Start a business with preparation, not passion

Passion plays a
complicated role in starting a business. Noam Wasserman
pictured.
Courtesy of Noam
Wasserman

• Starting a business
  because you’re passionate about isn’t always advisable, experts
  say.
• Too much enthusiasm can be unappealing to potential
  investors, who would rather see an entrepreneur who’s highly
  prepared.
• Passion can also lead to poor business
  decisions.
• Some research suggests that passion can grow over time
  the more effort an entrepreneur puts into their
  business.

At the start of every semester, Noam
Wasserman asks his students a question: How important is
passion for the “entrepreneurial magic?”

Wasserman is the founding director of the Founder Central
Initiative at the University of Southern California’s Marshall
School of Business, and he’s noticed his students consistently
buy into common misconceptions around successful
entrepreneurship.

“We get a resounding, ‘Passion is critical. Passion is going to
be the main ingredient that is going to enable me to go and
succeed as a founder,'” Wasserman told me. Then he presents them
with a case study “that drives home to them that passion can
become your peril.”

Specifically, Wasserman said, passion can mislead you into
thinking you’re readier to start a company than you are, or make
you believe that your idea is more valuable than it is.

Preparedness can be more important than passion

Many people in the startup world describe passion as a key
element of founding — and running — a company. Consider “Shark
Tank” investor Lori Greiner’s
observation: “I’ve seen great entrepreneurs convince others
to buy or invest in things that they would never have under any
other circumstances, but for their passion.”

Yet both research and experience suggest that too much passion
can backfire. Not only can it lead to ill-informed business
decisions, but it can also be unappealing to potential investors.

The authors of a
2009 study published in the journal Frontiers of
Entrepreneurship Research surmise that displays of enthusiasm and
commitment that come off as inauthentic can make the angel
investor less interested in the opportunity. Seeming prepared
when you meet with angel investors could be more important than
seeming passionate.

Another study of entrepreneurs’ pitches to venture capitalists,
described in
The Harvard Business Review, found that a calm demeanor was
generally more convincing than unbridled enthusiasm.

Starting a company because you’re passionate about the idea may
also be downright impractical. As entrepreneur and small-business
expert Carol Roth writes on
Entrepreneur, passion can make you somewhat self-centered.
“Businesses are borne out of a market need,” she writes. “It
doesn’t start with you.”

Passion often follows the effort an entrepreneur puts in

All this isn’t to say that you shouldn’t be excited about the
prospect of starting a company. But the relationship between
passion and entrepreneurial performance might be more complex
than we’ve been led to believe.

A 2014
study published in The Academy of Management Journal found
that passion results from the effort the entrepreneur puts in and
the progress they make.

Or, as Ramit Sethi, bestselling author of “I
Will Teach You to Be Rich,”
has said, “You get passionate about something when you get
good at it.” Instead of waiting for your calling to materialize
before you, follow the things you’re interested in and skilled at
and eventually, you might become passionate about them.