Build or burn?

If you build it, they really do come

When you work for yourself there is a pleasure when a customer pays your bill that is kind of biblical.  There was nothing; then you created something; and someone valued it enough to part with some cash.  The owner of a small business once said to me, ‘It’s still amazing to me when people pay my invoice.’  I knew what he meant.  It’s a primeval feeling that doesn’t fade, because this particular colleague has been in business for over twenty years.

I recall sitting next to a senior colleague at a function once who described taking the opportunity, whenever he could, of asking even more senior people what lay behind their success.  Fear of failure was the most common answer.  Fear of failure, and the financial pressure it puts you under, is part of daily life for anyone working for themselves, and the feeling gets stronger the more dependents you have.  Taking pleasure in paying customers is therefore understandable because success is always more satisfying when under pressure.

It’s interesting the number of entrepreneurs with a back story of a college drop-out or an inheritance or redundancy package or supportive partner.  Either the entrepreneur never had any money to start with, and therefore nothing to lose, or there was some sort of financial cushion there in the first place.  I once heard a theory advanced by a senior marketing executive in Unilever bemoaning the lack of entrepreneurialism among their graduate managers.  His theory was that recent graduates intuitively carry out some sort of cost-benefit analysis in their heads, comparing the likely income from a typical corporate career with that of an entrepreneur, and decided that it was not in their financial best interest to start a new business, despite the potential for spectacular reward.

For anyone starting a new business from scratch, one of the greatest inner doubts is, ‘Where will the demand come from?’  There seems so many other things that people and companies are spending their money on already.  Everyone seems to be getting on fine the way things are at the moment.  What makes you think that any of this money will be siphoned off towards you?  Next to the uncertainty over making next month’s rent, this is another factor that puts people off starting their own business.

Balanced against these doubts however is a more comforting thought.  Adam Smith characterised the way the price mechanism works as being like an invisible hand that matches supply and demand without the economic actors knowing each other or being told what to do.  It’s like magic.  Markets do seem to have a way of trying out new products and services without anyone asking it to.  In other words, someone, somewhere will buy your product at least once.  They just will.

During the late nineties there was a phrase that captured this inquisitive property of markets: ‘if you build it, they will come’.  It was borrowed from a Kevin Costner movie about ghost baseball called ‘Field of Dreams’.  The idea was ‘build the website and the customers will come’.  You can see why it quickly became discredited.  However, I think there is something in that phrase that resonates with the mysterious way markets test new product or ideas.  It should give hope to anyone contemplating taking the plunge.  If you build it, they really do come.  Whether they stay is another matter.

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