Feb 21, 2019By Tom Kooy
Business Growth Psychology
Entrepreneurship
Leadership
Mindset
Strategy

The True Cost of Entrepreneurship

There is a hefty price tag for success as an entrepreneur. It requires an “all in” approach that we so often shy away from telling; due to ego, pride or fear of judgement.

And in many cases, we when we do share, we deep dive into opening up without any real life-management strategies that cater for the entrepreneur.

It is my hope this article shares openly life's challenges in business and helps you along the way.

The walls start to close in, runway is looking far less optimistic than it did a month ago, costs uncertain, revenue models changing, “pivot” becomes a word all too frequently used (on investor calls) to describe the 'positive hope for future shareholder returns'.

Friends....who are they? People who once appeared supportive or you helped along the way (and where you thought the support was mutual) are gone. Family, well, they never quite got what you did anyway, so they care and love, but in that ethereal way. Light and delicate, but they are not quite sure how to exactly define the friction point and support you.

“Those who are crazy enough to think they can change the world, are the ones who do.” - Steve Jobs, Co-Founder Apple.

The only thing you have to cling to is that vision, your north star and the conviction of, why you do, what you do - the commercial reality or commercial hope that you are working towards. And maybe occasionally that one too many beers, vodkas or bottles of wine - queue the character traits of a functioning alcoholic.

The journey of the entrepreneur is half genius, half insanity.

And it has a cost.

Psychologically, a scarring affair, but so is any battle. The cost of war doesn't come cheaply and by natural attrition, has a graveyard of fallen soldiers...but there is always a victor.

Battle hardened and aware of the truths and strategies from winning a successful battle.

So here are my takeaways as an entrepreneur, angel investor/VC, coach. Someone who has won and lost. Built, invested in and coached businesses from ideation through to multi-million exits and in some cases, still exponentially growing.

“When you innovate, you’ve got to be prepared for everyone telling you you’re nuts.” - Larry Ellison, Co-Founder Oracle.

My insights and stories shared here are honest reflections of a journey still going, someone who coaches leaders, family groups, founders, executives daily but who has also lived this road and has come out with scars that now are used to provide others with real life, business insight to short-circuit those who are on such a pathway now.

In truth, there is no substitute for experience, but what follows is process based advice. Areas of life that any entrepreneur will face and that will index for each of you.

There is a hefty price tag for success as an entrepreneur. It requires an “all in” approach that we so often shy away from telling; due to ego, pride or fear of judgement. And in many cases, we when we do share, we deep dive into opening up without any real life-management strategies that cater for the entrepreneur.

You're on a journey to create greatness, whether it is a socially minded enterprise, a family group looking to build multi-generational wealth, or you are a founder/executive with a clear strategic and exponential growth plan, with a large financial exit in sight.

You deserve an open-source insight into struggles of those who have been there before and life's challenges that this journey brings.

I hope what follows is valuable...

RELATIONSHIPS: It’s not “go surrounding yourself with great people, who lift you up”, the truth is, the “great people” are the ones who stick around.

We hear so often that you need to surround yourself with great people, who lift you up and make you better.

I think I have even found myself positively espousing this in posts before. And it isn’t wrong, I just think we don’t realise that the handful of people who continue to support and lift you up are the ones who were there in the first place, and are still around even after you become totally obsessed with what you are creating and drop the ball as a friend or in your family.

"Some People Aren’t Loyal To You, They Are Loyal To Their Need Of You. Once Their Needs Change, So Does Their Loyalty." Unknown.

Sometimes you might be fortunate to find great people and naturally, by diving headfirst into your business you will find like-mindedness, but more often than not, there won't be that mutual give, take and care model of friendship when comparing to those you already had in your life and have, simply by sticking around, committed to helping you on this journey.

Recognise, that the filter for the value of the friendship and support is based around their willingness to stick around even after you become totally obsessed with your entrepreneurial journey and creating sustainability and scaleability from it.

Tools & Strategies for Relationship Building Success in Business.

I could tell you here to create a decision-matrix and articulate the values you look for in people. The actions and expectations you have and then put every one of your “closest” friends, mentors, and colleagues through that. Then sever ties with those who simply don’t make the “cut” and for some of you this might be useful.

But in truth, the intangibility of relationships don’t allow for it to work this way.

Everyone has plenty on their plate and more often than not, if you go “hunting” for support and great people, there is sometimes at least 18months worth of solid rapport building before you even will get to that point.

