Entrepreneurs share ideas and learnings from the experience of starting a company.
They say failure is a good teacher, but sometimes getting together with a community of like-minded entrepreneurs who’ve been there and done it, and don’t mind sharing lessons from their journey of success can be just as enlightening—and far more inspiring.
A recent “Entrepreneurs Forum,” hosted by Morgan Stanley Private Wealth Management, gathered business founders to network and hear from the experts on a variety of topics that got to the heart of entrepreneurial motivation, communicating vision, raising capital, setting business goals, as well as personal financial management.
Here are some key takeaways:
1. Build a business around a passion
“Don’t start a company because you want to get rich,” said Howard Lerman, who founded the digital management company Yext. For Lerman, creating a business that serves a true need is critical to staying positive through the challenges of building a startup. Indeed, Lerman likened building a business to scaling a mountain that keeps growing.
Just ask Shazi Visram, founder of Happy Family Brands, a maker of organic food for infants and children. She started her business in 2003 to bring healthier food to children worldwide. “I was going to change the world through business. I think the answer is to start kids out with healthy organic food. I made it my mission to change the way children were fed.” Today, Happy Family Brands is the #1 organic baby food company in the U.S. market, but to get there Visram accepted checks as small as $25 in the early days of fundraising.
2. To craft the story of your business, pitch first to your partners
Once the mission of the company is set, founders need to line up partners, investors and employees to build and help execute against their goals. To do that, founders need to hone their message along with their public speaking skills. Lerman explained how we tend to remember good turns of phrase and catchy songs, and how the best speakers over time honed their messages until they are memorable. For company founders, that means practicing telling their own story until it comes easily.
“Memorization is the ultimate editing session,” said Lerman. “As you memorize the words you want to say, the words become tighter, the rhythm becomes clearer. You end up telling your story."
3. Embrace adversity
All companies will face skepticism and other bumps in the road. For investors, seeing a company that has experienced tough times come out the other side is often a bellwether of ultimate success.
“We love founders who have gone through some adversity,” said Sam Landman, Managing Director at Comcast Ventures, the venture-capital affiliate of Comcast Corp. “We want someone who is not willing to accept defeat. Most of the companies in our portfolio went through some period of dormancy where it looked like things would not work out.”
When hiring, Lerman seeks out employees who are smart and friendly, but also looks for optimists. “Optimism is rooted in a belief that you are lucky,” he notes. “Optimists get more things done."
4. No shame to selling out
Be aware of what’s happening with competitors in your industry. The “domino effect” means that if a rival gets acquired it increases your scarcity value, but it also means that a would-be buyer is now no longer in the market, said Jeff Hoffmeister, head of Morgan Stanley’s East Coast Technology Banking team. “Be thoughtful about who the potential buyers are in your industry and make sure you think more broadly than just your immediate ecosystem,” advised Hoffmeister.
Founders considering selling their business should begin compiling a list of possible buyers at least a few years in advance of when they want to be acquired. Keep in mind the list of buyers may be broader than you expect, as more and more companies are turning to acquisitions to expand into different sectors.
5. Are you really ready for an IPO?
Many investors considering buying shares through an initial public offering take interest in the corporate culture and long-term outlook, in addition to the company’s financials, said Hoffmeister. “Going public is something you should spend a lot of time thinking about,” Hoffmeister notes. “Investors are looking for a culture of success. Are you built to be successful for the long term?”
For Yext, the rhythm of quarterly earnings releases helped the company grow more disciplined. “A lot of investors will tell you: don’t go public,” Lerman said. “But it’s helped us become a better company. You have the road ahead to grow into being a public company.”
6. Manage your capital
How best to manage the capital of a startup, both in financial terms as well as personally, was a theme echoed by several speakers. “To have innovation you need the idea, but the idea on its own is not enough,” said Mandell Crawley, Head of Morgan Stanley Private Wealth Management. “To scale that idea, you need capital. Morgan Stanley is committed to helping entrepreneurs at all stages of the business cycle to maximize that capital