With a brilliant idea, it should be hypothetically possible for any entrepreneur to be a success. If you’re solving a major problem for a price that your target audience can afford, it shouldn’t matter what your reputation is.
But what if you started a business with a strong preexisting reputation? That 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 reputation with a personal brand 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?
Let’s take a look at some anecdotal and empirical evidence for each side.
· 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 haircare 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 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 a 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 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 startups? Each failure has a different story. Some were driven into the ground by poor management, but many of them couldn’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 Kauffman Foundation’s Anatomy of an Entrepreneur. Research from the Kauffman Foundation supports the idea that reputation may be better for building a business than the idea. More than 73 percent of entrepreneurs credited professional networks as important for their success, and children of entrepreneurs are more likely to become entrepreneurs themselves. These data imply that people who are born into entrepreneurial communities, or those who are more ingrained in those communities have a better chance of success than those outside of them.
The Bottom Line
There are some interesting dynamics at play here. It’s certainly possible for a startup with a fantastic idea to become successful even if its founder doesn’t have much of a reputation and entrepreneurs with an established reputation probably won’t 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 bigger audience, which allows them to more easily find success with a new idea.
The bottom line here is that both the idea and the reputation are important if you want to maximize your chances of success. If you can, work on building your personal brand and reputation within an industry as you perfect your idea; succeeding in both areas will give you the best odds for eventual success.
For more content like this, be sure to check out my podcast, The Entrepreneur Cast!