Posted on December 5, 2007
Filed Under Web 2.0 Kool Aid |
French entrepreneur Loic Le Meur’s 10 rules for startup success were published in the Financial Times yesterday. While I agree with a couple of them (build a great team and don’t focus on getting rich), I actually disagree with most of Loic’s advice. For instance, he suggests that entrepreneurs “don’t plan a big marketing effort” and instead make sure their “community loves the product” without apparently noticing the logical contradiction: if you don’t market your product effectively, you won’t have a community to love it. Much of Loic’s other advice is equally naive and therefore, while I don’t think there are “rules” for startup success per se, I present 10 common sense tidbits of advice that I think can assist entrepreneurs:
Start a company around something you’re passionate and knowledgeable about. Very cliché but important to mention because this will be very helpful when you find out that the glamorous startup life you have isn’t quite as glamorous as you envisioned it would be.
Be willing to take big risks. Some of the business world’s biggest success stories lost it all before they hit the jackpot and if you’re not willing to put everything you have on the line, you should consider whether you’re cut out to start a company. While the abundance of capital from VCs often enables entrepreneurs to avoid having to take personal financial risk, my belief is that entrepreneurs who are unwilling to take risks with their own money first probably aren’t ideal candidates to successfully take risks with other people’s money.
Write a business plan. You don’t need an MBA and you don’t need to become afflicted by paralysis by analysis, but if you’re too lazy to invest the time and effort to critically think about your business and put things down in writing, you’re not ready to make a serious effort. Writing a business plan forces you to consider things that you might not otherwise consider and to make important decisions you might otherwise not make. Contrary to what some believe, a good business plan is not a 40 page document and it does not take 6 months to write.
Set milestones. There are so many things to do when starting a new business and the younger the company, the more possibilities. Analyzing where you think your business needs to go and what milestones need to be met to get there allows you to focus on execution. Time is the worst enemy of every startup and if you’re unfocused and unorganized, the time you do have will be wasted.
Recognize that short-term needs trump long-term goals. Far too many entrepreneurs focus on the long-term direction of their startups at the expense of paying attention to the short-term needs of the business. While it’s important to have some long-term goals in mind, if the business does not pass the hurdles most startups inevitably face early on, there is no long-term.
Your product is less important than your marketing of it. While all startups should aspire to build a great product, having a great product that isn’t marketed effectively is equivalent to having no product at all. Do not buy into myths: if you build it people will not come. If you expect to grow primarily via “viral marketing,” “reaching influencers,” “targeting bloggers,” “social network marketing” and “widgets,” consider recruiting a skilled marketer or salesman to your team because your startup is probably hopeless without one.
Leverage your relationships. Sadly, more often than not, it’s who you know, not what you know. Don’t underestimate the competitive advantages created by knowing the right people. If your company has a great product but you aren’t connected in the industry you’re serving, you might find yourself wondering why a competitor with an inferior product is thriving while you’re simply surviving. Quite frequently the answer is that your competitor has the relationships you don’t. Think long and hard before starting a business that nobody in your Rolodex can help you with.
Don’t listen too much to everybody and don’t pursue every opportunity. Not only are opinions are like assholes (everybody has one), so too are opportunities. When starting a business, it’s important to heed the advice of others and to explore opportunities as they arise, however exercise immense discretion. Listening to every opinion and exploring every opportunity that you are presented with will be detrimental to the business. While you shouldn’t be inflexible, you can easily be too flexible which leads to distractions that will waste your valuable time. In short, be decisive and don’t be afraid to say “no.”
Don’t make the same mistakes twice. Everybody makes mistakes but the difference between smart people and stupid people is that smart people never make the same mistake twice while stupid people will continue making the same mistake over and over again. As long as you keep making new mistakes, you’re making progress.
Cash is king. Businesses generate money; hobbies cost money. While it’s unrealistic that you’ll have a polished, validated business model when you launch, if you haven’t given any serious thought to how your company is going to make money and pay the bills on its own as quickly as possible, you might want to consider whether you have a business or a hobby.
If you follow this advice, the chances that you’ll find startup success still aren’t that great but that’s about as common sense as the advice itself.
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