Ever feel you're not super smart enough but also not dumb enough to start a really successful business?

Phil Mickelson, the golfer, has a saying, to be successful on the PGA tour, you need to be either really smart, or really smart. Sometimes I think the same in business.  

Title basically says it, you ever feel you're in the middle. Basically, not Jeff Bezos or Musk level intelligence, but also just smart enough to understand risks and all the ways your business could potentially fail. 

For example, I've been listening to the podcast "how I built this" about companies and their founders. Recently, I listened to the one about Stacy's Pita chips, the lady who started it (Stacy), just didn't seem that busy savvy. The whole time I was listening to it I thought, I that was risky, that part was dumb, that part was risky and dumb. 

Also, (not hating on women only businesses here), but something like Spanx. To me, its just almost dumb idea, almost a fraud idea (concept: hey, are you 50lbs overweight? want to look 48lbs overweight?). And when I say almost, I mean, I respect hustle, and definitely think if people will buy something why not sell it. Just more reflecting on the middle ground. 

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Comments (49)

Oct 21, 2021 - 11:11am

You don't have to be super smart to start a successful business.

You just need the right product at the right time and to treat employees and customers well. It's not rocket science.

I think it generally helps to have a business/finance background in order to maximize profits and safely grow while having the same quality. But, having a business/finance degree isn't required.

"If you always put limits on everything you do, physical or anything else, it will spread into your work and into your life. There are no limits. There are only plateaus, and you must not stay there, you must go beyond them." - Bruce Lee

  • 2
Oct 21, 2021 - 11:11am

Maybe in tech or finance, but do you really think the founder of the 17th restaurant in town or the 7th gym in town is that much smarter than a competitor who closed?  I think it's just luck and probability.

Oct 21, 2021 - 11:29am

Thats true, but that's also what I mean. 

For example, the Stacy's Pita Chips lady got a degree in psychology, found out she didn't want to do that while working, moved to hawaii with her boyfriend, moved back to Boston, and begin selling pita sandwiches out of a food cart. 

What I'm saying is, I'd look at the 7th gym, or 17th restaurant, and think, I'm not trained in any of that and there are others, why will mine work. Its one of those thinks, I'm sure for every STacy's Pita chips there are hundreds of failing businesses in the same industry. 

Oct 21, 2021 - 1:08pm

Founder of Clif Bar made snacks at his moms house and sold them in ziploc bags at traithlon competitions.

One note is these people are authentic. They didn't enter this business, at least originally, to develop a brand, leverage it for margin, target a niche, and be acquired, etc. They just did something they know and something they love - that is as key as anything in your own business 

Oct 23, 2021 - 10:40am

If you just want to sell things, get a business license and form an entity, acquire any other licenses you may need to sell your product or service. Being a small business owner can be a lot of work, especially if you are running a food business and you have family working there or are paying minimum wage.

Consider the pretzel cart, he's out there wheeling his pretzels making like 30k, but it's his cash profit after expenses. A small business does not need to make millions, and for many in America it was a form of self-employment when there were no other options. The pretzel cart is a one-man operation, and honestly is a perfect model of a successful business in its most simple form.

In finance you have a man selling legal contracts to obtain other contracts to acquire abstract objects of ownership and other goods. It is the heart of capitalism itself, of commerce and money. It is immense and complex, but every business in this industry operates on the same principle as the man with the pretzel cart. Generate revenue, cover expenses, collect profit. It's not like you are trying to land a rocket on the moon or discover the higgs boson, you really only need arithmetic to sell pretzels.

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Oct 22, 2021 - 5:06pm

This is what I was going to say. You may not start a business that ends up in the S&P 500, but I know plenty of regular folks who aren't insanely intelligent that started things like construction companies, real estate, own multiple gas station or food franchises etc. that do very very well for themselves.

Most Helpful
Oct 21, 2021 - 11:37am

Bezos and Musk aren't some kind of super geniuses. They were at the right place, at the right time, at the right age, with the right idea and right financial resources / network. Their ideas were scalable, had a clear market fit, first-mover advantage, etc. etc. It's like winning the lottery, you can't replicate all that. It's more about having foresight, taking a chance, and most of all having luck. It's picking two random pieces out of a one-billion-piece puzzle and they fit together. 

