Posts Tagged: Start Up
At any stage of a start-up’s life, there are dozens, if not hundreds, of different directions to take. In the early phases, you need to pick the right product direction and find your product-market fit. Later, you may wonder which marketing channels will work at scale and which ones won’t.
Since you never want to approach each crossroad blindly, the key is to continually test out the options. Success is often defined by how well you hone these experiments and learn as an organization. What separates great start-ups from the rest is how many experiments they can run at the same time, and how effective each is experiment is.
Building out your test
Approaching your experiment is not that much different than creating an A/B test – although you’re testing for a much bigger matter than tweaking the font and image choices on a landing page.
Any experiment needs to be well planned, grounded in a specific hypothesis and potential outcomes. Follow these steps to create your test:
1. Define the problem. What are you trying to fix or improve?
2. Define potential solutions. What are all the different possibilities that could solve the problem?
3. Define potential outcomes. What do you expect will result from your solution? What’s the best case scenario? The worst?
4. Run the experiment.
5. Analyze the results.
6. Double down on what worked, drop whatever didn’t. If the results were inconclusive, run another experiment.
For example: Let’s say you want to figure out if paid search marketing can help you scale your business profitably.
Wrong approach: You might be tempted to dive right in…start small by investing $50/day on Google to buy a few keywords and look at the results over the next few months.
This strategy won’t work for a few reasons. One, $50/day is too small an amount to derive any meaningful conclusion at scale. Second, it’s far too general: there’s no defined timeline and no defined outcome.
Right approach: Follow the steps above to fully define all aspects upfront: Define a meaningful budget (i.e. $500/day); define a specific timeline (i.e. one month); define the outcome (i.e. need to have a CAC of $50, otherwise this won’t be a profitable acquisition channel); and define different solutions (i.e. bid on general search terms vs. long-tail keywords).
Too many start-ups fall into the pitfall of running experiments for the sake of running them, and then never actually learn anything since the parameters were too fuzzy. Drive your activities toward reaching tangible learning milestones…as many as possible, as fast as possible.
It’s the age-old debate among start-up circles: which is more important to the success of a start-up: the strength of the sales/distribution strategy or the quality of the product?
On one end of the spectrum, many start-ups think that great products sell themselves, while the other camp argues that it’s the channel and monetization that define a company’s success.
The simple answer to the question is you need both. To be successful, a stand-alone company needs a top-notch product and a clever distribution/sales strategy. However, there are a few nuances to add to the discussion.
1) Start-ups are generally more successful when the founders are product-driven. It’s typically much easier to add sales expertise to a product-driven organization than it is to add product focus to a sales-driven start-up. Sales is more of an execution game, meaning a start-up can hire senior executives to shape and refine the sales and distribution strategy. On the other hand, a great product requires great leadership with the right product instincts. Those intangibles are usually much harder to add.
2) Sales-driven companies can turn into service organizations. Sales-driven companies are often focused on maximizing short-term return on investment and this mindset can shape product decisions. The natural consequence is that sales-driven companies can evolve into service companies as they are stating to build every feature that clients are asking for instead of following a long-term product vision.
3) The consumerization of IT is putting more emphasis on product. Historically, software and products were sold to a company’s purchasing agent and CTO. The sales cycle hinged on the ability of the vendor’s sales team to make the right contacts and manage the sales process and relationships from start to finish.
Today, it’s a different story. The CTO and other management no longer serve as gatekeepers for which products are used in the organization. Products are now introduced directly to end users. This trend has a double impact (and both in the product-driven start-up’s favor):
- Small start-ups that don’t have a large sales force can now sell their products in the enterprise.
- The enhanced role of the end user in buying decisions makes the product experience all the more important. Good products that are easy to use take hold in this environment.
While the sales cycle may be changing, start-ups still need to focus on their sales and distribution strategy. Products, no matter how great, usually don’t make money on their own. As a result, product-driven companies need to focus on distribution in order to succeed in the long-term.
Over the course of my career, I have met, worked with, and/or invested in hundreds of entrepreneurs. During this time, I’ve seen some rise to the top, while others never quite made it past the starting line. While there may not be a sure-fire recipe to guarantee success as an entrepreneur, a clear profile of a successful startup leader has emerged for me over time.
Here are five key qualities that successful entrepreneurs typically have in common:
1. They have clarity of vision
Successful entrepreneurs can very precisely describe where the company is today, where it will be tomorrow, and how it will get there. This isn’t some robotic elevator pitch, but a natural and clear vision that’s typically very product-centric. Such clarity of purpose and vision helps these entrepreneurs attract employees, convince investors, and bring in partners more easily than others.
2. The startup is their life
The most successful entrepreneurs love working on their ventures; they can’t imagine doing anything else. These are the type of individuals who will respond to your emails at all hours of the night and can’t help but pitch their company to every single guest at a party. This level of passion is critical, since being an entrepreneur is hard, hard work. If you don’t love what you do, there’s no way you’ll last.
