

The commonly held belief is that 90% of start-up ventures will fail within the first few years. If we were to dig deeper into these numbers, it soon becomes obvious that 10% success rate may actually be a little generous.

Y Combinator is a start-up incubator that accepts only projects with the highest potential and helps develop them so they can be successfully pitched to VC’s. Their self-described process is as such:

“The start-ups move to Silicon Valley for three months, during which we work intensively with them to get the company into the best possible shape and refine their pitch to investors. Each cycle culminates in Demo Day, when the start-ups present their companies to a carefully selected, invite-only audience.”

Given the pedigree and training these budding start-ups go through, one would assume a high percentage of these entrepreneurs will achieve success with their start-ups. According to Y Combinator’s Paul Graham however, during the initial five-year run of this program, only 37 of the 511 companies have sold for or are valued at $40 million or more. This works out to an approximate 7.25% success rate if we accept the $40 million mark as the benchmark for success. And that is just amongst the projects accepted to Y Combinator. When you consider they only accepted between 3% to 5% of total applications, that number plummets even further.

The Real Key to Entrepreneurial Success

Different experts have various ways to describe it but it all really boils down to the same thing – an inner drive or passion for the project itself, regardless of long term financial prospects. In other words, it’s not about how much money can be made at it, there has to be a passion for the project itself.

Through years of his own successes and failures, as well as observing other start-ups come and go, this is something David Skok believes strongly.

“When you work because you are passionate about your work, I believe you will maximize your chances of making money,” he said.

Another strong advocate for passion is Martin Zwilling, the founder and CEO of Startup Professionals, a company that provides services to start-up founders around the world.

“In my experience mentoring new entrepreneurs and aspiring business leaders, I see far too many who seem to be driven by all the wrong reasons. Everyone seems to espouse extrinsic motivations, such as getting rich, having power, and fulfilling parent dreams, when in fact a focus on satisfying internal interests and desires will likely lead to more success, as well as satisfaction,” Zwilling said.

Steven Adams is a former corporate banker and entrepreneur who literally wrote the book on the topic with the publication of The Passionate Entrepreneur.

“Passion is when you put more energy, thought, and intensity into your pursuit than is required. It is about going the extra mile in everything you are passionate about. It is far more than simple enthusiasm or excitement. Passion is ambition and motivation that have manifested into massive action. People of passion put as much of their heart, mind, body and soul into something as they possibly can, and in the end they have nothing left. They threw their whole heart into the endeavor and have no regrets.”

The Importance of Tenacity

Another commonly used term for this is inner drive is tenacity, or the sheer will to overcome whatever obstacle may stand in your path. Mike Colwell who runs the Iowa angel investor forum, Plains Angels, is convinced this is the most important trait a budding entrepreneur can have.

“Tenacity is No. 1,” Colwell says. “So much of entrepreneurship is dealing with repeated failure. It happens many times each week.”

The Power of Perseverance

This ability to thrive despite initial failures is another key character trait of a successful entrepreneur. While many blame a bad economy or poor timing for their start-up failure, Skok believes that the best entrepreneurs emerge from the toughest economic conditions. His experience has taught him that these tough times serve as a Darwinist test where only the strong survive.

“Around the years 1999 and 2000, the start-up world was invaded by a range of newcomers that were attracted by the prospect of making a fast buck. They had seen all sorts of dot com companies with crazy business plans go public and get amazing valuations. In my opinion these newcomers were not really true entrepreneurs. They were not motivated by a powerful inner drive and passion to build something wonderful. They were motivated mostly by money. The net results were some of the worst start-ups we have seen. However, the true entrepreneurs stayed. They battled the harsh funding environment even though they realized the chances of making money were slim. They did this because they were passionate about their ideas.”

Skok believes that if one really wants to know if they have a legitimate shot of making their start-up successful, there is one simple yet critical bit of introspection that needs to occur.

“Ask yourself this question,” Skok suggests. “Are you here because you are passionate about what you will be doing? Or are you here because you think this is a great way to make money?”

If the answer is the latter, many of the experts would predict you will find yourself seriously disappointed.