I guess what I'm saying is success on that level is not about being smart; being smart is a pre-requisite. It's about having the stars align perfectly in every way for you to become the once-in-a-century success story, ala John D Rockefeller, Andrew Carnegie, Henry Ford, etc.

If you want your run-of-the-mill success, it's much more common and easily attained.

Oct 21, 2021 - 1:16pm

I don't think being smart is even a prerequisite. You just have to know your product well and work hard. Being smart probably helps though.

"If you always put limits on everything you do, physical or anything else, it will spread into your work and into your life. There are no limits. There are only plateaus, and you must not stay there, you must go beyond them." - Bruce Lee

Oct 21, 2021 - 10:52pm

Amazon largely sells new items - eBay sells used.

"If you always put limits on everything you do, physical or anything else, it will spread into your work and into your life. There are no limits. There are only plateaus, and you must not stay there, you must go beyond them." - Bruce Lee

Oct 22, 2021 - 11:55am

To your point, I would argue that the ratio between luck and hard work for the "billionaire result" is 10:1.

In that same breath, if immense financial success is a goal "Fortune favors the prepared mind."

Alright alright alright

Oct 22, 2021 - 12:12pm

This is very true. People forget how important luck is in determining success. Do you think the early investors and employees of Amazon conducted detailed market anlaysis and came to exact conclusions about how it was going to take over the world and decide to invest in Amazon instead of bookstore123.com? Maybe a few people saw that but most just got lucky picking the right company. Its the same with crypto. Early bitcoin investors like to paint themselves as visionaries when most of them just happened to be on the right obscure internet forum at the right time reading about how it will "change the world" and thought lol may as well put some money in. 

Its also about taking insane amounts of risk and getting lucky with it. Like in the original post, dumb people can become successful even after doing a lot of stuff wrong just by getting very lucky. Any rational smart person wouldn't have taken those risks so they don't become as successful. It's similar with Musk and Bezos. There's so many times where Amazon/Tesla/SpaceX were close to failing but Bezos and Musk kept going despite the risks. Any rational smart person would've just sold and got out because the risk reward profile wasn't worth it. 

Oct 22, 2021 - 2:24pm

True 

"If you always put limits on everything you do, physical or anything else, it will spread into your work and into your life. There are no limits. There are only plateaus, and you must not stay there, you must go beyond them." - Bruce Lee

Oct 21, 2021 - 11:55am

There are more dumb successful business owners than smart ones for this exact reason.  People who are just smart enough to understand the risks are too big of pussies to start the business.

Take a look at the guys who started Charter Communications.  Most people here would think they are stupuid hilbillies.  Well turns out they started one the largest communications companies in the country. 

Oct 21, 2021 - 1:02pm

ironman32

Phil Mickelson, the golfer, has a saying, to be successful on the PGA tour, you need to be either really smart, or really smart. Sometimes I think the same in business.  

Title basically says it, you ever feel you're in the middle. Basically, not Jeff Bezos or Musk level intelligence, but also just smart enough to understand risks and all the ways your business could potentially fail. 

For example, I've been listening to the podcast "how I built this" about companies and their founders. Recently, I listened to the one about Stacy's Pita chips, the lady who started it (Stacy), just didn't seem that busy savvy. The whole time I was listening to it I thought, I that was risky, that part was dumb, that part was risky and dumb. 

Also, (not hating on women only businesses here), but something like Spanx. To me, its just almost dumb idea, almost a fraud idea (concept: hey, are you 50lbs overweight? want to look 48lbs overweight?). And when I say almost, I mean, I respect hustle, and definitely think if people will buy something why not sell it. Just more reflecting on the middle ground. 

Sorry, no because I have started a business and I work on it every spare time that I get. Working for someone else is OK for some but not for me.

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Oct 21, 2021 - 1:05pm

With companies featured in How I Built This you do get a good degree of survivorship bias. Also, I feel people in finance and similar industries are pretty risk averse (take a in demand job that pays a lot, invest and save aggressively, etc.) - but no doubt intelligent enough to run a business. The difference is that the average joes who are successful in entrepreneurship are either fine with that risk or really aren't good at quantifying it 

Oct 22, 2021 - 12:29pm

Yeah this is definitely true. The risk to reward ratio just isn't worth it if you work in a high paying industry and care about money. Like as long as you save and invest aggressiely you can retire with $10m which will afford you the same sports car and rolex as the guy who started a $100m business. Of course he can buy more sports cars and rolexes but at that point it doesn't make you any happier. Obviously for people who can't get a high paying job then the risk reward ratio becomes worth it to start a risky business.

