tl;dr: It’s faster to learn how not to fall down from people who have already tripped than falling yourself. Let’s talk startup lessons.
While successful entrepreneurs might attribute their success to factors like luck, timing and relentless hours of hard work, pure skill is often the deciding factor.
Founding a company isn’t easy. 50 percent of businesses fail within 5 years. The good news is learning from those failures increases your chances of success, according to a study on luck versus skill in entrepreneurship and venture capital.
The study found that founders of a previously successful business have a 30 percent chance of success with their next startup, and those who’ve failed at a prior business have a 20 percent shot. Both compare favorably to the 18 percent chance for first time founders.
One thing all successful entrepreneurs have in common is grit, and the willingness to keep trying even if immediate success doesn’t fall in their lap.
I know that because I’ve been around the block a time or two. I sold my first startup to WebEx nearly a decade ago, and more recently founded and grew gamification company Badgeville through its Series D. About three years ago, I founded my third startup, BetterWorks, and have scaled our team to support our growth to more than 200 enterprise customers.
The successes I’ve seen along the way have only emerged thanks to the hundreds of small failures and lessons learned. Here are a few of the things I wish I knew when first starting out.
Know Yourself, And Customer
Decide what you are and who will buy you. Failure to focus will be debilitating to your success.
In the very early days, it’s easy to stick to your vision. But as you grow, it’s an increasingly difficult task when big tag customers ask for changes to your product or when prospective competition moves closer to your territory.
It’s important to strike a balance between sticking to your strengths and evolving enough to keep up with market demand.
Continuing our focus theme, deciding exactly who you’re selling to is critical.
At Badgeville, I’d stay up late worrying that the daily work of our employees wasn’t contributing to our company goals. I knew I wanted to introduce BetterWorks as a platform for mid-sized and enterprise companies that were feeling similar pain. Our marketing, product, engineering and sales operations focus on that target market, but for now, only in the United States market.
I’ve been asked two dozen times about international expansion—and yes we’re selling to some companies outside of the United—but I know moving to quickly away from selling to U.S. enterprise organizations would take away from our potential success.
Stay focused on what you do and who will buy you, and take over that market.
The Grandparents Test
Call your grandparents (or even your parents) and tell them what your startup does. If it makes no sense, figure out how to explain it differently.
When I’ve failed to do this in the past, we’ve missed out on revenue from it because our idea didn’t resonate enough to close the deal.
For a first time founder, using jargon or complex phraseology might make it seem like you’re better than the competition, but in reality, it just adds unnecessary confusion. [Editor’s note: Yes, but what about my hybrid PaaS on-demand drop shipping free range coffee pop up Uber for X?]
At BetterWorks, we called ourselves “Fitbit for work,” but as performance management grew as a widely understood concept, we began calling ourselves an “enterprise goals platform.” We updated our sales deck every week for the first 6 months so we could nail the messaging. It’s all about what sits best with your target audience.
Treat Customers Like Gold
You should spend 1000 percent more time on customers than locking down investors.
It can be tempting for early-stage founders to spend calories and minutes pitching investors, but if you are building a solid product that delights your customers, it won’t be necessary. Take that time you would have spent on investors and invest it into the success of your customers. An early investment in customer success will drive referrals and facilitate upsells.
When you’re building product at first, it’s easy to focus on the obvious things like engineering a product and selling it. But if you fail to have a customer success plan in place, you are missing out on revenue.
Give Your Team A Clear Direction
In my early startup days, I spent a particularly long time learning this lesson: You need to find a way to be hands off with your team.
For me, that means goal setting and transparency. I’ve spent days and nights wishing I could get a better pulse on how my team was doing in real-time, and if all of their hard work was helping the vision come to fruition.
It requires the strategic hiring of passionate people to carry out a company vision, but what happens after that?
As the founder, it’s your job to rally the troops around your mission. When I think about my past experiences at previous startups, I can’t help but wonder how much more effective we would have been if we had openly set and shared our goals.
This is exactly how one of the best models for successful startups, Google, grew from 40 to 60,000 employees. Google’s success didn’t occur because of its goals, but because of what sharing them meant—transparency and regular feedback paved the way for a culture of innovation.
When employees set goals and know what they’re aspiring to do, they will find the inspiration to make it happen, and as a founder, you can rest assured that your team is running (or crawling as it sometimes feels) towards success.