Zuckerberg was an idea guy; Musk built his enterprises on his reputation. Which category describes you?
With a brilliant idea, any entrepreneur hypothetically should find it possible to achieve success. If you’re that entrepreneur, solving a major problem for a price that your target audience can afford, you shouldn’t have to worry about reputation at all.
But what if you start a business with a strong and preexisting personal reputation? Your idea could catch on faster, or you might have a chance to succeed even if your idea isn’t top of the line.
Aspiring entrepreneurs have the chance to build their personal reputation with a personal brand even before they launch a business. Or, they can work on crafting the perfect idea and let their reputation build itself. So, which approach is better?
Consider the following anecdotal and empirical evidence for each scenario.
Mark Zuckerberg. By now, you know the basics of Mark Zuckerberg’s entrepreneurial story. Facebook was a side project that started in a dorm room; it was a nifty idea that no one expected to one day support more than 2 billion users. Zuckerberg was a college kid with a strong idea and no reputation; he hadn’t managed any companies previously and certainly didn’t have much of a reputation in the entrepreneurial community. Still, when Facebook got its first million users, it attracted millions of dollars of VC and started growing into the behemoth it is today.
John Paul DeJoria. Here’s how important John Paul DeJoria’s reputation was to his success; he’s worth more than $3.1 billion, but you’ve probably never heard of him. Back in 1980, DeJoria was a door-to-door shampoo and encyclopedia salesman who teamed up with Paul Mitchell, with $700 and an idea, to eventually build a billion-dollar hair-care company. DeJoria would later create Patron tequila, though it could be argued that his reputation helped that idea to become a success.
Henry Ford. Henry Ford didn’t have a reputation when he started Ford Motor Company. He didn’t even have any savings. In fact, when he started his first passenger car company, his partners got frustrated with him because he was always tinkering to improve their designs, rather than putting an idea to market. He managed to scrounge up some investors for Ford Motor Company, and built the Model A and the Model T, both of which helped the company become a massive success.
Elon Musk. You probably know Elon Musk better than you know some of his companies. The co-founder of the Boring Company, Tesla and SpaceX Musk actually started with a startup called Zip2, which he sold to a division of Compaq Computers to become a multimillionaire. The idea was clearly good, but it was Musk’s reputation as an innovator and charismatic entrepreneur that helped his modern, cutting-edge tech companies find the audience and the public awe that they maintain today.
Good ideas that failed. It’s not hard to think of startups that have had good (and sometimes revolutionary) ideas that ended up failing, especially during the dotcom boom. AskJeeves was a popular search engine long before Google, and back in 1997, a site called SixDegrees emerged as the first prototype of the modern social media platform. So, what happened to these and other failed startups? Every failure happens for different reasons. Some companies are driven into the ground by poor management, but many simply can’t build up customer awareness in time to truly catch on. In any case, they cumulatively exist as anecdotal evidence that a good idea simply isn’t enough to be successful.
The revelations from Anatomy of an Entrepreneur. Research from the Kauffman Foundation supports the idea that reputation may be better than the idea itself for building a business. More than 73 percent of entrepreneurs in the survey credited professional networks as important for their success, and those who identified themselves as the children of entrepreneurs were more likely to become entrepreneurs themselves. The data also implied that people who are born into entrepreneurial communities, or those who are more ingrained in those communities, have a better chance of success than other people.
The bottom line
There are some interesting dynamics at play here. Certainly, it’s possible for a startup with a fantastic idea to become successful even if its founder doesn’t have much of a reputation; and some fraction of entrepreneurs with an established reputation probably won’t ever be successful unless they have a decent idea to build on.
However, founders with a pre-established reputation have access to far more resources, as well as a larger audience, both of which factors allow them to more easily find success with a new idea.
The bottom line is that both idea and the reputation are important if you want to maximize your chances of success. So, if you can, work on building your personal brand and reputation within your industry as you perfect your idea; succeeding in both areas will give you the best odds for eventual success.