Sep 14, 2010
“Have you quit your job yet?” This is the question that confronted MassChallenge founder John Harthorne when he approached business tycoon Gururaj “Desh” Deshpande for help in getting MassChallenge off the ground. Fortunately, Harthorne and his partners had quit their jobs to work on the startup. Deshpande replied, “Good. Then I can make some introductions for you.”
Entrepreneurship is a risky business. The bread and butter of entrepreneurship is convincing other people (be they investors, employees, or customers) to buy into your vision of how your product or service makes the world a better place. Harthorne, now the CEO of the MassChallenge startup competition, explains that before they can expect anyone else to take the plunge along with them, entrepreneurs need to show that they believe so deeply in their idea that they are willing to put their life and financial security on the line. There is something glamorous and gritty about the idea of being an entrepreneur that attracts people. The tension between attraction and risk raises questions: Are my ideas good enough to start a business around? Would I be able to find the resources I need to make a business work? Am I even cut out for the entrepreneurial lifestyle?
Fortunately for aspiring entrepreneurs, entering prize competitions offers a way to gain exposure to some key aspects of entrepreneurship in a hands-on setting. Many of the skills needed to be an entrepreneur can be learned through participating in a competition, but the consequences of losing in a competition are not nearly as severe as failing with a full-fledged venture. I spoke with Harthorne (who was also on the team that won the 2007 MIT 100K competition) about how prize competitions offer a valuable opportunity for people thinking about starting a venture to get a taste of the entrepreneurial life without risking life and limb in the process.
- Competitions provide a goal – A good competition is clear about what it takes to win. Many entrepreneurs struggle to come up with the right problem for their technology to solve or to define the next step to take to get their business off the ground. Competitions provide a structured template that entrepreneurship usually lacks.
- Competitions provide artificial urgency – Competitions give entrants a reason to act. The deadlines that a competition imposes force competitors to meet key milestones within a pre-determined timeframe. This is a crucial lesson for entrepreneurs who will one day have to meet goals defined by their board to raise a new funding round or to stay on the track to success.
- Competitions provide access to a network of people – One of the most important parts of forming a new venture is having access to the right people. A successful venture requires technical expertise, access to capital, and mentoring from people who have gone down the entrepreneurial road before and understand its pitfalls. A competition brings all of these resources together in one place. People are motivated to come out to activities that excite them, and one of the things that contests are great at is getting people excited. People who aren’t competing will still show up to a competition that interests them just to be around the atmosphere. They are generally very friendly and happy to network with contest entrants.
- Competitions provide access to passionate team members – Successful ventures need teams that are passionate about the venture’s vision. Competitions bring together contestants who are so passionate about the competition’s focus that they give their own time to participate. An entrepreneur can find great teammates by attending mixers sponsored by the competition or by reading internet message boards for it. Competitions also forge friendships between competitors, and your rivals today might be your business partners tomorrow.
- Competitions provide a known prize – Even when an entrepreneur does everything right, a new venture might not work out. The only way to know if there is a market demand for a product or service is to unleash it on the market. This is not the case with a competition. Entrants know that the competition’s sponsors value their solutions and that whoever wins will receive a predetermined prize. Of course, there will be many entrants competing for a limited prize pool, but competition also exists in new ventures.
It’s important to note that every competition is a little different. Not all competitions will offer all of the above benefits to entrants. Harthorne points out that the most important thing that an aspiring entrepreneur should remember when participating in a competition is to keep your eye on your own personal goal and not to let the competition’s format distract you. If your goal is to start a company, then be diligent about making contacts and taking advantage of feedback. If your goal is to learn-by-doing or to find a good team of people to work with, then make sure you enter a competition with a focus that interests you. By doing this, you can have a successful experience even if you don’t win. You will also get to sip the entrepreneurial kool-aid without having to drink it from a fire hose. Who knows, maybe you’ll like it and come back for more.