7 Things I Wish I’d Known Before Starting a Business
A good friend of mine, Jerry Rudison, likes to say, “Experience is what you get when you don’t get all the other things you want.” I agree with him. As an entrepreneur, things do not always go according to plan, and as a result, I have gained a lot of experience at the expense of financial rewards and balance in my life.
Most recently, as CEO of oDesk, I had the opportunity to learn from making decisions under fire (not all of them right) and adjusting when necessary. These errors provided me a unique opportunity to learn what not to do again. From these lessons learned, I’d like to share some essential truths that can lead to startup success.
1. It’s About the People
So much of your success as a leader and ultimately of the company is attributed to the team. Nothing is more important than knowing what type of culture you want to build and then hiring team members with the right core values.
I know that you’ve heard this before, but have you taken measures to ensure that you are building the right team? Have you identified the must-have values for your company, and are you properly interviewing for these core values?
One of the most rewarding contributions in my career has been hiring great talent and setting them up to be successful. At the end of the day, great people want to work with great people, and you will struggle to attract and build a phenomenal company with B talent.
2. It’s Not All About the People
I know I said that nothing was more important than having the right people in place. However, even the best team with the best product will fail if its market does not exist. Venture capitalist Marc Andreessen says that product-market fit (a term he is said to have coined) is one of the most important factors he considers when evaluating startups.
At one of my companies, we did not achieve product-market fit. Every customer was asking for something different, and we gave it to them. We had six markets with 40 different types of customers, and in hindsight, we should have developed just one really good product. We couldn’t be all things to all people—and by failing to declare our major, we created a world of chaos for our sales, product and marketing teams.
Even if you do have product-market fit, you will not get very far if the market is not big enough. To determine whether you fall into that category, ask yourself if the market you’re targeting is sizable enough to allow for pervasive adoption of your product and exponential growth.
3. Focus, Focus, Focus
Focus and simplicity are often more difficult to achieve than building features on top of features on top of features. As a result, too many startups are unfocused. The time required to trim back an idea is not insignificant—said best by Mark Twain: “If I had more time, I would have written a shorter letter.”
In order to succeed, a startup needs to do one or two things exceptionally well; some of the greatest products today don’t have a million bells and whistles, but they solve one concrete problem brilliantly. In the early days of oDesk, we took the minimum-viable-product approach using people behind the scenes to power the service before we built additional features. This gave us the opportunity to prove that customers not only wanted the functionality, but also that they were willing to pay for it.
By keeping it simple, measurable and achievable, you’ll be well on your way. Everyone at your company should be able to articulate the goal of your business, enabling a dogged, unyielding focus on that goal throughout the organization.
4. Over-Communicate Your Strategy and Priorities
I spent a lot of my time as a CEO focused on building a culture and an environment where everyone could do their best work. Once you have the right team in place, a good leader can improve the organizational climate by providing clarity as to where their team is going, how they will get there, clear definition of roles and responsibilities, and standards to measure progress.
You can’t underestimate the importance of not only defining, but also communicating these priorities to the team. We surveyed the team to assess our culture at oDesk, and I was shocked to learn that some of the team members did not think we had a clear and inspiring vision. Others were not clear on priorities, despite the fact that I would reinforce these messages regularly. Once I got over the shock and disappointment, I was able to address our issues by providing more clarity of our messaging and then cascading it down through each of the VPs, Directors and Managers in the company.
5. Validate Your Market With Your Customers
Once you have determined product-market fit, a common mistake among entrepreneurs is seeking validation of their ideas and decisions from investors and others. The most important people any company should seek validation from are their customers. That’s right, your customers matter more than your investors—and any good investor would agree.
Do not ignore yellow lights coming from your early adopters, because their activity indicates a momentum shift. Spend time understanding all aspects of the customer value proposition.
I once heard Guy Kawasaki talk about his 10-times rule—in order for people to switch and buy your new thing, your product doesn’t need to be perfect, it just needs to be 10-times better than the alternative. Think about the 10-times rule and ask yourself: Why should your customer buy your product? How does your product fit into the rest of his or her world? What influences their opinion of the product’s value? What is your product displacing—all products displace something—and why should your customer risk making that switch? You need to be as knowledgeable about your customer and their needs as you are conversant with your own product.
6. Determine Streamlined Metrics to Measure Your Progress
I once had a board member tell me that we were over-measured and under-prioritized. It stung. A lot. But it also made quite an impression.
As a business leader, you need to figure out the metric that matters most for your company and understand that the more you measure, the less prioritized you’ll be. Don’t fall into the trap of trying to measure everything. What I’ve learned is that, in the early days, what matters most is having customers who love and use your product. Figure out the one or two best measures to determine this.
7. Aim to Exceed Expectations
Your goal should not be meeting your customers’ expectations; it should be exceeding them. Truly great and memorable products surprise and delight their customers, so don’t be afraid to spend the time and money to build an exceptional product. But don’t let this pursuit inflate your product’s ego—making promises you cannot keep will leave you surrounded by disappointed customers, investors and employees.
I cannot emphasize how important it is in the long run to over-deliver to your customers. Customers come to restaurants for a great overall dining experience, but the food is the baseline. They come back if the service and experience exceed their expectations. It’s the same with any business—the product fulfills a need, but it’s the experience that brings people back. Think about the product you’re selling, and think about where you see it going. Now take a step back and ask yourself the most important question of all—how do customers feel when they are using the product, and will that feeling keep them coming back?
Mark Twain also said, “History doesn’t repeat itself, but it does rhyme.” These learnings were extremely informative for me over my career, as similar challenges arose in the course of building a number of businesses. I’m looking forward to sharing more insights with startup founders and teams when I join Polaris Partners in September as a West Coast Venture Partner. These challenges await every startup. And the more we can teach one another, the better off we will all be.