It’s not news that most startups fail. People throw all sorts of statistics around, but there’s strong evidence that, one way or another, most new businesses don’t live to see their second decades of existence. The stakes are even higher when other people’s money is on the line, as is usually the case in the world of high-growth startups. Founders aren’t just playing with their own financial fates — they’re obligated to investors with millions (or more) riding on the outcome.
With that in mind, every founder would do well to take lessons from those who’ve come before them. From world-changing founders and investors like Bill Gates and Warren Buffett to serial entrepreneurs turned VCs like Sky Dayton and Alexis Ohanian, these exceptional folks have been around the block more times than they care to count.
And they have advice aplenty to dispense. Here’s what you can learn from them about launching, scaling and exiting high-growth businesses.
1. Find Like-Minded Co Founders or Co Investors
It’s said that you can tell a lot about a person by who they surround themselves with.
This is certainly true about founders. It’s not so much that you want to embrace the idea of “groupthink” right from the get-go. More people with shared values and goals tend to work better together in high-stakes environments. You don’t want to get deep into the process of building your business only to find that you’re really not aligned with your co-founders or co-investors at all.
2. Embrace Division of Labor As Early As You Can
Like-minded people can be good at different things. Very different things, in fact. And that’s how you should approach the development of your founding team.
That is, you want to surround yourself with co-founders and early employees who are very good at what they do — but not good at exactly the same things. That way, you can cover more ground and minimize “competency gaps” that threaten your startup’s viability in the early going.
3. Settle on an Incremental or Disruptive Approach, And Stick With It
One is not necessarily better than the other. You can make a lot of money and change the world by building a better mousetrap — nearly as much as you can building something totally new and unexpected, and maybe without such great risk.
However, while it’s a distraction to argue over whether incremental change is better than total disruption, it’s very important that you pick one or the other and stick with it. You may have an opportunity to pivot later, but your first product, as well as the overall founding vision for your company, need to be one or the other.
4. Skate to Where the Puck Is Going
Never watched a hockey game closely? No problem.
“Skating to where the puck is going” is a literal description of how elite hockey players go about the game. Unlike beginners, who are apt to bunch up as they chase down the puck’s present position, great players skate to where they believe the puck will be in a few split seconds.
They’re not always correct. In fact, sometimes they’re disastrously incorrect, finding themselves far out of position as an opponent moseys along to score. But when they’re right, the results can be brilliant; that’s rarely, if ever, possible to say about less prescient players.
The point of this extended metaphor is simple: Your startup should aim to solve problems as they’re likely to exist when it’s ready to go to market, and should likewise target markets as they’re likely to look at that time. If you try to solve today’s problem in two years’ time, you might be too late.
5. Have a Plan to Cross the “Valley of Death,” Then Execute It
The “startup valley of death” is also known as the “death valley curve” or simply “death valley.” No matter what you call it, the meaning remains the same. It’s the extended period of time (often several years) where your company is not earning enough revenue to offset its expenses.
Needless to say, you need enough early funding to get through the valley of death. Often, that means going through multiple fundraising rounds before reaching profitability. To navigate this period successfully, and to keep raising money along the way, you need to have a clear, detailed plan that you and your team execute relentlessly. Otherwise, you might not make it to the other side.
6. Master Your MVP
“MVP” stands for “minimum viable product.” It’s the first tangible thing you bring to market, which means it’s the general public’s first impression of your company. It’s absolutely crucial to get it right. Make sure you have the right people in the right seats to get it done.
7. Know When to Delegate, And When It’s Time to Step Back
In your startup’s first phase of existence, you won’t have to do much delegating because you and your co-founders will be doing all the work. You’ll each merely be doing what you’re best at.
However, at some point, you’ll hire more people and staff up divisions within the enterprise. At that point, management will become more important. You’ll need to get comfortable with the notion of stepping back and letting others do the work. A bit further down the road, you may even consider stepping back from day-to-day management and replacing yourself.
Final Thoughts
In the high-stakes startup world, “being the best” is all about perspective. Even the most talented founders and executives experience grave setbacks and outright failures. And in the venture capital world, a “great” track record might mean one or two successful exits out of 10. For them, it’s all a numbers game.
That’s not exactly what you want to hear as you prepare to launch a business. It’s certainly not what you want to hear if and when you find yourself squarely in the startup valley of death. So, while keeping things in perspective and being realistic about what’s ahead, do what you can to put those concerns to the side and focus on building the best product with the best people you possibly can.
After all, you have a job to do. Everything else is just noise.
Photo by RDNE Stock project: Pexels
