It was only after spending the past couple of decades of my career working at big companies that I decided to become an entrepreneur. My team and I are now in the midst of building Ellevest, a digital investment platform for women. As I’ve made that transition, I’ve gotten a lot of advice, all of it well-meaning, but some of it pretty bad.
Other entrepreneurs can surely relate to the surplus of people offering their unsolicited counsel. Usually it’s easy to tell which input to dismiss, but sometimes even bad advice can leave you second-guessing yourself. Here’s the worst of what I’ve heard and how I’ve pushed it aside.
Don’t start Ellevest, Sallie. You don’t want to limit your business to a niche market.
Women? A niche? Seriously?
Don’t start Ellevest. If you do, you won’t be able to come back to corporate America after you’ve left it.
First of all, so what? Not every entrepreneur leaves a career in a big organization before launching their own business, but all need to do some serious thinking before striking out on their own. Choosing to take that plunge is a huge decision either way, and it’s one that nobody’s had to reckon with more deeply than entrepreneurs ourselves. By that point, we’ve already determined that the benefits outweigh the risks.
And second, this pessimistic advice casts the notion of expanding your skill set and experiences as something to be wary of. It isn’t.
Don’t start Ellevest. You’ll fail. Other people have tried similar things, and they’ve failed. If it were possible to get women to invest, one of those other guys would’ve succeeded already.
It’s true that the failure rate for startups is high, but self-defeating logic like this would put an end to innovation itself if every would-be entrepreneur followed it.
Okay, now that you’re insisting on starting your company, raise money at a high valuation, because you can.
That may work–at least up until it’s time to raise the next round. At that point it might turn out to have been a terrible decision. And this doesn’t take into account a more important factor (I would say a much more important factor), which is who the investor is, whether they buy into your startup’s vision, and what their time horizon looks like.
I took money at a lower valuation than was on offer by others in order to partner with the group that I felt like was the right lead investor for us, Morningstar. Follow the money at all costs and you might wind up regretting it.
You know everybody in the investing industry. Go hire the best of them.
Yes, I do know a lot of folks. But my old industry has been successful in doing things a certain way–and if that way worked well for women, it would have already worked well for women. So I hired just a few people from my old industry and spent a whole lot of time with them to make sure they could embrace a different approach. But I hired many more from outside the industry, in order to bring new thinking to bear on the issue of how to build an investing experience that women will embrace.
Entrepreneurs need to guard against the type of insular thinking that overemphasizes existing networks, which can lead to new companies repeating the mistakes made by older ones. If you aren’t committed to diversity of thought, you have no business launching a startup.
You know the answer to this, Sallie, given your experience in the business. Move fast, build the product, and get it out in time for the new year.
Going in, I had about 10 hypotheses as to what holds women back from investing. I held each one as strongly as the others. My team and I committed to testing them all; my new mantra is, “Why debate something when we can test it?”
We started down one road–based on the idea that women would want to learn about their investing style before investing–and quickly changed course when women told us that wasn’t the case. Another hypothesis we nixed: That women would want to be part of an investing community.
So we won’t launch by the new year, but we strongly believe that co-creating this platform with the women themselves will drive a much, much better product and experience.
That’s a lesson that’s easy to miss if you fear someone else beating you to market or are too focused on drumming up funding. Knowing your customer inside and out is mission-critical, and it takes time. It’s impossible to hit on the insights that will ultimately decide your company’s fate without putting them to the test—literally—even if that takes longer than you’d have liked.