The Silicon Valley approach for building companies has become the main strategy taught at many business schools around the country. It goes like this: You create a prototype you can quickly test, preferably in the tech industry. You find a group of users and gain proof of concept. You raise capital and scale the business as rapidly as possible. You plan an exit strategy that may include going public or selling to an industry buyer. You shoot for a 10X return to investors. You make a lot of money.
I recently rode my bicycle from the west coast of Oregon to the east coast of Virginia and interviewed 100 successful entrepreneurs on Main Street USA. Not one of them followed the Silicon Valley approach. Rather, they found a desirable location where they wanted to live; they found a need in the community they were uniquely qualified to fill; they used a host of resources other than money to get started; they diversified their products based on intimate interaction with their customers, and they have become vital contributors to their communities. I present the many lessons I learned from this unique cast of characters in my new book Main Street Entrepreneur. Here are a few of my observations:
Start with a Clear Purpose
All of these entrepreneurs articulated a clear and powerful purpose for starting their business – and none of them mentioned money as a major driver. Rather, they started their companies to do what they love, solve a problem, provide awesome service, live in a more desirable location, create jobs, and give back to their community. A driving purpose for Gail and Will Williams, founders of Idaho Sowing for Sports, is to create jobs and a place of healing for people who have a difficult time finding work. This prevailing purpose gets them through difficult times.
Build on What You Already Know
Most of these entrepreneurs launched their companies in industries they know well, through working in the industry or being serious consumers of the products. For example, Nicole DeBoom had little experience in the apparel industry, but she was a professional triathlete for more than a decade. She started Skirt Sports to offer women more attractive workout clothing. Like Nicole, very few of these entrepreneurs jumped into something they knew little about.
Maximize All Available Resources
These entrepreneurs are masters of efficiency – they have a real knack for utilizing a host of resources other than money: they find mentors, cobble together used equipment, defer compensation, negotiate excellent terms, and partner with their customers. Amy Gardner, founder of Scarpa, found herself in a cash crunch during the last recession. She needed to pay off her vendors in order to acquire the coming season’s inventory. No problem. She offered her customers significant discounts if they would pay for upcoming purchases in advance. She raised $70,000, paid her suppliers and acquired her inventory.
Create Multiple Streams of Revenue
Once the core business is up and running, most of these entrepreneurs pivot to related opportunities and diversify their income streams. They don’t chase every shiny thing that presents itself, but stay within their skills and resources. Benny and Julie Benson, founders of Energyneering Solutions, started designing biogas power plants; next they began building these plants and creating systems to manage them. Eventually they purchased the airport in Sisters, Oregon because they were flying around the country so often. Multiple revenue streams make companies less vulnerable to a single product or service.
Serve the Broader Community
All of these entrepreneurs give phenomenal service to their customers – the lifeblood of their business. This creates a tribe of loyal followers who rave about the company. Equally important, these business builders are heavily involved in giving back to their broader communities. They are supporting schools, mentoring students, aiding the needy, remodeling churches, building soccer fields, helping with medical bills, etc. I saw this over and over again. This generosity endears the community to the company which aids the success of the venture, even though this was not the intent of a genuine desire to contribute.
In sum, the Silicon Valley approach to business building is super; it leads to remarkable innovations and thousands of jobs. But not everyone can create a Facebook, Google or eBay. My crazy bicycle ride across America confirmed that just about anyone with a good idea can build the kinds of businesses I saw all across the country. But it requires passion, hard work, tenacity, value creation, exceptional service, flexibility to change, and community building.
Image credit: CC by Michael Dougherty