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Beloussov - "Better to be a Businessman than a Visionary"

0 21 January 2014

Sergei Beloussov is CEO of Acronis, co-founder of Rolsen and Parallels and a senior partner at Runa Capital. He wrote this article (in Russian) for Hopes and Fears.  

Recently it seems like more and more projects are facing closure, and serious problems at well-known Russian projects PinMe and Displair have come to light, forcing them to either change their business model or scale down significantly. I'm not surprised, and I'm sure that this year will bring many similar stories.

Part of the problem is that startupers too often view raising investment as their main goal and mark of success, but they fail to think about their business. This usually leads to disappointment. Hopefully the last few bad examples will help entrepreneurs to think carefully about what they’re doing and why they are doing it. 

Once, not very long ago, the technology industry was something progressive, the tool of choice for people wanting to change the world. Almost all the new technology coming out was new and revolutionary. But the industry has changed and continues to change. This, in my opinion, is normal. 

The IT industry accounts for 10% of total world economy – it’s massive. Now being revolutionary isn’t enough, and it might even be unnecessary. The main thing now is to be pragmatic; to reduce costs and increase revenues. IT has become a normal business even though many still do not understand it. Young entrepreneurs think that IT projects should be inspiring and bold. This is not true. 

No-one asked the man who discovered how to produce bolts: Why is this necessary? Will it change the world? Who cares! It’s a good business - bolts are useful and so can you’ll make a profit. This is the logic of a normal businessman.

Imagine a businessman from a “normal sector” who thinks - “we’re currently earning a million. In a year we’ll make 3, then 10, 20, 50. But why? This isn’t a breakthrough, a revolution”. It sounds funny - in reality nobody thinks like this. The tech sector is no different from any other. There are loads of possible niches for establishing a business - not a revolutionary one, but a successful one. 

For example, consider Acronis; a data back up company. It’s small and not strategic, it’s probably not a breakthrough into the market, but it has every chance of one day turning over$100 million. It’s a good business idea and there are many like it. Non-cloud backup services might not be “cool,” but people will be using them for at least 20 years, and the company will be earning all that time. In IT there are so many similar niches. 

The industry is changing. Entrepreneurs can be divided into dreamers and businessmen. The former have had their day. Now I’d recommend founders to start not “cool startups that change the world”, but to find solutions that improve what already exists. There are plenty of examples. 

Take Rocketbank. Entrepreneur Victor Lysenko worked in Groupon and started to create this convenient bank now used by many people. And yet, it is not a revolution at all. IT needs ordinary entrepreneurs to that focus on ordinary businesses, not dreamers. 

This is happening already. The tech industry is much more pragmatic than in used to be. This is normal for almost any industry; once it was considered cool to make cars and TVs, but now it is simply called business.

It wouldn’t be fair to say that there shouldn’t be visionaries who want to change the world. Of course there should. It’s just important to understand that visionaries make up 1% of the total number of entrepreneurs. We shouldn’t be thinking about our dreams when it comes to business, but rather how we’re going to make $10 from $5.

This means that the time for puffed-up capitalisations and enormous investment rounds has passed. It will return, but for a new trend. For now, we should just be thinking about how to do good business. 

Source: Hopesandfears

Top image via Shutterstock.

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