Startups fail more often than they succeed, but by understanding the importance of grit you can gain the edge your business needs to survive in this tough environment
Have you ever wondered why startups fail so much at an early stage? Do you want to know why people are scared to be an entrepreneur? Are you tired of listening to people's advice, telling you to take a secure job than start your own business?
For most of the questions, the answer would be: lack of grit. This four-letter word expresses a desire for long-term, concrete goals and perseverance. An entrepreneur needs to be a number of things to be successful, there is no doubt. But primarily if you don't have that urge to build something of your own, that desire, that passion to grow your own business, it is certain that you would face a ton of problems in setting up your startup.
We all know that overnight success is a myth. Successful businesses do not grow out of thin air. The startup team must work, day and night non-stop to achieve that marvelous feat of a billion-dollar company.
According to Medium magazine, startup grit is the top characteristic that they look for in an entrepreneur and in his/her team.
We often underestimate ourselves in our aptitudes. We believe the ones who achieves success are gifted people. But do you think all those who became a successful entrepreneur are gifted people? And no, it is also not just about sheer luck. They tried, they worked and they achieved, they have that 'grit'.
In the book - "Grit: The power of passion and perseverance", Angela Lee Duckworth explained that it takes consistent effort, rather than talent, in generating achievement. According to Duckworth, she found that effort counts twice as more than talent. She simplified her studies with the following two equations -
Talent × Effort = Skill
Skill × Effort = Achievement
And that is what grit is all about. You must read the book for better understanding.
Now why grit is so important? According to a study by Failory, 50 percent of the startups fail within the first five years and 20 percent of the startups fail within the first year. This number says it all about how much competition is there among the startups.
We all know the story of Jack Ma, a perfect example of grit, who got rejected from jobs several times, yet created Alibaba, a multibillion-dollar company. We know about the story of KFC, founded by Colonel Harland Sanders, who started by selling fried chicken from a roadside restaurant, and now people from all over the world know what KFC is.
These transformations did not come overnight. They struggled day and night, worked hard, broke down many times, and still kept working to reach a higher position where the whole world can appreciate their achievements.
Imagine, if Jack Ma and Sanders had given up when things became difficult, the world would not have got a major e-commerce site that helped us move forward with the advancement of online shopping and we would not have been able to eat one of the tastiest fried chickens ever.
A more recent company that has achieved this feat is Airbnb. This company started by accident, according to Leigh Gallagher, editor of the Fortune magazine, who interviewed the founders of the company. Initially, no one was drawn to the idea of an alternative to hotels; many investors also considered the idea crazy and suggested they look for another path.
So, two among the three co-founders, Brian Chesky and Joe Gebbia, tried an experiment. They needed money so they rented-out air mattresses in their apartments for some attendees of a conference and they called it the "Air bread and breakfast". Soon, a lot of people began demanding that service. They realised there was a market gap and there was room for a potential startup. Later they participated in the San Francisco startup accelerator program where they got the necessary advice and confidence boost to make this project a sustainable one. And that set up the momentum. If they had not had that belief that it had potential to be a successful startup, it would not have become a 3.1 billion-dollar company today.
In this modern world, we are all trying to build something new and start something of our own, but still, there are 9 percent of startups that fail due to a lack of passion (The Top 20 Reasons Startups Fail, 2019).
NewsTilt was a news destination website founded by Paul Bigger in October 2009. This was a good idea initially, but soon they started facing problems, and one of the main reasons was they simply ran out of news as the journalists lost their interest. (Paul Bigger, 2010) In the post-mortem of the company, the founding team candidly admitted they did not have much interest in running a newspaper. They simply wanted to create a good commenting platform which led them to start NewsTilt and it had to close within the first eight months.
Another startup - Doughbies, an on-demand cookie delivering company, founded by Daniel Conway in 2013 had to shut down five years after its inception, in 2018, despite having a 36 percent gross margin and 12 percent net profit. (Josh Constine, 2018) It raised $67,000 as an on-demand cookie delivering service only in 2013, yet it failed since it could not meet the expectations of the investors. (Conor Grant, 2018) Conway believes that it was a mistake to treat a bakery company as a tech one. The core problem of Doughbies, according to Conway, was that there was no huge growth or adequate interest in running the business.
The two examples show that lack of grit can cost you the whole company. Both NewsTilt and Doughbies could have done a lot better if the founders had shown more passion towards it. The idea has enough potential to be a successful businesses out there, but this absence of solid interest might have cost them success.
"Grit" is a word that can have a lot of different meanings to different people - resilience, desire, passion, goals, etc. But it is essential to have it in you if you want to start your own company.
Mustafizur Rahman, founder and CEO of Startup Dhaka, after having worked with more than a 1,000 startups, summarized the importance of grit into one sentence –"super IQ can be offset by grit."
An entrepreneurial mind should have that grit to try till the very end. You must do it with passion or not at all. Starting a new business is always going to be terrifying, a great risk is being taken, but as an entrepreneur, if you are not willing to take that risk then what actually are you doing?