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Are You Suited to Entrepreneurship

Why Failure Will Be Your Best Mentor – Ever

Let’s be honest: Nobody looks forward to failing. Yet, there’s no better teacher, or path to success.

Vusi Thembekwayo




We talk about the virtues of failure, but the truth is that failure is painful for entrepreneurs who experience it and funders that lose their capital because of it. Personally, I’ve experienced ‘failure’ of entrepreneurs I’ve funded nine times.

The truth that many VCs are not willing to tell you is how much wealth is eroded by the losses of investing in the dreams and businesses of entrepreneurs.

I recently spoke at a conference for venture capitalists in Sri Lanka and rather than tell the fairytale of how many businesses I have invested in, I chose to speak about the true cost of venture capital: The pain of losing money, the reality of eroding your own personal wealth and the disappointment of realising that entrepreneurs can sometimes be economical with the truth.

They often misrepresent sales, tax liability and even stock-on-hand figures so that the investor lives the illusion that the business is doing better than it actually is. Yet, I am bullish about investing in entrepreneurial businesses.

Related: Your Business Failure is Your Fault

What is it that keeps me going through the pain, the disappointment and the drama of venture capital? What lessons can other entrepreneurs learn from failure?

Master the ability to re-emerge

Conquering failure is less about scientific evidence that things will be fine and more about the sheer will and grit to get up again. It sounds fluffy I know, but the tenacity required to win at this game called life (and its mini-tournament, business) is something that you have to teach yourself.

What I have learnt over the past decade of business is that not giving up is more about believing — even without the evidence to prove it — that you will emerge at the other end a better version of yourself. In other words, the emotional capital required to emerge is an ability and not a feeling.

Focus on development and learning


Most of us forget that clichéd expression that everything happens for a reason. Like many clichés, it’s used often because it’s true.

What clouds us to the lessons of failing is that we focus too intently on the pain and shame associated with failure and forget that all pain is instructive.

When you start gyming, the pain that greets you in the morning is uncomfortable, unwelcome, undesirable and just plain unbearable. But any gym-bunny will tell you that the quickest way to get rid of the pain is to go back to gym and train again. The more seasoned gym-addicts know that their bodies don’t feel the same without that stiff muscle feeling of pain and growth. Growth and pain are interlinked.

So rather than wallow in self-pity, take a moment to work through the lessons of that failure. Today we have a process in the business that allows us to systematically work through the pain of failure. We do it at the exit stage of transactions.

We ask, discuss and document answers to the following questions:

  • Why did we not achieve our goal?
  • What were the main forces that led to the failure of the investment?
  • How could we have avoided these?
  • What do we need to implement internally in the business to ensure that we avoid the same outcome?

Notice how the questions are inward focused and assume that we had the full powers to determine the end result. As a principle, we believe that we are in charge of our destinies; not fate or ‘them’. We are.

Related: The #1 Reason For Failure of Businesses Over Two Years Old

Knowledge is not an end state but a persistent goal.

We fail.

When we fail we hurt.

When we hurt we learn.

When we learn, we heal.

This is the mantra of our investment team. So we are clear that VC by its nature is high risk. While risk can be managed, we also know that not taking the risk is not managing the risk. Not taking the risk is choosing not to participate and that is not acceptable.

Our people are our most important resource and our business systems must operate and think through problems faster and better.

We can never know all the challenges that lie ahead but we can learn to think through them better and faster. Knowledge is a fluid construct. What we know today and what makes us market-leading today may well be obsolete tomorrow.

Remember: Best practice is the most clinically correct answer… to yesterday’s problems.

Are You Suited to Entrepreneurship

Why Optimism Isn’t Enough – You Need To Also Accept The Brutal Facts

Entrepreneurs tend to depend on optimism in the same way that fish depend on water. It’s absolutely crucial for survival. In fact, it’s arguably the single most important character trait that a successful entrepreneur can have, but it also has a dark side…

GG van Rooyen




A realistic path to success

  • Lead with questions, not answers
  • Engage in dialogue and debate, not coercion
  • Conduct autopsies without blame
  • Build red flag mechanisms.