3. They stay focused on what matters
Entrepreneurs are typically visionaries, able to see new opportunities around every corner. While this personality trait is typically considered a strength, it comes at a price: staying focused is one of the toughest challenges for any entrepreneur. Thinking back on my own entrepreneurial career, I found myself too easily distracted by new opportunities. The result is that you find yourself thinking about bells and whistles instead of how to improve the core of the product.
In order to thrive as an entrepreneur, you can’t always chase after each new bright and shiny opportunity. Stay focused on just two to three key priorities at all times. Peter Thiel even takes this a step further and recommends only having one priority at a time. In any case, if you spread yourself or your company too thin, it’s difficult to gain any traction.
4. They surround themselves with great people
No one can be an expert in everything. The best entrepreneurs are acutely aware of their shortcomings and build an ecosystem of great people (including co-founders, employees, mentors, and investors) to fill in the holes. For example, a “big ideas” type needs to find somebody who can run the day-to-day and excels in building out operations. Or, a naturally introverted type may want to pair up with a co-founder who enjoys the limelight, pitches, and presentations. At my start-up, my co-founder Hannes and I had the perfect split of responsibilities: he liked finance, HR and legal while I thrived on marketing, sales, and product.
5. They pay close attention to detail
The most successful entrepreneurs I’ve seen don’t just limit their focus to big picture thinking. They care deeply about those little details that matter, particularly ones that impact the product, brand, customer experience, quality of the team and company culture. For example, I know founders who deliberate over the UI of web pages, who interview each new hire, who consider the details of the Holiday party and office design. These entrepreneurs are making decisions on the micro level that can have a profound impact on the macro.
Perhaps more importantly, these leaders are instilling careful attention to detail throughout their company. And this culture pays off as the company gains momentum and employees follow the CEO’s lead in getting the small stuff right every day.
Not every successful entrepreneur will excel in all five areas. For full disclosure, I’d rate myself 3 out of 5 as an entrepreneur. Yet while some people seem to possess a natural aptitude for these qualities, many of these traits can be learned. Don’t expect to develop any of these skills overnight, but keep them in mind throughout your own journey.
- 5 Common Traits Shared By Entrepreneurs (grasshopper.com)
- Cracking the Code: How Successful Entrepreneurs Build High-Growth Companies (growthology.org)
Today is GrowLab‘s first demo day with the 5 companies from the first cohort showing to over 50 investors what they have worked on since mid August. I am incredibly proud of all of the teams – they worked very, very hard for this moment and I have no doubt that all of them will nail their pitches today.
Reflecting on the past few months with the GrowLab companies, I am reminded of a few things:
- Never ever underestimate the power of a strong and engaged network of mentors – especially as first-time entrepreneurs you can avoid an incredible amount of pitfalls if you get the right advice as the right time.
- Never ever underestimate the power of a great pitch – most entrepreneurs don’t spend enough time creating (and telling) the story of why their start-up is worthwhile investing into. A great pitch doesn’t get created over night but is the result of many, many refinements, trial pitches and feed-back loops. Don’t treat it as a side project, it is one of the most important things a CEO should focus on.
- And last but not least, never ever underestimate the power of a platform that elevates you above the noise of the ever increasing start-up activity – we have seen an explosion of the numbers of start-ups in the past couple of years and it is becoming more and more important to find ways to break through the noise and leave a mark. Accelerators with a good reputation are probably the best platform to do so these days.
- Finding Signal In The Noise Of Demo Days (avc.com)
- What the BC technology industry really needs (wmediaventures.com)
- GrowLab announces startups of its ‘accelerator program’ (canada.com)
Gary Mason had a great article in the Globe and Mail yesterday analyzing the performance of some of the BC government organizations charged to drive forward the tech sector in this province. And this paragraph probably sums it up best:
There are many well-meaning and hard-working people at both the innovation council and Premier’s technology group. But it’s time to take a hard look at both organizations with an eye to reassessing their roles and either getting rid of them altogether or giving them higher profiles and more focus.
While I agree that fewer and better focused government organizations are certainly a good thing, I also think that the ONLY thing that will substantially change the trajectory of the local tech industry will be more entrepreneurs and more start-ups. The government needs to start focusing on initiatives that will either get more talent into BC or get more local talent to start new companies. So support initiatives like Startup Visa Canada that aims to attract the best and brightest entrepreneurs from around the world to this country; support accelerators with great mentorship programs that help first-time entrepreneurs get their idea off the ground; and implant entrepreneurship more into the curriculum of schools and universities. What we certainly don’t need are more high-level reports about where we stand as an industry, more government run events or more programs where the beneficiaries are only people in the know.
There is some great traction developing here in BC, there is a new generation of amazing entrepreneurs emerging, and the engineering and design talent base is as deep and wide as in most other markets. Let’s just put the foot to the gas pedal and create more entrepreneurial activity. Much, much more entrepreneurial activity.
Full discloser: I am one of the initiators of Startup Visa Canada and also one of the co-founders of GrowLab, a Vancouver based start-up accelerator.