Only 20 percent of all U.S. businesses make it to their 20th anniversary – a success rate that’s elusive for many but a great teacher for entrepreneurs and those who invest in entrepreneurial companies.
Leading CEOs have a system for spotting the long-term viability of business ideas. For example, Jeffrey Aronin, Chairman and CEO of Paragon Biosciences, believes that business longevity starts with tackling tough problems that people are willing to pay you to solve.
A frequent lecturer in entrepreneurship at Northwestern University and The University of Chicago, Jeffrey Aronin advises budding entrepreneurs, “Are you solving a problem that people are willing to pay you for? Because if you’re not, you don’t really have a viable business.”
After more than two decades of successfully launching bioscience companies, Jeffrey Aronin knows that innovation selectivity is essential for stewardship and growth: “I see great science that’s really cool and exciting every day that just isn’t solving a problem. That’s the biggest mistake people make.”
For corporate investor Warren Buffett, it’s about identifying companies that have solid, forward-thinking management, great brand equity in the markets they serve and an unassailable knack for defending those strengths. It’s what the longtime Berkshire Hathaway CEO calls their “economic castle and moat.”
“What we’re trying to find is a business with a wide and long-lasting moat around it protecting a terrific economic castle with an honest lord in charge of the castle,” said Buffett at Berkshire’s 1995 annual meeting. “We’re always trying to figure out what is keeping that castle standing.”
Like Jeffrey Aronin, Elon Musk, founder of SpaceX, Tesla, PayPal, and other companies, has also taken a problem-first approach to build lasting enterprises.
Speaking to CalTech graduates in 2012, Musk said, “Going from PayPal, I thought, well, ‘What are some of the other problems that are likely to most affect the future of humanity?’ Not from the perspective, ‘What’s the best way to make money?’ which is okay, but, it was really, ‘What do I think is going to most affect the future of humanity.'”
