The Ten Truths You Must Know About Entrepreneurship！

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The world of entrepreneurship is incredibly exciting, with successful entrepreneurs changing the world with genius ideas and great products. Their soaring legendary stories continue to be topics of great interest for the public. Many aspire to start their own businesses, as achieving ideals or seeking wealth are irresistible temptations and motivations. 

With the increasing influence of emerging startups in recent years, the global entrepreneurial atmosphere has become increasingly vibrant; it seems like a lavish feast where everyone can realize their dreams. Entrepreneurship has become a trend and fashion, with everyone enthusiastically discussing the topic, whether or not they are directly involved. The entrepreneurial world has never been so lively, to the extent that many seem to forget something very important: entrepreneurship has barriers, and they are quite high.

It should be noted that although technology startups are gradually becoming mainstream, the high barriers I'm talking about here do not yet involve higher-level objective competition such as technology, but rather discuss the challenges that entrepreneurship presents at a more basic level. Entrepreneurs who cannot pass this hurdle don't even have the qualification to compete with their competitors in terms of technology.

Having been in the investment field for over a decade, I have always been learning from and interacting with every entrepreneur I encounter. Their work is more challenging and risky compared to investment business. Over the years, observing them has greatly refined and improved my investment philosophy. Moreover, I have always considered myself an entrepreneur, viewing leading the AMINO team as another form of entrepreneurship. Whether it's expanding into new investment areas or digitizing investment management, we have been constantly trying new things. In this article, I want to share with you some truths that entrepreneurs gradually realize during the entrepreneurial process. These truths may not be easily accepted, but they are the real entrepreneurial world behind the prosperity that everyone must understand.

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Welcome to the world of entrepreneurship. Here are ten basic principles in this world:

1. Face reality: Entrepreneurship isn't as glamorous as it seems; success is extremely rare.

Don't be misled by self-help and motivational speeches; don't believe in unverifiable statements like "sacrifice leads to success" or "persistence guarantees success" because they are meaningless. Not every temperamental person possesses the product design skills of Steve Jobs; not every bald person can become the world's richest like Jeff Bezos; not everyone who curses and challenges everything can become a "modern Iron Man." It's their remarkable achievements that make these traits shine, not the other way around. 

Many people think Elon Musk is cool, but the fact is almost nobody can be as cool as Musk. If given the choice, you probably wouldn't choose to be as cool as him because you wouldn't be able to bear the cost. What's more interesting is that Musk wasn't as cool before he became successful as he is now. When he was ousted from PayPal and when Tesla faced financial collapse on the brink of bankruptcy, he was a painful, silent, and introverted oddball.

According to statistics, in the United States, the probability of entrepreneurial failure is approximately 90%, and this data is roughly the same across all industries; while in China, the survival rate of start-ups between 2017 and 2019 was less than 1%. The vast majority of businesses start heading towards death from the moment they begin. The so-called success, fame, and world-changing achievements are hidden outcomes triggered by only a few lucky individuals. The majority of the time in entrepreneurship is mundane and busy; the shining moments we see under the spotlight may only account for less than 1%. This is the truth of entrepreneurship.

2. Make tough choices decisively, leniency does not rule the army.

There are many idealists who believe in the well-packaged success stories, longing to conquer the world with a group of friends, with the start-up team staying together from beginning to end, and everyone enjoying fame and fortune, leading to a happy ending. There are also many who find their work experiences painful and vow to become a considerate and kind boss. Moreover, some entrepreneurs would rather endure financial difficulties themselves than lay off employees who have struggled alongside them because they feel guilty.

Wake up, none of these ideas are realistic.

The most important thing in entrepreneurship is not temporary success but perseverance. Only by having the ability to survive can one confidently talk about ideals and sentiments. When a company faces financial difficulties, the decision to stick together with the team and persevere is subjectively admirable but objectively unwise. If the company is experiencing cash flow problems and cannot break through by expanding business operations to generate revenue, then as an entrepreneur, one must decisively cut costs to turn the situation around. Entrepreneurs must understand that being able to lead the team out of difficulties is the most responsible approach for the majority of people.

