Three Things Even MBAs Get Wrong When Starting A Business (and Two They Get Right… Sometimes)

By and by, I could have bought a track car with that money and saved myself a few steps. I lack imagination sometimes. Instead, I convinced myself that first I needed the MBA; then I needed the startup; finally — when it was justified — only then the fancy car.

So I took the $100k and went to school and spent mid-life bettering myself with education. Don’t mistake an MBA with a sound, grown-up decision. It can be as frivolous as a track car that only gets driven on Sundays around the neighborhood. I don’t think I started the MBA to buy a fancy car. I do think I started the startup with Aman and Alberto afterwards for one. But then why start a business if not to make money?

The three of us came together because we liked how we worked together, liked our idea, and thought it time to execute on all the little practice lessons we had done in class. We thought the time we spent in school — now over — devoted to time spent on some money-making scheme would be an equivalent exchange of time and effort. After all, we had completed three courses on startups. That alone should put us in a better space than those who hadn’t, right?

Wrong. We learned nothing. Every happy family is alike; but every unhappy family is unhappy in its own way. We learned about happy families in MBA school; successful companies; companies with revenue, customers, and products. We were going to start an unsuccessful company like so many before us: no revenue, zero customers, and a whole bunch of untested and unproven products.

As things go, we three were unremarkable MBA students, but we were good socially and smart enough to keep up with one another. Success requires good grades, a good network and some basic smarts. I don’t know where I heard that; I know it was during the MBA years. It might have been a fortune cookie. It sounded good and it stuck. We had two out of the three boxes checked in my mind, so off we went with an idea and a vision. We would retrofit smart sensors on dumb gym equipment to count reps and motion. It sounded off-the-shelf enough to be viable. We had data from a downtown Toronto gym that was recording the selfsame data with just a pad and paper for hundreds of clients. We could solve that problem for them with some effort, make some money, and have a blast doing it. Aman had the idea and the data. I had the technical know-how on how to get things done, and Alberto had the financial background to get us a workable business. We set sail on this unsinkable ship expecting profitability in 24 months.

The Idea in a sentence: gyms buy the hardware to retrofit existing exercise machines, users use the machines and our software, and we provide analytics back to users and gyms.

Immediately this approach had a problem that we refused to address and instead got complicated on. Our users were the gym members, but our customers were the gyms themselves. We talked about increasing retention and reducing attrition. We would talk about it until the bitter end, when we finally had to choose. We needed gym members because without a user base (gym members), customers (the gyms) would not be interested in doing business with us. When it became a choice between the gym or the gym member and given the limited resources of this one, that one, or none; we chose none. And it ended, but our biggest problem wasn’t that, it was us. Let’s not spoil the ending. First, what worked.

Two Things That Worked

1. We had a good partnership. Starting a business is like starting a family. First you choose who you marry, then you have some children who may or may not like you and finally you die and the children squabble over what’s left of your life’s work. Choosing a business partner is at once rewarding and stressful. They will be around a lot. They will have an equal say in all the important decisions. You will disappoint them and they will disappoint you. Ideally, you will eventually hire employees and then the employees inherit your efforts and build on what you started. At times, I complained to my actual family, but I never once regretted starting a business with Aman and Alberto. We got along and we stayed respectful, professional, and friendly. A startup is still a job and I can’t imagine starting a job with a toxic partner, peer, or boss. We got the getting along and having a good relationship part of the business absolutely right. When starting anything make sure you get along with your partners, be it a family or a business.
2. We had a workable idea. Starting a business is also like writing. You pick a topic, spend countless hours toiling away, first practicing just being in front of a keyboard getting the letters down, then working on the edits. Finally you post it and it gets a single solitary like from some random person by mistake. You need to believe in the idea even when no one else does and when no one else will. In business, as in writing, the quantity of the efforts may not lead to a qualitative piece at the end. The topic was not at fault; it was the execution. For us, the fitness app market was already becoming saturated and the competition had time and money advantages that we did not have. Those challenges could have been overcome, if it were not for the other things we got wrong. The quality of our idea didn’t really matter in the early stages, and there was enough there to produce quantity from it. Fitness apps have emerged since those early days indicating that there remains opportunity in the space. We had something.

Three Things That Did Not Work

Aman, Alberto, and I met in MBA school. Aman had data from a local downtown Toronto gym and an idea. I had technical know-how and Alberto had the finance background. What we did not have was industry-specific knowledge in one of three key areas that could have saved us a lot of effort.

1. The Credibility Problem. We had no credibility in the fitness space. Two of us worked as tech consultants and the other as a banker. We had zero credibility in the fitness industry. We needed to establish credibility in the business we wanted to enter so clients would take us seriously. We tried a few things like connecting with kinesiology professors and recruiting the gym the data came from. At the end of the journey we still had a credibility problem in the fitness industry and nothing to show for any enhanced expertise in the space.
2. The Technology Problem. We lacked direct knowledge of the IoT space. We spent time learning how sensors worked, what sensors to use, and talked ad nauseum with people. They told us we were going the wrong way and in for a lot of challenges with the approaches we were taking. We lost time becoming competent in technical spaces we lacked expertise in.
3. The Build Problem. We were not developers. More than not having an IoT background, not having the technical background in mobile development set us back. We were again starting at the very beginning while others had tools, knowledge, and a list of previous work to inform them on how to solve mobile app challenges.

Solving for any one of the items would have kept our business afloat beyond where it ended up. Solving all three would have made us a success. Bootstrapping a project is fine, but as a founder, you should be bringing something to the table to alleviate costs. We lacked knowledge in three key areas we desperately needed and it was our undoing. Sure, the three of us got along, but would we have been better served with Edgar who had a lot of background and experience with sensors? Would we have been better off in taking Andrei from the downtown gym into the fold and building out the business with a fourth man and an established gym? Yes, we got along, but did we have the right skills for the job? The answer, unfortunately, was no. What we had was too many overlapping skills, and, yes, it made the business relationship easy; but it also made us unprofitable and expensive. If I had to do it again, I think we needed to bring in expertise in one of the core pain points sooner and more fully. We spent too much time learning like good MBAs and not enough time doing like good entrepreneurs.

Questions to Ask Yourself

When starting out with your business and if you’re not flying solo (which is a challenge deserving its own expert self-help article), ask yourself the following questions:

1. Can I work with them?
2. Can I disagree with them?
3. Can I be wrong or disappointing with them?
4. How do they handle being wrong or being disappointed?
5. Do I need them or do they need me?
6. Am I going to regret this?
7. Are they going to regret this?
8. Will our relationship survive a business?

But also remember to ask yourself are they the right fit and would you hire them for the role given an opportunity to interview other qualified candidates?

1. Do the backgrounds and skills complement each other or is there a lot of overlap?
2. Do we have to learn a lot of things we don’t know?
3. Can our existing knowledge be targeted at the industry?
4. Do we have industry knowledge?

Money can solve all problems, but a finite amount of money can only solve the problems you chose. The rest becomes up to you and your team to deal with.