Entrepreneurs Lack Creativity Where it Matters Most
February 10, 2009
This is a guest post from Dave Lavinsky, the founder of Growthink based in Los Angeles, San Francisco and New York.
Over the past decade, I have spoken with thousands of entrepreneurs. And from them, I have heard some of the most creative product and service ideas, and have seen lots successes and failures.
If one thing is clear, it is that entrepreneurs, by their very nature, are extremely creative. They are constantly creating better mousetraps, starting new companies, devising cool marketing plans, etc.
However, I find it extremely frustrating that entrepreneurs lack creativity in the most important aspect of their businesses: raising capital.
That’s right. The most important skill set for an entrepreneur is his ability to raise capital. Without capital, even the best ideas and companies will fail. With capital, even poor ideas and businesses can be morphed and molded into successful enterprises.
My hunch for why this occurs is that capital is primarily viewed by entrepreneurs as a necessary evil. Unlike devising new products, companies and marketing plans, which ARE exciting and interesting, raising capital is boring. There’s no great excitement in coming up with a cool, creative financing plan.
So, every entrepreneur sends their business plans to this VC firm and that VC firm, because it’s so easy to find them in directories throughout the web. And then they wonder why they fell into the 99% of plans that the VC’s didn’t fund.
So, what does creativity in capital-raising look like? One example is Australia’s Blowfly Beer. To fund early operations, the company sold equity to its customers. Not only did this provide the capital that that company needed, but it provided the company with market research, a customer base, and great word of mouth advertising (people are much more likely to support and promote products in which they invested). Blowfly Beer is now sold over the Internet to more than 44,000 share-holding customers.
Another example is shoe manufacturer Kenneth Cole. Cole started out with no money, but great ideas. So, he convinced a struggling Italian shoe manufacturer, knowing that they needed clients, to manufacturer hundreds of thousands of dollars of shoes for future payment.
Entrepreneurs must extend their creativity to the capital-raising process if they want the opportunity to use their creativity in the other business disciplines, such as product development and marketing.