In the early days of NVIDIA, the company took the wrong direction and faced closure. Jensen Huang choice was to dismiss most of the team members, leaving only over 30 core developers to try a new business direction. However, at the same time, he promised the laid-off employees that when the company succeeded in the future, they would be welcomed back. This is what makes a good founder: while ideals are important, their foundation must be deeply rooted in the reality of the world.

Furthermore, being tolerant and kind is not wrong; it's a matter of personal choice. However, in handling business and managing teams, unreasonable and bottomless tolerance is tantamount to indulgence and should be avoided at all costs. This is where the logic of business differs from personal life. Blind pursuit of personal moral values, such as being a "good man" or being "lenient," can often lead to unclear rewards and punishments within the team, ultimately turning the team into disarray.

3. The degree of innovation in entrepreneurial ideas is not crucial.

Many believe that to succeed, one must have a revolutionary innovation in business, product, or business model. This notion is overly naive. With a global population of 7.75 billion people, it's nearly impossible to conceive a truly unprecedented entrepreneurial concept. From the initial spark of inspiration to the stages of refinement, team formation, execution, product development, and finally realizing the envisioned outcome, each step forward eliminates a large number of people. Most of the seemingly "disruptive" business cases we see have survived through numerous trials and tribulations before emerging victorious. Due to survivorship bias, when we witness the birth of an innovative product or business model, many similar companies have already failed countless times.

For many startup companies, the premise of success lies not in how novel the entrepreneurial idea is but rather in the courage to take the first step and how effectively it is executed. Do you know which number Google was in terms of search engine creation? The 18th. Hard to believe, isn't it? But their product was superior, with powerful features, enabling them to surpass competitors and become an industry benchmark. Today, Google has evolved from a search-focused company to one of the world's leading high-tech enterprises. Meanwhile, the search companies established before Google are mostly forgotten. Therefore, an innovative entrepreneurial idea without execution is meaningless. Execution is the key; without it, no matter how groundbreaking an idea may seem, it will ultimately be nothing but a bubble. And when it bursts, others may not even hear a sound.

4. If you want to start a business, learn to endure loneliness first.

Can you tolerate loneliness? If not, please don't start a business. Entrepreneurship is not about glamorous stages, not about being in the spotlight with everyone's attention, and certainly not about rallying a team to conquer the world. These are just the plays and applause after success. The truth is, during the process of entrepreneurship, entrepreneurs are lonely, very lonely.

Why is that? Because entrepreneurship involves interests, and human nature dictates that everyone tends to think from their own perspective when it comes to interests. If you say that entrepreneurship is all about realizing a certain ideal, changing the world's appearance, and has nothing to do with money, then I suggest you not start a business yet but try to face yourself honestly first and examine whether you are honest enough with yourself. Moreover, even if what you do in entrepreneurship is your ideal, and you do not pursue any financial returns, you will find that the people in your team gather around you and decide to fight with you for their own interests. After all, everyone hopes for returns for their efforts, and everyone needs to live. This is the most natural thing. If you insist on doing things without considering making money, please go ahead and work on open-source and charity projects.

Therefore, during most of the entrepreneurial process, you will find it hard for others to empathize with you. Many things cannot be discussed with others; no one listens to your complaints, no one understands your contradictions, no one is willing to stop and see if you are happy when making money, and no one cares about the pressure you are under when you can't make money. Most people will only blame you for not working hard enough or not being capable enough.

Is it cruel? I think it's very cruel. But every entrepreneur faces the same dilemma. If you can learn to endure loneliness, maintain independent and clear thinking, and not be overly influenced by external opinions, this may become your advantage, helping you reduce internal friction in the early stages, develop quickly, and stay ahead of competitors.

5. Not getting VC money doesn't mean it's not a good project.

As venture capital (VC) investment has flourished, the market has seen an influx of funds, and the mindset of entrepreneurs has undergone significant changes compared to earlier years. Previously, venture capital was just a minor force in the entrepreneurial world, playing more of a supplementary role. Nowadays, with abundant VC funds and strong investment power, many entrepreneurs have developed a mindset of "no funding, no entrepreneurship." Admittedly, the existence of venture capital has lowered the financial entry barrier for entrepreneurs. However, it has also reduced the cost entrepreneurs need to pay to decide on entrepreneurship. More and more people with a "take a chance, make a bet" mentality have flooded the market, lowering market quality, increasing investment risk, and raising the difficulty of entrepreneurship.

