Entrepreneurs are like water

Entrepreneurs are like water: in Australia there is a great shortage of both--but that’s not what I mean. Entrepreneurs have the unique ability to flow around obstacles, and always find the way through to success. Many, many good business people are more like stone, and in many cases being stubborn and inflexible in a negotiation pays off--I know people who have listed their houses at outrageous prices, waiting three or four years for the bigger fool to come along and pay the price. However, that victory comes at a cost--time. Entrepreneurs know that time is the most precious resource (like water). Water will always find away around inflexibility, and in the end water will wear away the stone, but in the short term it will simply flow under, around or in between the cracks and get to its goal faster and with less hassle.

I am in the middle of a difficult negotiation with a large Chinese state-owned enterprise as I write this, and trying to help a startup do a deal with them. Imagine the cultural disconnect in every dimension--small vs. large, US vs China, swift, innovative, agile technology, working in a large slow to move industry, with a very large foreign company where failure is often very very costly.

So far, the entrepreneurs involved have blown up three times; each time we have found basic disconnects on communication and misunderstanding, or lack of knowledge as to how deals are structured differently between the jurisdictions, to be the culprit. Now, of course, the Chinese are the greatest capitalists on earth--extremely skillful negotiators, and known for difficult, long, complex deal structures that evolve many times even after they are agreed and signed. It’s always a fluid contract in China. Which is another reason why entrepreneurs need to be like water. This basic attribute of China, which is so against the grain of western culture is endemic to markets, new technology, and the financing climate--these three elements are the most fluid of all and if entrepreneurs can't adapt quickly, they fail.

In this negotiation, one of the founders is having heartburn with the Chinese style of renegotiation, and being a little like stone--as in stonewalling the deal. While it does not pay to be too flexible in dealing with highly skilled negotiators (i.e., if you bend a little, they grow to expect a lot, so you have to yield a series of decreasing concessions to signal a clear end to negotiation) a stonewall with the Chinese, like the Chinese wall, leads to the Mongol horde at your gates, or at least not a very satisfactory conclusion for either party.

The other way in which entrepreneurs are exactly water is their ability to foster and nurture a deal. Investors thinks it’s the money that waters the seed, which has some truth, but nothing has the ability to deliver growth, raise money, see an opportunity and go after it like an entrepreneur….

The one area where the water analogy fails is that, unlike entrepreneurs, water flows downhill, sinks to the lowest level, tends to stagnate there. Although this fate can befall some unfortunate entrepreneurs generally they are headed in quite a different direction ;-)