Startup Success

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Top Ten Misconceptions about Startup Strategy

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Top Ten Misconceptions about Startup Strategy

We were recently asked to do a webinar about startup strategies for an audience of angel investors. The reason we were asked to talk about this topic is because many people are confused about a strategy versus a tactic. We thought we’d share our list of misconceptions about strategy with you, our readers as well. Let’s start with a definition. We define strategy as “the process of linking today’s choices and actions with tomorrow’s destination, under uncertainty.” You see, there a many, many actions any startup can take. Having a strategy means having a plan for where you are going. With that overarching plan, then daily and weekly choices have “bumper rails” because only actions that fit with the overall strategy should be taken. The startup’s strategy helps take alternative actions off the table.

We are going to do this list like a “David Letterman Top 10.” We’ll start with number 10 and work our way to the top. And these are misconceptions, so the opposite is true!

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When Should Startups Punt, Pivot, or Proceed?

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When Should Startups Punt, Pivot, or Proceed?

You may recall our “PEP” model for successful entrepreneurs—that success is based on a combination of Passion, Experience, and Persistence. We have another model grounded in Ps that has come up several times recently in discussions with founders: When is it time to throw in the towel? Or change directions? Or jump all in and put the pedal to the metal? Virtually all startups have those inflection points, both negative and positive, that lead to doubt—or euphoria. The venture journey is littered with such times, both for specific decisions (like letting an employee go or changing terms with a customer, etc.) as well as overall sink or swim moments. So how do you approach these inflection points?

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How To De-Risk Your Startup

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How To De-Risk Your Startup

Aha, we got you! Actually, we want to talk about the whole notion that you can “de-risk” a startup. We frequently hear founders and investors make a statement like “This is a good investment because it’s already been de-risked.” Or advisors will say, “We can help you de-risk your startup.” This makes us want to remind people about the difference between uncertainty and risk. Risk is probabilistic and can be quantified. Uncertainty is about the unknown. It’s hard to put a probability on the success of a startup. So, moving startups forward requires reducing uncertainty rather than risk.

Let’s work through a more tangible example. On one of our favorite mountain bike trails, there is a set of four stumps.

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How Venture Ecosystems Enable Startups To Succeed

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How Venture Ecosystems Enable Startups To Succeed

The focus on “ecosystems” as a contributor to startup community success has recently begun to receive additional attention from academic researchers. A healthy and vibrant entrepreneurial or venture ecosystem can provide a nurturing environment for startups and innovators. This boosts job creation, economic growth, and talent attraction. Innovation itself includes both de novo (i.e. brand new) startups as well as new undertakings by large and small organizations. As a result, we prefer the term “venture ecosystem.” Think of a venture ecosystem as being kind of like a marine reef. It is a home for a variety of life forms including coral, fish of various types, and a host of other life forms with often symbiotic relationships. So what makes up an “ecosystem?”

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What Kind Of Experience Do Startup Founders And Founding Teams Need

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What Kind Of Experience Do Startup Founders And Founding Teams Need

We’ve shared the PEP model for founding teams before - Passion, Experience and Persistence. Since we’ve already covered the 2 Ps (click above to read about them), we thought it was time to talk about Experience.

There is a myth in startups that startup founders are young people, fresh from education, and looking to disrupt the world. We see icons like Bill Gates, Mark Zuckerberg, and Steve Jobs and think, “You have to be young to start a company.” There are notable startup founders who are young. But the average age of all startup founders is 42 years.

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Startup Founders Need to Be Both Passionate and Savvy About the Solution They are Creating

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Startup Founders Need to Be Both Passionate and Savvy About the Solution They are Creating

In The Titanic Effect, we talk about the PEP model for startup founders – Passion, Experience and Persistence. We’ve shared some ideas about Persistence and how to have it. But we’ve been doing research about the importance of passion for the last 5 years or so. So we thought it was time to share what research has shown.

The whole reason that researchers have looked at passion is that they’ve been tracking what leads to startup funding. In the 1980s and 1990s, the primary focus was on understanding what criteria venture capitalists and then angel investors said they used to evaluate venture pitches. One key finding from this time, was that the founder and management team rose above all other criteria. So, researchers looked into why the founder and his team were so important. Investors recognize that creating a scalable startup takes a lot of work, overcoming many challenges. So they wanted to make sure they bet on the right people.

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“Self Made”—What Can Startups Learn From Madam C.J. Walker

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“Self Made”—What Can Startups Learn From Madam C.J. Walker

We recently watched the Netflix original limited series “Self Made,” inspired by the life of Madam C.J. Walker. We do understand that elements of the story were adapted for entertainment value, but it was nevertheless an inspiring and educational story about a truly self-made millionaire. In fact, Madam Walker not only was the first self-made woman American millionaire, she also happens to have been the first self-made Black millionaire. We found it interesting to note that she moved her company to Indianapolis in 1910 while the Titanic was being built. There are several key takeaways we wanted to share from the series that we believe are important for entrepreneurs and startups everywhere. Oh and if you haven’t watched Self Made, we highly recommend it: 4 episodes of 45 minutes each are well-worth the time. It’s a good story, good character development, and very well acted.

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Let’s Talk About How to Persevere Through the Startup Grind

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Let’s admit that starting a company is really hard. It takes a lot of grinding. For those you who aren’t sure what the startup grind is, it is the epitome of the definition of grind: Dull, hard work; A crushing or grating sound or motion; or To wear down, polish or sharpen through friction. You see, creating a company from nothing takes hard work. It’s the kind of hard work that on the one hand is dull, but on the other hand is exciting because you know you are creating something from nothing. But it also encounters a lot of friction and it can be soul crushing. Doing the thousands of small, annoying tasks that move a company forward is just plain hard and painful. But, the best startups founders have to persevere through these struggles to move the ball forward. If they don’t, the ball just sits there. And of course, we all want to work smarter rather than harder. But, it takes PEP – Passion, Experience and Persistence. But, how do founders persist in the face of these challenges?

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How Can Startups Get Others to Help Them?

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How Can Startups Get Others to Help Them?

Yes, startups need dollars to move forward. But they also need help, lots of help. This help comes from getting introductions to potential customers, employees, and investors; finding beta customers to test their products; and even having advisors to help them work through tough decisions. They need others to advocate for them. But how do they get this help?

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Funding 101 for Startups

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Starting a business requires navigating many kinds of uncertainties. Startups need to take many detailed steps, including: 1) Selecting a market, 2) Researching customers’ needs, 3) Picking a name, logo and domain name, 4) Creating a website, and 5) Starting to produce your offering and marketing it. In addition to time and effort, all of these steps take money. Every new business has to think about where it is going to get capital. When starting a business, the key is to get the kind of capital that matches the kind of business you are starting…