Rudy Karsan, Founder and CEO of Kenexa (KNXA) and author of We: How to Increase Performance and Profits through Full Engagement, spoke at IPN Northeast Professional Venture Boot Camp, where he shared some of his mistakes and weaknesses as an individual with candor. Here are some of the lessons we can learn for Karsan's experience.
Lesson No. 1: Triple what you think you need in cash. When starting your venture, always triple the amount of cash you think you will need if you want to be profitable. Not only does everything cost more than you can account for, there are unpredictable expenses that will inevitably come up.
This is crucial -- in business cash is king. If you run out of cash and are no longer able to support the operations, cover salary, cover rent or hidden costs, then you have no business.
Action Item: Look at your cost projections, and triple it. Raise money or dip into your savings to meet this need. After you triple the expenses, is the venture still viable? If so, go for it!
Lesson No. 2: Have a clear understanding of what’s driving you to start the venture. Karsan’s key drivers are ego, greed, fear, love and purpose. He knows if he starts a venture out of fear or ego, it will fail; greed will succeed; love and purpose will be the most successful (e.g. Kenexa).
As an entrepreneur, especially as a young or first-time entrepreneur, it is crucial to identify your drivers. It could be that you want to change the world (purpose), or you want to make a lot of money (greed), or you want to affect someone’s life in a positive way (love). Whatever it is, be realistic with yourself and identify your drivers. This is what will keep you motivated when you face tough times in your pursuit and you feel like giving up. If at that moment you have clearly internalized your driver, you are much more likely to be resilient.
Action Item: Step back now, look inside, and figure out why you are doing what you are doing. What is truly driving you?
Lesson No. 3: Do not let your ego get in the way of a venture. Every time Rudy has let his ego get in the way of a business decision, he has failed miserably. Failure is hard to manage, as a certain amount of ego is needed to start a venture. Ego helps him form the foundation, but he has developed the tools to check his ego when it may pose a risk to achieving his business goals.
It’s important to note how paradoxical this lesson is. The thing that helps Rudy take risks and be successful is also the thing that could lead him to failure. I think the core reason he has been such a successful entrepreneur is because he recognizes this paradox and understands the importance of managing the Ego (see: lesson No. 4).
Action Item: Can you find these types of paradoxes within yourself? If so, can you figure out a way to mitigate them? If you can, you will succeed as an entrepreneur.
Lesson No. 4: Find the constant. Rudy needs a partner in his venture to be successful. He needed to fail 3-5 times before recognizing this. A partner helps him keep his ego in check, make accurate risk assessment, identify his drivers, and notice when he's running out of cash.
Having a business partner is optional and may not apply to you (though it does to me). The key thing for this lesson is not to say that you need a business partner, but to see what type of environment you can manufacture that will help lead your venture to success. If it’s making sure to have a business partner, find a partner. If it’s having a really close advisor who can give you advice, make sure you have that advisor. If it’s always working with the same core team of people, then do that. The important lesson is to identify what works best for you and implement those ideas.
Action Item: Figure out what (aside from you) is the glue in all your ventures. And make sure it exists in each venture you pursue. This will maximize chances of success.