How to Succeed as a Startup
Introduction
Let’s talk about how to succeed as a startup. The most important thing, the number one lesson we try to teach startups is that the degree to which you’re successful, approximates the degree to which you build a product that is so good. People spontaneously tell their friends about it. Startups always ask us for the secret to success, they always want to believe it’s something other than this, because this is really hard to do. But this is it. If you can build a product that is so good, people spontaneously tell their friends about it, you have done 80% of the work that you need to be a really successful startup. If you think about the most successful companies, you know, Google, Facebook, whatever, you probably find out about them. Because a friend of yours said, you got to try this. It’s great. So this is the bar, something that people love so much they tell their friends about it.
Easy to understand
One important indicator for a product like that is a product that’s simple to explain, and easy to understand. If you can’t explain in a few words, what you do. And if people don’t if at least some people don’t say, Oh, that’s pretty interesting. That’s usually a mistake. It’s usually a sign of unclear thinking, or a need. That is not big enough.
Exponential growth in market
Another thing that start-ups need to look for, is a market that is either started to undergo or is soon going to undergo exponential growth. For those who need to know the recipe on How to succeed as a startup, here is it… I think this is actually related to one of the biggest mistakes investors make when evaluating start-ups. Investors always say, What’s your growth rate? We care about the growth rate. Investors will forgive smallish revenue today, if it’s growing quickly. For some reason, people don’t think about markets this way. But if you think about the most important start-ups, they are the ones that start in small markets that are growing very, very quickly. 11 years ago, the market for iPhone apps is $0. It’s not huge. And I think if you only think about the TAM, today, you’ll make a big mistake, what you really want to do is identify a market that’s going to grow every year, and be able to ride that up elevator.
Real trends verse fake trends
A really important thing to figure figuring this out, is learning how to differentiate between real trends and fake trends. A real trend is something that’s actually going to happen and the fake trend is not or at least not yet. And before you make a big bet on a new platform, you want to make sure it’s real. Now there’s an easy trick for this, which I’ll share. Now, real trends are ones where a new technology platform comes along. And the early adopters use it obsessively, and tell the friends how much they love it. A fake trend is one where people may buy the product, but don’t use it. Or at least not enough. So an example of a real trend. I already mentioned the iPhone, I mentioned that again. When the iPhone first came out, many people were dismissive because they only sold a million or 2 million that year. And they said, well, this just doesn’t matter. But for the people that had an iPhone, they used it for hours every day, it became central to their lives, they loved it, they told their friends, you got to get one. And I think it was obvious then to people paying attention that something had fundamentally shifted. And it was a good time to bet on mobile apps. A fake trend, or at least a fake trend as of August 2018, I would say is Virtual Reality, I do believe Virtual Reality will be big someday. But today, most people that I know that own a Virtual Reality headset, use it never or very rarely. And so although a lot of people talk about it, and maybe even a lot of people by them, there’s not the intense usage per user among the early adopters that I think you want to see before you make a big bet.
Evangelical founder
Another thing that start-ups need to be successful is at least one evangelical founder, usually the CEO, someone at the start-up has got to be the person that is going to recruit, sell the product, talk to the press, raise money. And this requires someone who can infect with enthusiasm, the whole world about what the company is trying to do. And someone who becomes the chief evangelist for the company. It’s very hard to succeed wildly.
Ambitious vision
Without that it’s very hard to build a team at all without being able to do that. One thing that helps for this is having an ambitious vision. You never want to be grandiose that turns people off. But you want to let yourself grow more ambitious over time. And as long as you do that, organically, people will respond. Ambitious visions are exciting. They’re fun to work on. In fact, I think in 2018, at least in Silicon Valley, it’s easier to start a hard start-up than it is to start an easy start-up. Now, that sounds paradoxical. But ambitious projects are interesting.
You know, in the current environment, it may be relatively easy to raise capital, but it’s really hard to do everything else. There are so many start-ups, it’s so easy to start one, they all sound so promising, that that bringing together enough talent in one organization is really hard to do. And if you’re working on a problem that you know, maybe modestly successful, it’s kind of easy to get the first few people to join. You can give them a lot of equity. But then it gets really hard. Why is employee 20 gonna join? Why is this? Why does this matter to the world? Why should someone work on your start-up versus any of the other things they could do? And picking something that matters, if you’re successful is a great way to do that. And so, I think it’s really important to think about when you’re starting a company, how is this going to evolve into a vision that a lot of people want to help with, that a lot of people want to be associated with, because I think getting talent and getting mindshare is really hard in the current environment. And people are interested in start-ups that matters.
Confident and definite view of future
Another thing that we’ve noticed among our best founders again and again and again, is that they are have a confident and definite view of the future, they may be wrong. And so we say it’s good to be confident and flexible. But this idea that you are confident and definite, this is what I think is going to happen, or this is what is going to happen. And being relatively sure of that having courage of your convictions, being a clear leader saying we’re going to do this. And that’s why even in the face of a lot of doubt, that seems to really correlate with success.
Team
I’m not going to talk too much about the team. There are a lot of obvious things I could say, that had been said many times, by many people about you know, you need smart people who want to work really hard and who communicate well, these are all really true. But I’d like to mention a few non obvious things that we’ve noticed that we don’t hear people say as much about the team you need to assemble. Vinod Khosla says that the team you build is the company you build. And I really think that’s true. I’ve still met only a handful of founders, I think that spend enough time on recruiting like Mark Zuckerberg is famously one of them. But building a great team, I think other than picking the right market, and building a great product is the most important thing you do. All founders go through a transition all successful founders, where you switch from building a product, to building a company. And building a company really is about the team.
Legality & Formalisation
Over and above, your start up success is determined by how well you’re set up in terms of legality. You have to be a registered company that abides to the laws of the country(ies) you’re operating in. Check the government website on how to register a company. If you need to register a company in Zimbabwe, get in touch with us via the contact us page or by simply sending our support team a message via WhatsApp: +263716196475
Competitive advantage
Another thing that we think start-ups need is a competitive advantage over time. Now, this is something that sounds so obvious, I hesitated to even put it in. This is well discussed. But we’re seeing more and more start-ups apply to Yc. And when we ask them, so what is the long term monopoly effect here? What is the long term competitive advantage? What is you know, where is the network effect in this business? They look at us like it’s the first time we’ve ever they’ve ever heard this question. All of the really great businesses I know, have an answer to this question. And in fact, the better they are, the more they pretend not to. But this is something that you want to have a plan for.
Sensible business model
Another thing you want to have a plan for is at least a sensible business model. You don’t have to have it all figured out at the beginning. But when we ask founders, so how are you ever going to make money? And they look at us like it’s the first time they’ve ever been asked that question, which happens more often than you would think recently. That’s a bad sign too.