This is also why people who are really successful entrepreneurs generally aren't obsessed with money or else they would never take on the risk, they have the be passionate about building something/changing the world. Lets be real if any of us on here managed to get $100m for selling PayPal like Elon Musk we are safely investing all of that and not risking it all on starting tesla and spacex.

  • Associate 2 in RE - Res
Oct 22, 2021 - 7:35pm

Implicit in the concept of Modern Portfolio Theory, which all finance students learn, is "don't be an entrepreneur".

Oct 21, 2021 - 3:15pm

reliably starting and running a business from scratch in a field thats not advanced as fuck is an aggregate of knowing basic economic concepts (think first year econ courses), having the capital and risk tolerance to make asymmetrical bets, people skills and brass balls 

Oct 22, 2021 - 12:12pm

Exactly, blue collar businesses and simple services are awesome.

Depending on the scale that you're working in, you may not be able to use your institutional processes and thinking. Because of this, I would emphasize the people skills as you will be leaning heavily on others at least in the beginning. Brass balls is the real differentiator IMO; most people here have based their life and decisions off a time-tested roadmap since college, and that map goes right out the window when you step off that train.

Alright alright alright

  • 1
Oct 21, 2021 - 8:06pm

It's entirely possible to run a successful, cash-flowing business while mismanaging it. Just look at your average HVAC, landscaping, or repair business. Do you think they have any idea how to properly manage working capital, plan for a market downturn, etc.? Probably not. That's why you have so much PE activity in spaces like this- there is just so much low hanging fruit when it comes to value creation.

Oct 21, 2021 - 8:44pm

It could be an HVAC chain.

"If you always put limits on everything you do, physical or anything else, it will spread into your work and into your life. There are no limits. There are only plateaus, and you must not stay there, you must go beyond them." - Bruce Lee

Oct 22, 2021 - 12:15pm

I remember talking to a LMM banker a year ago and there were a couple players rolling up these smaller HVAC companies and paying north of 10x EBITDA for them. 

Alright alright alright

Oct 21, 2021 - 8:49pm

Yes and no.  The types of businesses you listed have completely different types of capital management requirements than a traditional business does.  Can owners mismanage?  Sure, but I have seen a good number of PE roll-ups in these spaces implode on a regular basis.

Oct 21, 2021 - 10:04pm

This is because achieving hyper success in fortune fame and commercial enterprise has nothing to do with IQ or intelligence at least not as defined

as what it takes to become a neurosurgeon or a NASA scientist. It's about mastering sociology which doesn't reward all areas equally which is probably what you

call the dumb part because it is indeed of difficult nature to grasp.

There are plenty of millionaires in boring businesses that anyone with an IQ of 90-ish could've succeeded in.

I know a guy who owns a $3 million Bugatti Veyron Chiron.  For fear of being disrespectful to him or his family who I think highly of for their work ethic, they

are literally former food industry workers now in the agriculture and meat export business. You could even say they were basic farm hands at one point.

Here they are today living the good life.

Business is not about smartness or dumbness. It is about sociology and economics and connecting the dots.

The root of all income is based on giving a value and getting a value in return. Barter. This is because nobody gives you a dollar unless you give them something in return. The equilibrium is settled.

That means anyone who can fulfill what someone else wants (sociology part) while charging a price and capturing a margin (economics controls prices and costs) and keep it going (sociology again) is going to be a successful businessman.

The clever and genius part is overrated. There are plenty of authentic businessmen like Jobs or Enzo Ferrari or Ferrucio Lamborghini who were just good at making stuff people wanted and had no inherent interest in selling it off and cashing out. Apple, Ferrari, Lamborghini are spectacularly success companies.

Do you really think these guys could rival a Harvard MBA in academics or were Mensa candidates. They mastered sociology.

They engaged in commercial enterprise and made things that are valued high due to scarcity or rarity of what they supplied and they could defeat economics due to branding power. Prices of commodities like coal iron ore potatoes go down. Prices of Lamborghini at first hand sale never go down though they keep coming up with new models.

