5 key factors for entrepreneurial success

At a recent gathering on the campus of Stanford University, billionaire Peter Thiel, co-founder of PayPal and the first outside investor in Facebook, commented on Silicon’s Valley’s “failearly, fail fast, fail often” mantra, observing wryly, “failure is overrated.”

Thiel has set up dozens of two-year Thiel Fellows with $100,000 to entice those he calls “the world’s most ambitious, relentless, passionate, wily, creative, driven, smart, visionary, and adventurous kids” to skip college and go directly after their entrepreneurial dreams. For some, this opportunity may be just the ticket they need to reduce the odds and the impact of failure. Thiel is also encouraging them at a time in their lives when it’s easiest to recover from their stumbles.

Figuring out how to bounce back from a failure is a good first step toward securing success – whether you’re a young, ambitious wunderkind tempted not to let school get in the way of your education or a career veteran thinking of quitting your job to start your own business. Whichever category you fit in, consider the following factors:

1. It’s not too late. It’s of course a lot easier to bounce back from failure if you’re in your teens – but it’s also more likely that you’ll need to. A study by the Kauffman Foundation found that half as many successful entrepreneurs were under 25 as over 50. Despite the highly-publicized examples of young entrepreneurs succeeding spectacularly (think Gates, Jobs and Zuckerberg), the odds of entrepreneurial success generally go up with experience. So would-be entrepreneurs distressed that it’s too late for entrepreneurial success shouldn’t despair. Remember that Sam Walton was 44 years old when he started Wal-Mart, David Duffield, founder of PeopleSoft, was 46 when he launched his successful entrepreneurial career, and Colonel Harlan Sanders of Kentucky Fried Chicken was 65.

2. Talent isn’t enough. The greater your natural talents, the greater the odds you’ll succeed. But you can’t rest on talent alone. You’ll also need luck, a cooperative market, good partners and a lot of hustle. Great entrepreneurs borrow what they don’t possess naturally – not just resources, but also reputation, knowledge and contacts. Some great business ideas solve existing problems – synced smart phones to take the place of the pocket planner, 24-hour gyms for busy city-dwellers, or TV screens in airplane seatbacks. Other ideas create solutions for problems we didn’t know we had. But even if you have a world-changing idea, remember that a product is not a business. So while it’s vital to have a great business idea, don’t be tempted into thinking that’s enough. Hustle and street smarts are generally also needed in abundance. A great product or service does not a business make.

3. Get ready for long days and long nights. If you can’t take a grueling schedule, multi-tasking, and being short on resources, think twice about taking the plunge. And to continue the start-up-as-family analogy, new businesses are like infants – when they’re hungry or fussing in the middle of the night, count on being up with them. Indeed, you may go without breaks or vacations until your infant business is “potty trained.” (Just hope this stage comes at the pace of human development since businesses that go beyond 2 or 3 years without making a profit, sometimes never do.)

4. Don’t let setbacks stop you. If you have what Stanford psychologist Carol Dweck calls a “fixed mindset,” you may look at early failure as a result of fixed traits that can’t be changed. Thus, a setback may keep you from wanting to saddle up again. And since failures tend to dog people forevermore, if you fail before experience has given you a chance to test your character, you may, likewise, struggle to recover. But if you have what Dweck calls a “growth mindset,” you’ll tend to see failure as a bump in the road on the way to success – a natural starting point for change, improvement and development. In this case, the earlier in your career you stumble, the better.

5. Plan for failure, too. Line up a BATNA (best alternative to a negotiated agreement) or, in this case, a “fallback” plan if things don’t work out. This isn’t just to shore up your finances, it’s also to protect your emotional well-being. If you’re older and have a family to support, taking care of downside potential requires a little more planning, but if you’re committed to taking the plunge into entrepreneurship, it can be done.

If you have the brains, talent, ideas and energy to be an entrepreneur, you should plan for success but prepare to learn from failure. Developing courage, resilience and a love of learning will help pave the way for you to consider failure as the starting point for success. Try to see inevitable stumbles not as fixed points that define you, but as vital markers along the way to personal growth, productivity and an ever smarter way to take on the next challenge.

Published in collaboration with LinkedIn

Author: Joel Peterson is the Chairman of JetBlue Airways, and the founding partner of the investment firm Peterson Partners.

Image: A woman is silhouetted next to a solar panel display by solar module supplier Upsolar at the fourth International Photovoltaic Power Generation (PV) Expo in Tokyo March 2, 2011. REUTERS/Yuriko Nakao.