Everywhere you look these days, people are attempting to start innovative businesses and nonprofits, working on putting team, product and financing together, and generally trying to change the world - or, at least, their world - through entrepreneurship.
Meanwhile, I strongly suspect that the mortality rate of tech startups is as high as ever (no rigorous scientific tracking there, just common sense and observation - please do share stats if you know of some). In any case, one failed startup is one too many.
Guest author Greg Boutin helps startups and early-stage ventures defy a certain death, through strategy and marketing services. He blogs on entrepreneurship and on semantic technologies. He thanks Arnold Wytenburg, William Mougayar of Eqentia, Fabien Tiburce of Compliantia, and Ceara Scullion for their priceless input on this post.
So, wouldn't it be great if we could align on a guiding set of principles on how not to kill a startup? Think Hippocratic Oath for entrepreneurs - just not strictly an oath, and more in the spirit of "Doing Good" than "Doing No Harm" (or "Doing No Evil" for that matter). After all, unlike humans, doing nothing to a startup is a sure path to death, so we need to be more proactive.
And yes, I know, blanket business principles can sometimes be silly (if you haven't yet, I recommend you read the Halo Effect by Rosenzweig), but as the recent book The Checklist Manifesto argues, situations can also sometimes be improved with the introduction of simple, field-tested guidelines. I can personally tie every startup failure that I know of to the principles below not being respected.
So here is a rough copy - or should I say an alpha - of a list, based on inputs from other entrepreneurs, and my own experience as a startup consultant and entrepreneur. Please make your own suggestions for changes and additions/subtractions in the comment section. If I get many responses, I'll compile the best submissions into a beta version to be published in a follow-up post.
And of course, our list will always remain in beta. Without further ado:
How Not to Kill Your Start-Up (v 0.1)
- This one's obvious - watch your cash flow. Whether your plan is to fund your startup through investors or through revenues, plan ahead. Every other principle below flows from this simple one.
- Spot a real problem and concentrate your efforts on solving it. Do not disperse your time among too many concurrent, unrelated pursuits.
- Identify your target market(s) and collect market feedback early on. Seek to understand your prospects and customers through first-hand observation (how do they currently deal with the problem you are trying to solve?) and continuous inputs.
- Design and develop a minimum viable solution as fast as possible. A minimum viable solution is anything you can extract a firm commitment from a potential client or investor with.
- Surround yourself with dedicated, effective people. Build a small team and a pipeline of strong players, and nurture a circle of supporters with knowledge and/or financial resources. Incentivize everyone intelligently (if nothing else, respect can go a long way) and reward them fairly.
- Read Crossing the Chasm. Appreciate the difference between early adopters and mainstream prospects. Know which one you target, and do not confuse technologies and products with whole solutions. Only offer whole solutions to mainstream leads.
- Consider other sources of competitive power than just technological sophistication, e.g. superior customer experience or service, exclusive distribution partnerships, or other market-based advantages.
- Have a plan for cutting through market noise. Know how prospects will hear about your solution. Understand that building a great product is required but rarely sufficient to build a great business, it needs to be marketed one way or another.
- Invest time in selecting and testing a business model, and be open to changing it based on new learning. Choose one you are able to sell to investors if you go down that road (even if it is based on traffic only, à la Twitter, have a monetization model you can justify).
- Be creative and resourceful in meeting your objectives. Seek cost-effective solutions, and do not give up in the face of adversity, but seek to learn and adapt your approach to overcome obstacles.
And ultimately, remember that startups sometimes need to be killed, for their own good (or yours at least). Do not fear failure, because that is the fastest road to failing as an entrepreneur. Just rinse and repeat.
Photo by B S K.