No matter how bad your day’s going, it’s probably nothing compared to your average day at the ‘Hanoi Hilton’. This was the euphemistically-named prisoner-of-war camp (actually called Hoa Lo Prison) where American soldiers were interned during the Vietnam War. Pilot Jim Stockdale was shot down on 9 September 1965 and sent to the prison. While there, he was tortured, denied medical attention, kept in a windowless cell and locked in leg irons at night. Stockdale spent almost eight years in the prison, and while many other American soldiers died there, he survived.

This brings us to the topic of optimism. You don’t survive eight years in a prison camp by giving up hope. Despite almost impossible conditions (and odds), you need to stay optimistic. Stockdale never lost hope.

“I never lost faith in the end of the story. I never doubted not only that I would get out, but also that I would prevail in the end and turn the experience into the defining event of my life, which, in retrospect, I would not trade,” Stockdale later said about his time in the prison.

Related: Shark Tank Funded Start-up Native Decor’s Founder on Investment, Mentorship And Dreaming Big

The Stockdale paradox

So, Stockdale was an optimist right? Yes, but it’s a bit more complicated than that. Jim Collins interviewed him while writing his seminal book Good to Great: Why Some Companies Make the Leap… and Others Don’t. After hearing how Stockdale refused to give up hope and stayed optimistic throughout his internment, Collins asked him who didn’t make it out alive.

“Oh, that’s easy,” he replied. “The optimists. They were the ones who said: ‘We’re going to be out by Christmas.’ And Christmas would come, and Christmas would go. Then they’d say: ’We’re going to be out by Easter.’ And Easter would come, and Easter would go. And then Thanksgiving, and then it would be Christmas again. And they died of a broken heart.

“This is a very important lesson. You must never confuse faith that you will prevail in the end — which you can never afford to lose — with the discipline to confront the most brutal facts of your current reality, whatever they might be.”

From this, Collins identified one of the key things that differentiated great companies from others: The ability to accept brutal facts. Greatness demands optimism, but not in the face of obvious disaster. Collins called this the Stockdale Paradox.

Too much optimism

What happens when a bunch of executives enter a boardroom with their charismatic founder? The founder is optimistic, inspiring… and demanding. He has absurd expectations. He wants the impossible. (Steve Jobs was a good example, who employees said had a ‘reality distortion field’ around him). The executives are eager to seem equally gung-ho, of course, even those who know that a crucial deadline won’t be met, so the brutal facts are ignored.

“We’re going to be shipping product by Christmas,” they all say. And Christmas comes, and Christmas goes. Then they say: “We’re going to ship by Easter. And Easter comes, and Easter goes. And then Thanksgiving, and then it’s Christmas again…

Related: 10 SA Entrepreneurs Who Built Their Businesses From Nothing

An overdose of optimism is a dangerous thing. While optimism is a crucial tool in the entrepreneurial kit (especially when it comes to motivating employees), it can lead to disaster if administered too liberally. Like morphine, a sensible amount can take the edge off a scary reality, but too much will distort reality to such an extent that you become oblivious to existential threats.

And how do you keep your company off the morphine? Collins suggests four things: Lead with questions, not answers. Engage in dialogue and debate, not coercion. Conduct autopsies without blame. Build red flag mechanisms. If you do this, optimism becomes a powerful tool, and not a ticking time-bomb.

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Are You Suited to Entrepreneurship

Alan Knott-Craig Weigh In On Living Your Entrepreneurial Dream

From raising capital to getting the most from your employees, business ownership is all about living your dream.

Alan Knott-Craig




How do I chase my dream? — Sam

First, you need money. Moola. Cash. Capital.

Chasing your dream without enough capital is akin to having a premature baby. All the baby’s energy goes into survival rather than growth. Start-ups are not about survival (paying the bills). They’re about growth (getting rich).

Before you chase your dream, make sure you have enough capital. Keep your lifestyle simple and living costs down. Save up enough to last two years. Or marry rich.

I’m considering selling my business. I need help. — Clark

Before you enter M&A conversations, first decide: “Am I a seller?”

