Disciplined Entrepreneurship: 24 Steps to a Successful Startup author Bill Aulet said this in an upcoming Business901 Podcast:
Bill: There is an enormous need for this. We’re already into, you know Joe, this is two weeks out and we’re going into our second printing. I have been blown away by the demand for this. I guess I shouldn’t be because as I just told you, when 20% of the people coming out of college want to be entrepreneurs and there’s not a fundamental base of knowledge or work, there’s no textbook if you want to become an economist you go read Samuelson, if you want to become a marketer you read Kotler. There’s no base knowledge for entrepreneurs right now and we need to do that so there’s a significant demand out there for it.
I’ve been really surprised at, when I used to say “Disciplined Entrepreneur” people would say entrepreneurs are not disciplined, that’s just an oxymoron and that’s one of the reasons why I named the book Disciplined Entrepreneurship. I wanted to shock people into realizing that there was something and to see the speed with which the people are adapting this has been really quite something that I’ve been surprised. I thought there would be more resistance.
The third thing I would say is that people still believe that entrepreneurship can’t be taught and that’s something that I just want to say stop being illogical, entrepreneurship can be taught. I’ll tell you my personal example and I’ll give you many more, why is it that the data is very clear that people who start multiple companies get better each time when they do it? That’s because you can learn something.
Joe: Another part I enjoyed about your book, and it was in the later stages is that you actually start putting numbers and quantifying things for people – calculating lifetime value, acquisition costs. I can say you’re one of the very, very few books about entrepreneurship that start addressing those issues.
Bill: In our class when you get a paper back, “this isn’t specific”, “this is too general” – this is some kind of MBA BS, we want numbers and give us numbers, relevant numbers, because, at the end of the day, business is about numbers that you need to make. If you don’t make it economically, you don’t have the oxygen. That doesn’t mean those should drive the business. You can be a mission driven business, a customer driven business but at the end of the day the numbers have to work. You think this is obvious. People talk about it, but what we’ve found was that people didn’t know how to calculate the cost of customer acquisition. One of the characters in the book you’ll see; he has wine and seems a little bit tipsy. That’s because he is tipsy. Entrepreneurs pathologically lose their rationality when it comes to cost of customer acquisition; how much does it cost for me to acquire a new customer? They just think “oh, if I build it, they will come.” That’s not how it works.
There’s a whole process that customers have to go through to buy a product and entrepreneurs need to understand that process and understand whether the sales cycle is three weeks, three months, six months, nine months, a year and a half because that very data right there could absolutely kill a company. If your sales cycle is a year and a half it’s very, very hard, but if it is a year and a half it might be possible. You need to know that and not think that it’s three months. Then you need to make sure that your lifetime value of the customer is very, very high to support such a high cost of customer acquisition.
This podcast I have shared with a few of the companies that I am working with. In fact, I use the process to lay out the starting Kanban Board to work with startup type clients. My Trello Board is below.
P.S. The Boards never look this clean when they are being used.
Bill Aulet is the managing director in the Martin Trust Center for MIT Entrepreneurship at MIT and also a senior lecturer at the MIT Sloan School of Management. The center is responsible for entrepreneurship across all five schools at MIT starting with education but also extending well outside the class room with student clubs, conferences, competitions, networking events, awards, hackathons, student trips and most recently accelerators.
Comments are closed.