And knowing how entrepreneurs or just “driven people” think, we so often shoot for who we think would be the "best person" and normally they are high-performing executives, successful founders, venture capitalists and chances are, you may have met them once before in your life. So fitting in amongst their schedule to build the collegiality you need takes time.

"Personal relationships are the fertile soil from which all advancement, all success, all achievement in real life grows." Ben Stein, Writer, Commentator.

So, the greatest people you build your journey around are going to be those that firstly, invest time into you regardless of what you give them, but also, secondly, they are the ones who stick around.

My advice here, is always be open to the care and advice of those who continue to show engagement with you, even after you know you can't maintain your end of the friendship or support network. As their independent 30,000-foot view is the one you should apply a feedback loop to your life with.

And also, don’t get cynical, hold grudges or become bitter, about those who walk out of your life. They are on their own journey and regardless, you both would have taught each other something, making and growing you into a stronger person.

This point on relationships was probably more learned perspective than really a tool/strategy, but as humans, it is in our nature to be in relationship, this is super-critical in understanding and grasping the cost as an entrepreneur on a journey. As the mental health ramifications are real if you can’t get your head around this one and embrace the real human support you have.

CONTINUOUS LEARNING & GROWTH: Always Apply Double Loop Learning To Your Life in Business.

A continuous hunger to learn and grow is the number one prerequisite to be successful as an entrepreneur. Our ability to win at this game is predicated on our willingness to evolve, test assumptions, be proven right or wrong on those assumptions and then have the coachability within us to make changes that lead to further learning and growth.

“I think it’s very important to have a feedback loop, where you’re constantly thinking about what you’ve done and how you could be doing it better.” - Elon Musk

With the many coaching clients I have, across my keynote speaking, workshops and within the start-ups that I support, this is a critical factor that I ensure is banged home and instilled as a high-performing habit.

Without this constant desire to move forward and a hunger for growth, you are stagnant and without choosing to evolve you’re opting for the opposite result, which is choosing to corrode in character and eventually die.

It’s a pretty binary choice as an entrepreneur.

Grow in openness to new learnings, perspectives and opportunities or become defensive, lost in the trenches of your own thinking, not test your thoughts and lose.

"You adapt, evolve, compete or die." Paul Tudor Jones, Investor, Hedge Fund Manager.

The reality is you simply will not be able to sustainably deliver value to your customers, staff, shareholders and yourself, if you don’t apply that openness to your deeply held mental models, archetypes this then naturally flows to how you “do business”. This then will of course impede business growth.

Tools & Strategies: Double Loop Learning for Life.

It’s all about double loop learning. Developed by Chris Argyris and Donald Schön.

In a nutshell, this is a process that involves teaching people to think more deeply about their own assumptions and beliefs. Whether it is in a business context or your journey more broadly, it is building in openness and awareness of yourself and your actions, recognising the underlying variables that drive the bias’s you have and adjusting your lens and ‘strategy-in-action’ accordingly.

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This can lead to being entirely disconnected from reality and as an entrepreneur this doesn’t end well, if you are not testing your own assumptions against the commercial reality, which you are attempting to operating within.

It’s not uncommon amongst founders or leaders of major firms to fall into this trap. They become all too deeply entrenched with working “in the business” and their "daily operations of life" that they don’t zoom out and test their business and overall life’s direction in the context or environment to which they operate.

They then make critical decisions based on information that they simply haven’t validated and choose to operate on objectives that won’t actually deliver the North Star they are measuring their success by.

It may be that they naively have faith in their other operators to maintain the quality of work they would expect of themselves. It may be that the founder has taken on a significant investment and they are lost in delivering on the basis of their investor’s expectations, rather than what creates product-market-fit (and therefore, revenue).

There are a myriad of reasons, but there is no excuse for not testing assumptions, validating and constantly seeking feedback.

"When you’re talking to me in the first minute, I’m thinking — is this person a leader?” Ron Conway, Venture Capitalist

I have personally been involved in a coaching and investment capacity of a business that burnt $500,000 of investment prior to them recognising this process and while they came out the other-side 'better for it' and having delivered a profitable outcome.

It wasn’t an easy path, the cost associated with their entrepreneurial journey, their own personal lives, the stress and the impact on their relationships even with the broader investment market took its toll. But the willingness of the founders to build this process into their lives, as well as, their daily ‘business as usual’ (BAU) processes. Coupled with their tenacious hunger to succeed at all costs is what delivered exponential shareholder returns.

But this story and the process I recommend here isn’t simple.

If you're a major corporate there are massive change management initiatives required. And as a start-up with founders learning the ropes, the discussions with investors, partners, loved-ones and people who have gone with you on a journey for 1, 2 or 3 years, only for you to go through this process and realise you need to pivot, can be stressful and humbling.