You won’t find it easy backing out during negotiations. Don’t start a process you can’t finish. Don’t look for buyers if you don’t want to sell.

Most people I know that sold their business regret it, unless they had a very specific reason: i.e. the business was about to die, or the business can’t grow without a big brother, or they want to leave the country. If that’s your reason, go ahead and sell. If it’s simply to have a pile of cash, reconsider.

Related: Your Questions Answered With Alan Knott-Craig

What are you going to do with the money? Put it in your bathtub and wash yourself with notes? Buy fancy cars? Buy a fancy spouse?

Lots of money in your pocket can only tempt you to the dark side. Eventually you’ll get bored and you’ll want to start a business again, and you’ll start all over. If you don’t need to, don’t sell.

How do you instil an ownership mindset in your staff? — Johan

It’s hard to work with people that have no drive. Some people just come to work and go home with no planning or vision or energy. Start with getting rid of the bad apples, then start fine-tuning recruitment to only let in the folks with a good attitude.

Use some of these methods to motivate and encourage buy-in from staff:

  • Ask staff for feedback.
  • Do not tolerate mediocrity.
  • Make sure everyone knows their job.
  • Share information. Keep everyone in the loop.
  • Look after your staff and they’ll look after you.
  • Lead by example. Pick up litter. Be first to office. Be last to leave.

How do I determine what venture to dedicate my energy to and when do I know when to stop pursuing one of the opportunities? — Mike

Go with whatever gets traction first. Ruthlessly scratch everything else off your to-do list. Generally speaking, go with the business with the most tried-and-tested business model. 

I left my former employer to move away from the legal side of things. I know that I have the technical skills in this area and I have used that in completely running the legal side of the micro lending venture, but the ultimate aim is to be an entrepreneur/businessman rather than constantly seen as the ‘lawyer’. Do I discontinue the legal consulting or slowly taper off? — Mike

If you can live without the sideline income, do so. Focus 100% on business. If you need the money, keep selling hours on the side.

Related: Alan Knott-Craig’s Answers On Selling Internationally And Researching Your Idea

I have a very successful farm store. I’m considering expanding countrywide. Any advice? — Elo

Ask yourself “why?”

If the answer is to get rich, that doesn’t necessarily mean you need to scale your successful farm store.

Maybe a better option is to take the free cashflow of your farm store and invest it in a different business. An annuity revenue business. A business that will make money while you sleep, rather than only when you’re behind the till. Cash cows are hard to come by. If you don’t want to lose your cow, don’t try to scale it unless you’re 100% sure you never have to sell it.

Can you help me flesh out the detail of a pitch to investors? — Mamkhele

There’s only so much you can rely on others for. At some point, you need to man up and do the work yourself. You need to answer the questions yourself. The answers for all pitch-related questions are on the Internet. Google it. No one will save you, only you will save you.

Listen to this

Alan’s audible book Be a Hero: Make Life an Adventure is now available on and

Read by Alan himself, Be a Hero is a collection of stories on how to make your life an adventure by changing your mindset and tackling adversity.

Go to or to download your copy. Be a Hero is also available in Kindle and paperback through

Read ‘Be A Hero’ today


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Are You Suited to Entrepreneurship

What Real Entrepreneurs Do When They Hear The Word ‘No’

Are you strong enough to push through early struggles?

Jason Saltzman




In this video, Entrepreneur Network partner Jason Saltzman sits down with two founders to hear their stories of perseverence and resilience.

Raul Tovar is the co-founder of WindowsWear, a fashion tech company based in New York City that archives display windows. He moved from Mexico to New York determined to make something of himself and resolved that he would not go home empty-handed.

Jordan Wan is the founder and CEO of CloserIQ, which builds sales teams for startups. He started his business through tragedy – losing his mother and his marriage in the early stages.

You might think these difficulties – whether moving, or being told their ideas weren’t good enough, or working through tragedy – would be enough to make them give up. But they didn’t. They only spurred them to greater success.

Related: How To Start A Business With (Almost) No Money

Click play to learn more.

This article was originally posted here on

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