Do you think they are geniuses to do this with deliberate intent or they just coincided with all the forces it takes to make a venture successful and keep it that way ?

People tend to focus on extrapolating some level of intelligence quotient with financial success.  The truth is people are financially successful for various reasons.

A cunning person like Buffett will invest only in monopoly businesses which he has honed over insane obsession with understanding what makes a business a monopoly therefore controlling his financial fate and corporate's financial future.

How is this level of smartness better over being a perceptive fashion businessman like Bernard Arnault of Louis Vuitton Group or the Zara guy who know what clothes will be honest next.

It's just that one guy's success was the deliberate creation of years of practice whilst another's passion was coincidentally rewarded by the commercial dynamics of the world.

There are plenty of people that have so much knowledge about things like flowers, home decor or design, or chemistry or how solar panels work or how nuclear fission works.

None of them will ever make a buck if they don't indulge in barter which is the root of all wealth whether you're working 8 hrs a day selling your accountancy skills as an auditor or whether you own and operate an oil refinery.

 Some people  have innate talents like creativity, producing things for commercial trade, personal enthusiasm for being  a relentless salesman/showman in their creation.

Musk and Bezos are freakshows and horrible examples. They all had passions and businesses which had mass commercial relevance and markets and they also mastered financing and distribution marketing and had a personal obsession on building the temple of modern wealth which is a corporation.

I highly doubt the richest food company family on earth the Ferrero Rocher group people are even remotely close to the intelligence of your local dentist. They were shrewd in separating their income to machine technology which produces highly valued and profitably produced chocolates whilst the dentist's pay stops when hes tops working.

Also Musk is somewhat of a controversial subject in my opinion to qualify as success. Musk has an insane social network which allowed him to sell non-profitable companies due to him knowing all the big industry players at the exec level which is where deals close. A lot of his ventures fare poorly at the profit and loss level.

He's a great all rounder and technical guy but not a businessman in the truest sense. If Musk never had the social circle he did he'd have never sold out even his first venture and he'd still be your average joe blow.

Musk is smart, not wicked. He is smart and connected and into commercial enterprise. And that is a much better combination than smart and into commercial enterprise.

Oct 21, 2021 - 11:03pm

Yeah exactly 

"If you always put limits on everything you do, physical or anything else, it will spread into your work and into your life. There are no limits. There are only plateaus, and you must not stay there, you must go beyond them." - Bruce Lee

Oct 21, 2021 - 10:15pm

I also find it futile and misplaced to call successful people in business with uninspiring ideas or services/products dumb.

The market doesn't care about whether you're Musk or Gates or Joe Blow. The market only cares about itself and merchants exist at its mercy.

The harshest truth about economics and free market dynamics is it doesn't value

A. intelligence

B. efforts

C. Originator and his blood sweat and toil

Market cares about what it wants and free market economics will see to it whether the merchant profits or not.

In other words, there is no such thing as dumb or not dumb. There is only the placeholder. The product, the service at hand. You can call it what it wants. But it

doesn't matter. The only thing that does is do you have the right product/service at the right time at the right place in front of the right group ? You could be selling used panties. As long as there is demand and the equilibrium settles you've got the game right.

Oct 21, 2021 - 11:04pm

True 

"If you always put limits on everything you do, physical or anything else, it will spread into your work and into your life. There are no limits. There are only plateaus, and you must not stay there, you must go beyond them." - Bruce Lee

  • Analyst 1 in IB-M&A
Oct 22, 2021 - 1:49pm

The older I get the more I think smartness just doesn't really matter. It's experience and understanding.

I'm confident a majority of MD's couldn't pass calculus, but they have spent 10+ years looking at transactions in a specific vertical making then unbelievably valuable if you are selling a business in that vertical.

The genius in some of these founders is recognizing a vertical before it existed-that might be more luck than genius though.

Oct 22, 2021 - 4:28pm

I agree in the sense it sold. It's like saying the pet rock was a "genius" idea, because people bought it. 

I'm just saying, in my head, if I ever had the idea (i'm not a women so idk), I would have been like "should I sell underwear that turns a hard 3 into a possible 4?" I mean, if anything, its just basically a marketing play. They pulled the same same strings Under Armour did ( how do we get men to wear tights...just change the name). 

Again, not trying to hate, because I respect hustle at the end of the day. 

