The Article that i liked this week

This is a shameless copy from one of my favourite blogs by Tony Tjan, a VC. Here is what he has to say about "

"Why Do Most Entrepreneurs Fail to Scale". Please post your comments.

Consider the strengths and weaknesses of the following entrepreneurial traits:

Persistence and stubbornness. Many people commented on past entries on the importance of having persistence and the willingness to persevere. This is a part of my "guts" bucket: you need to have the guts to start something, but just as important is having the guts to stick it out. Perseverance is an admirable quality of great entrepreneurs. However, when perseverance is confused with unhealthy stubbornness the outcome is not likely to be great. Stubbornness is fantastic when it is right, but it is a bitch when you are wrong. Or to paraphrase the bible, "Hell is truth seen too late." So how can you tell the difference? It's tricky, but here's a tip: Be persistent in your vision when you are sure you are right and have some proof to back that up, but also acknowledge when you need help or redirection.

Controlling interest. During the early stages of a company, the entrepreneurial vision is critical and is typically embodied by the founder. It can therefore make sense early on for the entrepreneur to control of the operations as possible. This control freak nature and maniacal attention to detail are almost required during the early phases of company growth. But as a company grows, entrepreneurs need to demonstrate not only that they can do the task (i.e. no task is too small or beneath them), but also that they can appropriately delegate. Fast growing businesses quickly move beyond the ability of one person to manage without proper delegation, founders can unknowingly limit the start-up's growth potential.

Team loyalty. Some of my closest friendships began at businesses I founded or where I have worked. It is natural to form very close ties to a group of people working day in, day out and often with significant sacrifice in the hopes of realizing an entrepreneurial dream. What has to be recognized is that the loyalty and relentless commitment that helped get a company to a certain stage might cloud judgment in determining the capabilities and skill gaps required as a business scales. To be clear, loyalty should be recognized and is culturally important, but it cannot be confused with the performance and future needs of the organization. As a start-up becomes a full-fledged business, an entrepreneurial leader has to be prepared to deal with difficult and inevitable personnel situations where business decisions need to be made for the interest of the company and not personal or historical reasons.

Some of these and other factors that hold a business back from realizing full potential are described well in the 2002 HBR article by John Hamm "Why Entrepreneurs Don't Scale." I also touched on similar themes in a lecture on entrepreneurship I delivered for the School of Management at Boston University.

Thanks again for all the comments on the prior blogs that helped shaped my thinking on this entry.

Now, what growth challenges do you face and why do you think many entrepreneurs fail to scale?


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