It's these moments that make or break you and ultimately tests your resolve and how much are you willing to endure in your journey of business building.

There’s a real cost to entrepreneurship here, that by applying this double-loop learning approach from the start, can minimise the impact and support a more seamless (but not totally frictionless) journey.

BUSINESS & PRODUCT DEVELOPMENT: A North Star isn't just a Metric for your Customer & the Product, it should be one that Directs Your life.

The North Star is a metric that is “very sexy” and emerged from Silicon Valley years ago.

Broadly, it is best described as a tool of measurement for companies who invest in long-term sustainable growth. It focuses on the core value and the product that the company can deliver to your customers. In this context, the North Star is all about defining the single most important metric for your growth model and how it should look when delivering value.

It is quite an extensive exercise, that can all too often be the main focus when defining a business direction, even at the expense of your own personal direction. What I mean here, is we can all too often have a North Star that while within a business makes perfect sense, it is hugely disconnected and doesn’t recognise the impact it will have on your life.

The more detailed and ambitious the metrics that point to the North Star, the greater the impact on the founder's life.

I have learnt this the hard way.

Several years ago, I embarked on a choice to take some significant early-stage investments, namely in 3 angel rounds, roughly all at the same time. Meanwhile, maintaining coaching and advisory and deciding to begin a family.

The North Star metric in each of those businesses was solid, however, I didn’t properly recognise the expectations on my own life in order to deliver on these ambitious metrics we had set. Meanwhile, my coaching practice was taking off and business, as it does today, continued to exponentially grow. However, what I poorly failed to align to this North Star, was my family. It dramatically took a toll on home-life and my priorities versus, my wife’s were entirely out of whack.

“The single biggest problem in communication is the illusion that it has taken place.” - George Bernard Shaw

There were fights, late nights and from her end, a general disdain for all things, “business related”, but with communication, we prevailed and now have 3 wonderful kids and what I call “operating baselines” that are adjusted upward or downward depending on what level of clients, contracts and businesses we choose to take on each year.

Tools & Strategies: Imagine Your Life is a Major Corporation.

Now, the solution here is going to look somewhat different for each of you.

If you’re single, your life’s priorities are dramatically different to someone who is ‘partnered’ or ‘growing a tribe’. However, my piece of advice is communication within whatever your structure is.

Treat your whole life like you are a major-multi-national organisation, “[INSERT YOUR LAST NAME HERE] Corporation”.

Live out your life totally integrated. And have a North Star, with a vision, mission, goals, key behavioural indicators (values/priorities) and key performance indicators (actions and targets) that steer how you live life as a whole.

“Just like in a family with kids, in business we show up with a united front that this is who we are,” Melinda Gates, wife to Bill Gates, Microsoft.

These ultimately are going to drive the decisions you make. But within each integrated element of your life and the North Star you are living your life by, you should be (just like in your business and product development) measuring the value you deliver for your customer.

It's just, in this case, your customer is your family and life is being lived as an integrated whole.

The cost of not testing how integrated your life is via the double-loop learning approach is fraught with danger.

The number of failed marriages I have coached executive clients through because of this lack of integration and shared commitment between partners to a common North Star is scary. And the impact these home-life struggles then have on a business is financially dramatic.

I have had clients need coaching after whole teams left their business due to the psychological impact an executive with home-life issues played out in the workplace. And the financial effect on the business, led to $600,000 reduction in profits for that executive and fellow directors. It took them a further 2 years to recoup that profit.

I really want to hit home that, if you are not living out that congruency in all aspects of your life, then there's a risk to the business and your growth both personally and financially.

So if you’re in a deep dark hole with this one, I would firstly, zoom out from your business schedule for the entire year of 2019. What does your, work-in-progress (WIP) look like? Is it going to be a big year?

Have you communicated this to the important ones in your life?

If not, do it.

“Working together as well as raising a family together, there’s a certain intensity to that. But we’re very lucky because we mostly see things the same way, the goals are very much the same,” Bill Gates, Microsoft.

Take control of your schedule, then you can, as a family unit, set ‘pit stops’ that everyone involved in your life can look forward to. That is the first step.

Secondly, discuss what could that look like if you were to define a North Star (as a family or partnered unit)?

Perhaps it could be; total engaged time - How long as a couple or family unit you (as a whole, genuinely engage with one another)? Recognising that this doesn’t have to be based on quantity but the quality of the time spent. Then apply structure via scheduling to ensure the family value is created and delivered on.

