We Are All Entrepreneurs Now

By Rich Karlgaard

I sit on the board of a start-up company. I would love to tell you the name of the company and what it does, but that would be an abuse of my position at Forbes.

OK, it’s in 4G wireless. But that’s all I’m telling you.

The board met in Palo Alto, Calif., yesterday. The two entrepreneurs who run the company are brilliant. Their IQs could boil water. They have five times the energy of any of us older people on the board. The challenge is getting our two champions to focus. Ambitious entrepreneurs that they are, they see opportunity everywhere. One is from Hong Kong, and he can spot opportunity in a fog. The other is from India, and he can detect opportunity under a blade of grass in a deep, deep recession.

The problem is that these two see too many opportunities. This potential market over here looks good to them, but so does that one over there. And so on.

Our job on the board is to get these two entrepreneurs to prioritize and focus. We tell them to work as hard and efficiently as they can, but we remind them that some things just take longer than you anticipate. Raising money always takes three times as long as you think it will, and that’s if you’re successful. If you’re not successful, you just wasted time and burned capital. Another time sump is acquisitions. No matter how small, an acquisition is always replete with unexpected complications.

Prioritize and focus. That is one message.

The other message is cash management. In a big public company, you might manage for earnings. But in a start-up, you manage for cash. You must make every penny count. When it’s gone, it’s gone. And you know what? When you are down to to your last six months of cash, everyone can smell your desperation. You will have no leverage with vendors or investors. So don’t think that 18 months of cash in the bank is really a year and a half. It’s more like one year.

Focus and frugality. That’s what we tell our entrepreneurs.

And you know what? In today’s rough economy, focus and frugality are lessons for all of us.