Moreover, the active presence of VC has given many entrepreneurs the misconception that if a project cannot obtain venture capital, it has no value. This is completely wrong. To obtain VC financing, two essential conditions are required: the expected future growth must be significant, and the current price must be low enough. Both conditions are necessary, regardless of whether there are many potential investors or few. The former corresponds to both parties' views and judgments on the project, while the latter corresponds to whether there is a deviation in both parties' understanding of the project. When the deviation is too large, entrepreneurs cannot get money from investors.

Therefore, when we redefine the definition of a "good project" to its most basic point of "making money," we will find that whether or not to receive venture capital has no correlation with whether the project is good. Not receiving venture capital may be because investors believe that the future prospects of the project are insufficient, or they consider the project's price too high. However, investors often make wrong judgments. Even if investors' judgments are correct, it does not mean that the project cannot make money, or even make a lot of money. This is because investors pursue rapid valuation growth and eventual profitable exits. But from the perspective of entrepreneurs, the best business may not lack cash flow from the very beginning.

So, have some confidence. Not getting VC money may not be your project's issue; it could also be a problem with the investor's expertise. To delve deeper, what the truly outstanding entrepreneurs and investors pursue fundamentally differs. Nongfu Spring, with a market value of 500 billion RMB and a 2021 revenue of 36.3 billion RMB, did you see them getting venture capital? National brand Laoganma, selling its products worldwide, had a revenue of 5.3 billion RMB in 2020, selling 2 million bottles of chili sauce every day. Don't talk about getting VC money; its cash flow is so abundant that going public wouldn't even make sense. Are these not good companies? Of course, they are.

6. "Work-life balance" is a false proposition for entrepreneurs.

The term "work-life balance" first appeared in the 1980s during the women's liberation movement in the UK. Today, this concept has been widely extended to almost every corner of the business world, including entrepreneurship. But, forgive me for being blunt: if you still hope to have work-life balance, then entrepreneurship is not for you. Unless you are a genius entrepreneur, and your product or technology is in high demand in the market, with extremely high barriers to entry and no competitors challenging you, these two cannot coexist.

From the entrepreneurs I've encountered and the entrepreneurial cases I've heard of, all those who have been relatively successful, or those who have developed smoothly, or those who have successfully crossed the death valley, none of them have the concept of work-life balance. Whether you're starting a business for ideals or wealth, only when your motivation is strong enough and you've invested enough effort, do you have a chance at success. And when you have enough motivation, you won't deliberately pursue the so-called balance between work and life.

Please note, I'm not saying that achieving a balance between work and life is impossible. It may be possible, but it definitely does not appear in the early or middle stages of your entrepreneurship journey. Moreover, if you deliberately pursue this, it means you're not fully prepared to commit yourself wholeheartedly to entrepreneurship; you're leaving yourself an escape route. This mindset is not conducive to success.

7. Ask yourself if you are a lightning rod.

The founder is the core of the company, and this is an undeniable consensus. Why? In addition to judging the direction of entrepreneurship, formulating strategies, and executing plans, there's another crucial aspect: the founder is the convergence point for all information and conflicts; all matters and conflicts related to the company will converge around the founder.

So, one point I often emphasize is whether the founder is the lightning rod for the team.

Good founders should be adept at emotional guidance, problem-solving, conflict resolution, and even, when necessary, willing to endure grievances to maintain the stable development of the team and business. Like a lightning rod, they can use their own body to dissipate the fury of thunder. In my view, whether it's a startup or a tech giant, all managers must possess this core quality. Satya Nadella, from integrating teams and businesses at Microsoft's cloud division to becoming CEO of Microsoft, has led Microsoft from its lows to its current $2 trillion market value. Apart from solid technical skills and exceptional foresight, what's even more valuable is his powerful charm in handling interpersonal relationships and uniting the team.

Smooth communication leads to safety; effective guidance ensures peace. 