Side note: its basically ironic that a company celebrated for women leadership is the same company that their main pitch is basically, you need our product because your main value is how your body looks. i digress....

Oct 22, 2021 - 5:11pm

I think the vast majority of entrepreneurs (at least the ones I've met, which working in growth equity is a fairly large sample size) fall somewhere in the middle as well. Most aren't Bezos/Musk/Zuck level of intelligence (a lot are surprisingly average), and most are also pretty level-headed and recognize the risk-reward tradeoff of starting a business vs. pursuing a conventional career.

The reality is, the vast majority of entrepreneurs aren't starting anything original and thus don't need to have genius-level intellect / foresight. Think about how many HVAC or lawn care companies there are in just one suburban county. Even with tech founders, most enterprise software isn't that groundbreaking. Same with consumer, business services, etc. So it's not like most founders are taking a massive risk on whether or not an idea is business-worthy. I think by now we've kind of proven out that selling enterprise software is a pretty good business model. 

Instead of starting something original, most founders end up just being people who a) like the idea of taking on slightly more career risk with opportunity for additional upside vs. working a corporate job, and b) have the financial safety net to do so (in the form of existing savings, raising funding from others, having rich parents, etc.). And then whether their business succeeds comes down to some combination of execution / motivation / luck (obvious, I know).

So to wrap it up, I wouldn't be discouraged from starting a business if you don't view yourself as a super-genius or some sort of risk-taking idiot. Just make sure you have some safety net and decide for yourself whether the risk (which is oftentimes overestimated) is worth taking.

  • Associate 2 in RE - Res
Oct 22, 2021 - 7:50pm

A very underrated trait in business success is just the desire for money. Some people are innately more interested in money than other people are. People vary in this just like they vary in extroversion, math aptitude, or other traits.

A friend of mine, whom I've known since we were kids, is a successful entrepreneur. When we would go to, say, a pizza place in high school, he would just spontaneously start calculating how much money the store owners were taking in. X number of customers per hour paying Y, rent is probably Z, etc. The math isn't particularly complicated and I could do it just as well as he could, but he was naturally drawn to thinking like that constantly. It's just how he's wired.

I think really high intelligence might actually be a hinderance to most entrepreneurship, because a lot of the smartest people just find the constant hustle and selling uninteresting. They would rather work on hard intellectual problems with other smart people than motivate employees and sell stuff to get rich. So they end up in academia or in pockets of the business world that suit them, like quantitative hedge funds, tech companies, biotech, etc.

Oct 22, 2021 - 8:52pm

Wall Street attracts intellectuals who want to make a lot of money. We only have quantitative finance because congress shut down our supercollider in 1993, causing a bunch of theoretical physicists to lose their job prospects and flock to Wall Street.

The markets are an interesting intellectual problem. There are many solutions, but the greatest market players are quickly becoming statisticians, programmers, math PhDs, etc. It is the most efficient means of acquiring money, period.

This attracts people who do not want to spend their entire lives selling their minds and their time to some faceless corporation. For the rest there is Silicon Valley.

Oct 22, 2021 - 9:03pm

Quants are neither the most efficient at acquiring money (Bezos, Gates, etc. will always be richer), nor are they any different from any corporation in Silicon Valley, in fact they produce objectively less value.

Oct 22, 2021 - 10:11pm

This is brilliant. If you know how a billionaire is formed or what they do for a living you know they live life from one financial earnings quarter to the other.

The smartest people on earth are probably not too interested in living life reporting sales units or profit margins.

Oct 22, 2021 - 7:57pm

Intelligence is acquired and sectional, you can learn how to make a lot of money and still be ignorant of other things.

You don't need to be a genius to collect profit, and the people you mentioned are less freak geniuses and more people born into immensely wealthy business families pursuing their own ventures as their parents did. A lot of these business magnates will "borrow" millions of dollars from family and friends, and not all people want to apply their minds towards making a ton of money.

You can succeed in business if you know the right people and have the right ideas, but it's a risk like any other investment. The intelligence necessary for this is something you can acquire through education, experience, or both. A lot of people in this business are chasing after these large bonuses and investments in order to raise capital for their own ventures, but I do know a number of bankers who were lifelong analysts or in similar support roles.

Oct 22, 2021 - 10:16pm

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