The popular TV show Shark Tank probably shapes what many people think of entrepreneurship. In the show, startup founders come face to face with famous investors such as Dallas Mavericks owner Mark Cuban to pitch innovative ideas in hopes of securing funding to take their business to the next level.
But entrepreneurship involves much more than asking for support. Just ask Michael Goldberg, executive director of Case Western Reserve University’s Veale Institute for Entrepreneurship and associate professor of design and innovation at Weatherhead School of Management.
As Global Entrepreneurship Week continues, The Daily sat down with Goldberg to learn about pervasive misconceptions surrounding entrepreneurship.
Misconception No. 1: Your business idea must be fully formed before testing it with potential customers.
It used to be that you’d worked on these things in stealth mode because you were worried about sharing the secret, this great idea. I think that approach hasn’t worked as well. The approach to supporting and educating entrepreneurs has evolved, including books by Steve Blank, Eric Reis and Weatherhead’s own Brandon Cornuke, which help founders come up with a minimum viable product or prototype to test their products and services with customers and get valuable feedback.
The way we tend to work with our students is to tell them to get something—even the start of something—out there that they can test with potential customers.
Misconception No. 2: You need to quit your job to start something.
There was a lot of new business formation activity happening during the pandemic and coming out of it—and a lot of that involved people with day jobs who are doing something on the side. I think that’s exciting.
People had more time on their hands during the pandemic to be thinking about what they wanted to do. Many folks are reprioritizing what they wanted to do with their lives. Doing things on the side, opening up an Etsy shop, Amazon Marketplace shop or even selling at your local farmers market, some of these things can be done as a side hustle. You don’t have to quit your day job.
Misconception No. 3: Startups are primarily tech-based innovations.
There are many ways entrepreneurs are delivering products and services to the market. It doesn’t have to be a tech-based startup spinning out of one of our labs at the university. People often get frustrated by a problem in their daily lives. It could involve your kids and daycare. It could be around some service where you’re like, “I wish we had this.”
It’s still entrepreneurship whether you’re coming up with a new app or spin a technology out of a lab at [CWRU] or selling something at a farmers market. It’s all new business creation.
Misconception No. 4: You have to live in a specific geographical area to launch a successful business.
You can start a business from your home as a side hustle from anywhere. There are certain communities—San Francisco being one—that have access to capital and lots of support from other entrepreneurs. Entrepreneurship is usually a team sport. Even if you’re a solo founder, you need mentors and advisors and money. That being said, there are great startups that are forming in places like Cleveland.
Misconception No. 5: You need to give up control of your business to raise capital.
I think a show like Shark Tank does a pretty good job of simulating the valuation side for entrepreneurs: “Hey, you’re going to give up a percentage of your company for this money.” Folks who go on Shark Tank recognize there’s the money itself and then there’s the connections that come with the money. Entrepreneurs who are raising outside capital and giving up part of their “baby” to someone else have to be very thoughtful about how much they’re giving up versus controlling. If you want to raise venture capital, which to some degree is the most expensive form of capital, you may find yourself giving up majority ownership to someone else.
This often leads entrepreneurs to use what’s called “boot-strapping,” using their own savings or credit card debt (which may not be a great idea with high interest rates). There’s ways to raise capital without giving up ownership. Another way that this is done is through crowdfunding, whether it’s equity-based crowdfunding in which you’re giving up some ownership or just as a way to fund the product. EveryKey is an example of a [CWRU] alumni startup that has raised capital through crowdfunding.