They say hindsight is 20/20. How did our ten person startup go from having what seemed to be:

  • the right group of people
  • with the right kind of ideas
  • generating millions of dollars of revenue per year
  • making a big splash in the niche where we focused

to ending in a frustrating death in 4.5 years? Like anything, there were a variety of factors, but I would like to focus on one in particular.

The E-Myth Revisited by Michael Gerber

Michael Gerber, in his book “The E-Myth Revisited,” notes that most small business owners are Technicians who have worked for someone else and been frustrated that “there must be a better way.”

The Technician is the doer and the maker of the business world. They possess a certain skill set and are usually very gifted at what they do – programming software, baking pies, building furniture, etc. They are the meat and potatoes behind every business – without the Technician, the majority of the goods and services that companies offer would not exist.

When Technicians reach a certain point, where the frustration gets high enough, and the resistance to change gets low enough, they have an “entrepreneurial seizure” and decide to start their own business centered around their particular technical expertise. In doing this, Gerber says that they have made the fatal assumption that “if you understand the technical work of a business, you understand [how to run] a business that does technical work.”

The Entrepreneur is the second role that Gerber describes. This is the visionary, the dreamer – they live in the “what if” world of ideas and future possibilities. They are the ones that drive the business forward. They give momentum to great ideas and usually have the personality to put those ideas in front of the right kind of people or investors.

Many startups fail because even though the Technician had a great idea (the entrepreneurial seizure), they themselves are not entrepreneurs. A Technician thrives on tasks and projects and needs to focus their energy on doing what they’re good at – programing, baking, and building, etc. The energy of the Entrepreneur is needed to drive the business forward, to vision cast, and to create new opportunities.

Our startup originally had one person as the designated Entrepreneur, and the rest were Technicians doing the various jobs. As we added more employees, the “founders” came to think of themselves more as “owners” and “entrepreneurs,” without understanding the distinction.

Interestingly, Gerber shows the roles of Entrepreneur and Technician aren’t enough to build a viable business. There is a tension between these roles because the Entrepreneur loves to talk ideas, and the Technician doesn’t want to talk, they want to do. This is where the next role comes in.

The Manager is the much needed go-between that translates the Entrepreneur’s ideas into concrete action items for the Technician. This role enables the Entrepreneur to do what they do best without frustrating the Technician, and it allows the Technician to do what they do best and get to work on clear action items.

The Manager also keeps the Entrepreneur grounded when it comes to the scope and limitations of the team, budget, and timeline, while simultaneously putting the right kind of pressure on the Technician to meet the appropriate deadlines.

Without the Manager, the Entrepreneur with technical leanings will never be able to focus on one thing long enough to be productive, and the Technician will be overworked and understaffed, or even worse – will have no work at all because no clients have been found.

Our startup essentially tore itself apart because we didn’t even realize we needed the Manager role as part of the company vision. Don’t make the same mistake! The Entrepreneur, Technician, and Manager roles must be clearly delineated for the longterm success of a company.

“Though one may be overpowered, two can defend themselves. A cord of three strands is not quickly broken.” — Ecclesiastes 4:12