This doesn’t have to be quantified to the “n’th degree”. As I wrote this one, I was worried it sounded a bit like a relationship exercise that Sheldon on the Big Bang theory may dive in with.

But, there is a lot to be said for structure, an open communication channel and a co-created North Star that clarifies expectations as an integrated family/partnered unit on the journey together.

As the toll your investment as an entrepreneur takes, while costly in time, if you're given that ability to focus, the probability to deliver a financially viable result for the business, your life and everyone in it exponentially increases.

“Communication – the human connection – is the key to personal and career success.” - Paul J. Meyer

Also, the more clarity and shared understanding around a vision you have with them, the more focused and energised you will be when you are in the trenches building your business.

Distraction and disagreement within your personal life always will be fracturing and will impede business growth dramatically if home-life isn’t right.

PERSONAL: Avoid the "Functioning Alcoholic" Therapeutic Path.

Next, there is a seductive and therapeutic nature to alcohol. Embedded in Australian culture it is seduces us to celebrate with it, to commiserate with it, to enjoy it for the healthy dose of escapism it brings.

Now I have been a massive wine fan for over a decade now and I do part-own a wine business, The Vine House, so I am an advocate for a good drop....when in moderation.

"There is a seductive and therapeutic nature to alcohol. That we enjoy for the dose of escapism it brings." Tom Kooy

But several years ago when I began building businesses and investing in them, it was quite common for me to write myself out a subscription daily for a bottle of wine.

It was early on with a few of my very, ideation-based investments, there were pathways to revenue, and product-market-fit was there, but the sales cycle extended out beyond what was anticipated. Runway became shorter and some of these businesses had taken on a lot of investment and no one was earning from it.

The stress took its toll and wrongly, a bottle of wine was a daily cure. The kilos began to pile on and an unhealthy lifestyle ensued.

This pathway is not uncommon, we resort to quick fixes to handle the anxiety and mental stress that “building a plane, while jumping off a cliff” leads to.

There is genuinely not another activity like the authentic journey of the entrepreneur.

And honestly, I don’t care who you are, if you haven’t poured at least a quarter of a million, solely into an idea, with the vague idea of where revenue is going to come from and then delivered on a viable product with market fit and a resulting positive cashflow outcome. Then don’t throw stones here, because it’s bloody stressful and a bottle of wine a day is what appeared to keep the insanity away.

And in all honesty, it was the wrong approach, as night, after night, after night, after night it definitely starts to take its toll and what was confidence supporting, quickly became a major depressant, with health ramifications.

It had an impact on how I was with other people, my clients and family. The odd, loose text, strongly questioning a founder on a chosen revenue pathway may not have been too uncommon either...

There were certainly issues and something had to change.

Tools & Strategies: Hack the Chemicals in Your Brain.

My advice here and what I did to rise above the stress was to hack the chemicals in my brain. The positive mental health game started with, (a) obviously slowing down on the wine intake, but also (b) adopting a solid routine, which becomes a lifestyle embedded in health and fitness.

“Fearlessness is like a muscle. I know from my own life that the more I exercise it the more natural it becomes to not let my fears run me.” — Arianna Huffington, president of The Huffington Post Media Group

Since then, I have been exercising 2-3 times a day, starting early. Often between 5am and 6am for 1.5 hours and then (if able) an afternoon session too.

And for me, this started the process to help push through the mental crutch that a wine bottle had become. And naturally this life-hack, hacked the chemicals that delivered a sustainable healthy lifestyle.

So for you - some may be in this boat and for others, you will know if there are aspects of you lifestyle that just aren't supporting the high-performance lifestyle you need to be at your best.

And my advice here is; you really need to find a health and fitness regime that works best in your life and schedule. And you will undoubtedly need to try different things as you figure out what works best for you. Just remember, don't wait for the opportunity to make a change, as that time simply won't come, there is no such thing as free time, you have to make the time.

So make it...

The energy and high-performing outcomes that will come from a solid lifestyle embedded in exercise is unmatched.

And for me, when I was going through the initial steps here and figuring out what worked for me, it was recognising that my weakness was I didn't have the motivation to adopt this exercise regime on my own.

I needed the support and accountability that a personal trainer brought. So my investment was in that, and for the last 6 years I have found a great mate, confidant and personal trainer out of it.

And this means that, for you it’s about accepting that fitness and a healthy lifestyle is a major influencer in your high-performing lifestyle and mental game. All of which is what gives you the drive to win.

It's by embracing this that you will learn to hack the happy chemicals of your brain. Those being; Serotonin, Endorphins, Oxytocin and Dopamine. It's enabling the release of these, in exercise, that will have you mentally kicking positive goals.

