How to succeed in a Startup? Certainly there are more than ten steps to building a successful start-up. There is an extensive body of literature on the subject, and some of our favorite books and articles are listed in the next post on Start-up Success Literature.
This first post of the E7 Blog outlines the 10 behaviors we find most valuable to first time entrepreneurs.
- Fall in Love, But Don’t Go Blind
- Test Your Assumptions with Real Users
- Iterate & Improve Your Product
- Get an Investor to Validate Your Idea
- Make Lots of Friends
- Stay Hungry
- Opportunities are like Zebras
- Be Ready & Pivot Wisely
- Adapt and Plan
- Go Fast
- Never Stop Listening
Fall in Love, But Don’t Go Blind
If you weren’t in love with your idea, you would still be working at your old job. The trick to succeeding is to have total confidence in your product and your success while still being aware of all the dangers in the environment. The biggest danger is that the world will not understand your product the way you do, or worse, that they just don’t care like you do.
Test Your Assumptions with Real Users
Entrepreneurs who develop their ideas in an ivory tower often descend to the real world to find they missed the mark. The mantra in lean business is to “Get out of the building”. Development is costly, so test and improve your ideas with real people.
Iterate & Improve Your Product
Think of your favorite film. Is it possible that someone thought up all those details in one sitting? Of course not. They iterated and revised thousands of times. From the back of the napkin to the release of your minimum viable product. You should make hundreds of iterations and improvements on your product concept.
Get an Investor to Validate Your Idea
Even if you are a programmer who plans to do all the work, you should still consider an investor. Recall tip #1, and remember that you are in love with your idea. If you can get an investor to fall in love too, then you have the best reality check. Lot’s of folks, including your parents, will tell you what a keen idea you have, but if they put some money behind their compliment, you have something. The more sophisticated the investor, the more valuable their vote of confidence.
Apart from validation & cash, your best investors should be able to bring you valuable personal connections or direct strategic value to your company.
Make Lots of Friends
You never know who is going to save you with an essential introduction, a rule clarification, a free pass on an obligation.
I have a friend who, no matter who he meets, the first thought in his head, is “this person and I could do something great together”. It could be a trash collector or an airline CEO. This guy is the CEO of a start-up client of ours. Be that guy. Keep your competitive urges in check as long as you can, because the truth is that any two people can do great things when they cooperate on the synergy of their shared creativity and ideas.
I apologize if Jason Roberts is not the originator of this idea, but a good read is this short post, How to Increase Your Luck Surface Area.
”The amount of serendipity that will occur in your life, your Luck Surface Area, is directly proportional to the degree to which you do something you’re passionate about combined with the total number of people to whom this is effectively communicated.”
Hey don’t forget you are a start-up. Resist the expensive office and furniture. These are all distractions. Apart from saving money for future pivots and unplanned iterations, spending wisely will attract people to your organization who come to fight the fight. It will discourage employees who are looking to ride a gravy train.
University of Tennessee Research lists the top reasons for business failure. Number 11 is too much money. I rate it higher, because I have seen the effects. We are all at our best when we have exactly 1 penny more than we absolutely need.
Opportunities are like Zebras
Zebras use their stripes and their number to evade predators. Imagine the excitement of the young lion when she bolts into a herd of a thousand panicked zebras. Opportunity is all around her. Dinner comes only if she learns to focus on a single slow or injured animal. Of all the nature shows I have watched, I have never seen a lion catch 2 Zebras at once.
Success will present you with a frenzy of “opportunities”. Before chasing after market number 2, be sure that you have achieved a market fit, traction and possibly even dominance in market number 1.
As a start-up, even a funded start-up, your resources are precious. Money, your attention, staff are all critically limited. Even a tiny diversion can cause you to miss your target in market #1.
Pivots are the obvious exception to this rule (and metaphor). Don’t confuse a well reasoned pivot with thrashing. Be the lion, the well fed lion.
Be Ready & Pivot Wisely
Most successful tech businesses started with of vision of being something completely different. View this list of 15 Famous Pivots.
Vanity or complacency would have killed any of these companies. Instead they were vigilant, looking for problems that would stagnate them or put them out of business. When their original visions were slowing down, these companies recognized the problems and seized new opportunities . Finally, they moved early on their instincts and pivoted before they ran out of cash.
Adapt and Plan
Start-ups are like chess games, you need a plan, but you will also need to constantly modify that plan to realign to an acute understanding of reality. Given the choice I would rather be good at adaptation and then planning.
I once worked for a company that spent $300 Million without ever achieving market fit. They could have built 1000 start up ideas, but they wanted to change an entire industry in one shot and they were dead certain they would do it. We had a great product, a great plan and great people.
This story should be unthinkable with the popularity Lean Business Strategy, but read the description of WebVan and their $800MM fail in Chapter One of Four Steps to the Epiphany reprinted here by the good folks at Stanford. If this story sounds too familiar, you should consider calling for a consultation.
Building on the previous tip, companies don’t go out of business because their products fail, they go out of business because they run out of money. Don’t run out of money.
Build your minimum viable product (or demo). Find out what works and what doesn’t in the real world. Make your product better (or different). Do it again.
Never Stop Listening (Bonus Tip)
It’s easy when you find a little success to let your listening skills take a back seat. Don’t be sure you take every opportunity to hear and evaluate different points of view. Listen to your customers. Listen to the employees who never speak up in meetings. Be absolutely sure to listen to people who communicate inconvenient truths as well as appealing fantasies.
Richard Branson has his own jet, but he takes the time to fly economy class on his own airline. He wants to hear what his customers have to say. If Sir Richard finds listening to the little guy that important, shouldn’t we?