5 Rules for Entrepreneurs

Entrepreneurs are often celebrated and widely known in society. We hear the stories of their successes, but not enough about the pain.

 Starting a business requires grit, determination and the relentless pursuit of a great idea. It requires years of blood, sweat and tears. It involves anguish over decisions about people and strategy that may ultimately make or break you.

 No entrepreneur anticipates or wants pain, but pain is the reality of starting something new. It is unavoidable. My experience of entrepreneurship was anything but a smooth, upward curve. There were many turning points that could have taken me in a completely different direction. But it was at these inflection points when I learned the most important lessons in business and life. 

1.    Reach for a fantasy worthy of your pursuit. The rewards will be commensurate to your effort.

Being an entrepreneur is so grueling that I have never understood the idea of people wanting to be “serial entrepreneurs.” Doing it once is hard enough.

So if you are going to pour your life into an idea, make sure it is big enough to justify it. It’s as easy to do something big as it is to do something small. Both will consume your time and energy, so make sure your fantasy is worthy of your pursuit, with rewards commensurate to your effort.

2.    Success comes down to rare moments of opportunity. Be open, alert, and ready to seize them.

 When people ask me how I succeed, my basic answer is always the same: I see a unique opportunity, and I go for it with everything I have.

 Often you will spot these opportunities unexpectedly. Look and listen for patterns everywhere. Pay particular attention to anomalies and data points that don’t feel right. This is how you get ahead of new or shifting trends and set yourself or your business up for success.

 3.    Hire 10s whenever you can. They are proactive about sensing problems, designing solutions, and taking a business in new directions.

 Being a strong and accurate assessor of talent is perhaps one of the most critical skills required of any entrepreneur.

 When you start a company, you are usually happy to find anyone of quality willing to go on the journey with you. But you must quickly emphasize attracting and developing talent that can both execute seamlessly on the work at hand and drive the business in new directions.

 In my book, I describe these people as “10s” out of 10. Eights just do what you tell them. Nines are great at executing and developing good strategies (you can build a winning firm with 9s). But 10s improve everything and everyone around them, while pursuing new ideas that you have not considered yet.

 4.    Failure is the best teacher in an organization. Talk openly and objectively about them and use them to guide future decision making and organizational behavior.

 Failures can be enormous gifts, catalysts that change the course of any organization and make it successful in the future.

In the late 1980s, Blackstone made a very poor investment in a company called Edgcomb Steel and lost significant money for our investors. The person who pitched me the idea told me it was a great investment, but another colleague warned that the company was flawed. I picked the wrong person and soon after the company fell apart.

 I had fallen into a trap common to many organizations. I had succumbed to a good sales pitch. While this was devastating at the time, it forced us to completely reshape Blackstone’s process for evaluating deals, which has been a key to our success in the decades that followed. Never again would we allow one person to single-handedly green-light a deal. We created rules to depersonalize the process and reduce risk.

 5.    Never get complacent. Nothing is forever. Competition will defeat you if you are not consistently seeking ways to reinvent or improve yourself.

 To succeed as an entrepreneur, you have to be paranoid. You always have to believe your company, regardless of size, is a little company. The moment you start to become big and successful, challengers will appear and do their best to take your customers and defeat your business.

The entrepreneurial experience is grueling and incredibly humbling. But over time, if everything works out, life does get easier. You can refine systems to become more consistent and avoid risk. You can surround yourself with other talented leaders to drive the business forward in ways that you never could alone. And you can train the next generation to care about and carry on the legacy of what you built. There is nothing more rewarding than that.

Learn more about What It Takes to Start a Business.