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8. If you stick to your entrepreneurial idea to the end, you'll probably end up in a terrible state.

Many entrepreneurs like to emphasize one thing to others: they maintain unwavering confidence in their entrepreneurial idea throughout the ups and downs of entrepreneurship, no matter how great the obstacles, they persist without wavering.

As an investor, when I hear such words, I naturally admire the entrepreneur's steadfastness. However, at the same time, I also question one thing: why not change or adjust? Is it because of sufficient confidence, or a lack of flexibility? Is it because they can see a future that no one else can, or are they just obstinate?

Entrepreneurship essentially begins with an idea and gradually evolves through trial and error. In almost all the companies I've invested in, continuous iteration and upgrading of their business, direction, and content are ongoing processes. If entrepreneurs cannot flexibly adjust and adapt based on external feedback from users, the market, and so on, it's akin to working in isolation. The ultimate result will inevitably be a mismatch between the product and market demand, leading directly to closure. Only entrepreneurial teams that are adept at listening to customer needs, remaining sensitive to market feedback, and seizing opportunities can find the most suitable path for their development. For example, Weee!, invested in by AMINO, started with community group buying business and, after continuous and painful business and strategic adjustments, is now the largest ethnic grocery store in the United States with a valuation of $4.1 billion. 

If you're an entrepreneur, don't fantasize about being at odds with the whole world, nor expect the world to adapt to your ideas. Otherwise, you'll likely end up with a broken head, financial ruin, and no returns. What's the point in that?

9. Be prepared to embrace pain; no entrepreneur can escape it. 

There isn't much to say about this point, as everyone understands the concept of seeing the rainbow after the storm. Entrepreneurial success can bring many rewards, but these are all compensations earned after enduring pain. 

If I must elaborate on this topic, it's probably this: if you're an entrepreneur, be prepared to constantly accompany pain. When faced with multiple choices, the most painful one is likely the most suitable answer. If you fear hardship yet desire to embark on entrepreneurship, then you're joking. The financial industry's law — potential returns match risks — applies in almost all scenarios. 

Pain is inevitable in entrepreneurship; that's the nature of the game. Either accept it or exit; that's all there is to it.

No matter how illustrious an entrepreneur, they must have experienced the darkest moments of pain. The story of Steve Jobs being ousted from Apple has been recounted many times, so let me share a story of a project I invested in.

Parker Conrad founded a company called Zenefits in 2013, which skyrocketed to a terrifying $4.5 billion valuation within just two years, making it the hottest star project in Silicon Valley at the time. However, due to the company's rapid growth, Conrad and the management team neglected the establishment and management of company culture, leading to a series of scandals. Eventually, Conrad, as the founder and CEO, had to resign. Zenefits' valuation was also slashed by more than half.

That must have been Parker Conrad's most painful moment. But he didn't give up. Two years later, Conrad started anew and founded Rippling, a human resources management SaaS enterprise. Fortunately, we at AMINO had the privilege of supporting his development as early investors. In May 2022, Rippling completed its latest round of financing, with a valuation reaching $11.25 billion. A miracle has happened again.

10. Are you ready to accept questioning from around the world?

Within an organization, there are hierarchies, and each level has access to different information. For frontline workers, the information they access should be accurate and detailed enough for them to efficiently and correctly complete their tasks. As you move up the hierarchy, the information becomes more complex, but the amount of information that can be extracted for management decisions becomes less. Due to this disparity in information, many times, the decisions made by the founder may not be understood by other team members. Questions from within the team will then emerge. 

If the company is developing smoothly, this issue is relatively easy to handle. However, once the company encounters operational problems, conflicts will erupt, and more and more questions will emerge like dominoes falling one after another. The team's questioning, family's lack of understanding, investors' denials, and even the founder's uncertainty about their decisions will all become huge mental pressures, becoming the straws that break the camel's back.

The feelings of loneliness and pain mentioned earlier for entrepreneurs will be further reinforced in this situation. This is a significant psychological challenge for anyone. If an entrepreneur can calmly face these challenges, then in my view, they possess one of the foundations to convince me to invest in them. Such individuals are extremely rare and often achieve remarkable accomplishments.