The Mind Traps That Entrepreneurs Must Avoid
How you perceive advice and business models could determine your success or failure.
Many startup founders have mentors who they talk to and get advice from, either through personal contacts, incubators or investors.
But taking advice from anybody, despite their good intentions, can sometimes create mind traps that confuse or create uncertainty on what to do for the entrepreneur.
Here’s why.
About a decade ago I hired a cab driver to show me around a mountainous area in Taiwan when I was on holiday there. As we roamed the nearby area for the day, he shared with me his life story.
He was 60 years old when I met him and had spent his entire career driving people around. His kids were now grown up. His son is an engineer and his daughter a doctor. He was contented and semi-retired.
His wife had always managed their family finances. Being a traditional family, he worked to make money and then gave it all to his wife who was a full-time homemaker. She brought up the kids and took care of the household budget.
Now that his children were doing well, it was time for them to take holidays and enjoy their space and time. They had ample savings and their kids were filial.
His one piece of advice to me — “In life, one must always have a plan.”
When I was around 27 one of my peers quite unfortunately suffered from cancer. She was a banker at a top firm and was recently married and just had a baby.
Her condition deteriorated rapidly and became terminal. At a time when all of us were at our prime and working long hours to establish our career, she passed away, leaving behind a word of advice to all of us — “Seize the day. Life can be shorter than you planned it to be.”
Looking back, neither was wrong. Each saw life through their own experiences and the hand they were dealt.
But that is precisely the problem with advice. Most are given from a perception bias based on personal experience. It often had to do with what the person was proud of accomplishing or regretted.
Many years ago I was also introduced to a stock broker through a friend. He was in his 40’s and had been in the industry for 20 years. At that time I had been brokering myself for about two years.
Over a casual conversation I asked him for his advice on how I should perform better as a stock-broker. Among all the highly successful people I’ve met in my life, what he said I will always remember.
He said, “I can share with you a few things but don’t compare my experience with yours. I have my experience and you have yours. My 20 years isn’t necessarily superior to your two years.”
Most people who are accomplished or senior in age tend to want to ‘preach down’ to younger folks. His take on ‘experience’ was very different indeed.
Part of the reason why he felt that way was because he made his money before the internet era. There was no online stock trading yet. The broker’s commission was much higher and the market slower. Information wasn’t as easily available. So to him the industry I was dealing with was very different from the one he succeeded in.
The friend who introduced us told me quietly on the side later what the other reason could have been. This gentlemen was unfortunately stricken with a condition that required him to carry his own urine bag around, strapped under his clothes.
Perhaps faced with a major health condition, he was far more humble than the average elder, knowing that pride and ego in worldly accomplishments were all very transient compared to the sincerity and friendship one could offer, no matter the status or age difference.
These episodes in life taught me one thing. Advice given by anyone is always subjected to two mind traps: perception bias based on personal experience and irrelevancy due to changing times or market conditions.
About 11 years ago, I went to work briefly for a friend’s father in Melbourne.
He was quite successful by all accounts, owning a small empire in multiple businesses — land and property development, budget hotels, gasoline stations, LPG gas supply and distribution, 2nd hand car dealership, a restaurant, and even a hair salon!
His little conglomerate had two key features. They were all managed by family members or relatives, and they all worked on the lowest possible cost premise to maximize profits.
Sitting in a high-end tea cafe in Melbourne city one day, he looked around the place and shook his head. He remarked to me that this was such a bad business model. Their renovation cost had to be sky high and they probably had very few customers because their tea was so expensive.
Yet the place did very well during the six months I lived in Melbourne.
On the other hand the budget hotel I had just helped him open in Melbourne were facing multiple issues due to poor workmanship and materials, as well as hiring difficulties from budget constraints.
Both businesses were still around last I checked.
Steve Jobs was well known for hiring only ‘grade A’ talents and emphasizing on quality and branding. Richard Branson’s business philosophy when he starts a new company is to look for the best man to be CEO, and then give him sufficient incentive to perform. His crazy PR antics like running naked on a beach is even more well-known.
The founder of Uniqlo became the richest man in Japan by sourcing for cheap OEM manufacturing in China and selling basic clothes in different colors instead of fancy designs. Daiso, another big Japanese retail chain, built a thrift store empire across the world with more than 3,000 stores that sold every item inside for a couple of bucks. One could argue that they spotted the right opportunity at a time when Japan’s economy was troubled and people were budget conscious.
I could go on, but the point I’m trying to make is, business models vary based on personal style and actual demand conditions. Don’t get stuck in yours or anyone’s preconceived notion on how a company or its product should be.
If you talk to successful startup founders, you’ll find that more often than not at some point they had to pivot their product, pricing or branding. And the best way to determine this should be client feedback or actual market demand rather than any mentor’s advice.
Credibility in business depends largely on success and nothing else. If whatever you do doesn’t make money, nothing you say will matter. People will just treat it as sour grapes or unsubstantiated fluff.
A young man from the audience once entered into a heated debate with Jack Ma in a televised panel discussion. When he refused to give up and kept pressing his point, Ma turned around and said to him, well I’m Jack Ma, the founder of Alibaba, what have you done to back up your opinion?
If you make it you’re a hero. If you don’t, you’re zero, no matter what you say.
Advice can be useful, especially if the person is from the same industry. A friend of mine who is a unicorn founder once said to me, “I know how to run my business, but I don’t pretend to know anyone else’s.”
Network rather than just talk is even more useful. The ability to introduce you to potential clients or partners will aid any business more than theoretical advice. Choose your mentors carefully.
Listening to concepts and theories can only bring you so far. Much of the journey depends on you doing it yourself. Someone points you on the right path, then it’s up to you to make it to the destination.
Advice is two letters short of vice. Don’t get addicted to soliciting advice. With many mentor schemes out there, founders can be easily overwhelmed by advice. Some of the best startups in history, like eBay, were ridiculed by the people who first looked at it.
Harry Potter was rejected by more than 50 literary agents before a small publisher finally agreed to sign it. The author, J.K. Rowling, is now the richest writer alive. Sometimes even the experts can be gravely wrong!
Do your homework and then go for it. Equip yourself with the rights skills, hire the right talents or find the right partners. The rest is hard work, your innate talent, and some measure of luck.
At the end of the day, no matter what anyone tells you, the proof of the pudding is in the eating!
The Mind Traps That Entrepreneurs Must Avoid
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