These will definitely trump the short-term effects of excessive alcohol intake any day of the week.

“It is exercise alone that supports these spirits, and keeps the mind in vigor.” Cicero

So here is a quick fly through to give you an insight into each of the chemicals and what you can do to release them:

Dopamine

This chemical is pretty much what motivates you to maintain action towards your goals, desires and needs and when you achieve them, you are given a nice reinforcing kick of pleasure for achieving the goal set.

How to get it?

  1. Break down big goals into little action steps, so that you can celebrate these “mini-milestones” receiving the chemical kick.
  2. Also, always create new goals before achieving your current one. You’ll then receive a consistent pattern for the dopamine release.

Serotonin

This chemical flows when you feel significant or made to feel important.

How to get it?

  1. Practicing gratitude can help remind you of the role you and other’s play in your/their life.
  2. Get some Vitamin D.

Oxytocin

The release of oxytocin provides feelings of trust and can ultimately strengthen relationships.

How to get it?

  1. Intimate relationships will have this one in spades.
  2. But also gift giving, appreciation of time given and recognising that as a gift can provide that hack to delivering an oxytocin release too.

Endorphins

This is the chemical released to alleviate stress, pain or anxiety.

How to get it?

  1. Laughter and exercise reinforce this endorphin release
  2. Also, nothing like a little dark chocolate too.

Broadly, a regular exercise routine will provide you with all of these chemical releases throughout your brain and will definitely support a high-performing day.

Sustainability of this “happy chemical hack” of course only comes when released within a lifestyle of health and fitness. Such lifestyles are built only by committing to a daily routine, that then builds into a habit (and scientifically, you are looking at 21-28days for a habit to be built) and then that habit when replicated consistently for 2-3months, will fast become the high-performance lifestyle you need to create that success as an entrepreneur.

Then it is a good wine, beer or hard liquor in moderation, and you’ll enjoy it more. Meanwhile, the body is enjoying the solid chemicals it deserves and that is what will provide you with the best outcomes as you endure through the challenging journey building a life out a life of significance.

As the cost is far too great to make the same mistakes I did. To hurt your body and others around you with the stress and then resorting to becoming what was a glorified “functioning alcoholic”.

That pathway didn't deliver the value or the relationships you need to support your business success, but embracing a breakthrough by hacking the chemicals, through exercise will build the high-performing habits you need to ultimately create a sustainable business.

LEADERSHIP: We are Leaders Called to a Purpose Greater than Ourselves.

Finally, as a last point in this epic blog/article.

When the walls do close in and you're living out all these other steps. My honest final words are, it still isn't roses.

You need to expect and be prepared for chaos.

Remember, you are paving a path that many people don’t dare to tread and being able to hold a selfless, servant-hearted approach in tension with a selfish drive to create greatness comes with its challenges as a leader.

"It doesn't matter where you came from, it only matters where you are going" - Brian Tracey

My advice here, as one entrepreneur who has been there is;

Good leadership stems from commitment to a purpose that is optimistic, forward-looking and viewed with the lens of commercial reality. It is living out the belief that your solution is scaleable and solves a root cause deeply entrenched in that which, is bigger than you.

I personally believe that the problem you are solving will provide a far more fulfilling vision and will give you greater energy and focus if your solution is deeply social as well as financial. Naturally, by having such a vision and direction, you will attract an amazing team who will support you at an even greater scale when this is the case.

But regardless, as a leader, your job, as you lead your vision into reality is to selflessly put aside your baggage of the past. Let go and commit to delivering a solution to product-market-fit, then transform it into a growth orientated company. It's by doing this, with clear milestones set, which I know will deliver the shareholder value that is both exponential but also points to an aligned outcome or exit.

Good leadership stems from those who can by grace, walk this journey with full awareness that the cost involves the leader putting their needs aside for all the other stakeholders in the leader's vision and life. It's this commitment to the cause that will deliver a highly profitable and rewarding business outcome.

The journey is worth it, believe me, the fruits are incredible.

Definitely it comes (as I hope I have articulated here) with huge costs.

And my job today was to provide strategies and openly share what I have struggled with and where I know plenty of others have too.

My hope for you is that you persist in pursuing this pathway. Do not resort to returning to a workplace, purely for the pay cheque.

By creating something from an idea, bringing it to a profitable state and scaling it into national and global markets will give you the skills that will allow you to accomplish anything in life.

It's all about battling through at all costs.

Wishing you way more than luck,

Be Amazing,

TK