The Ultimate Start-Up Guide

Hard Won Advice from Venture Capitalists

Many of us love to read stories of the beginnings of Apple or Facebook. We imagine what those early days were like and what it would be like to be a part of a small startup that skyrockets to success.

But, of course, statistically most startups fail. Studies show 90% fail in the first two years.

That’s sobering.

 

Why do so many startups fail?

What can the successful ones teach us?

Is there a blueprint for startup success?

 

Tom Hogan and Carol Broadbent founded Crowded Ocean, Silicon Valley’s top marketing firm for startups. They have years of experience working with some of the Valley’s most successful firms. Their new book, The Ultimate Start-Up Guide: Marketing Lessons, War Stories, and Hard-Won Advice from Leading Venture Capitalists and Angel Investors, is packed with the wisdom of their experience working with numerous startups. I recently spoke with them about what makes a successful venture.

 

“Start-ups fail because of lack of execution.” -Charles Beeler

 

Why Start-Ups Fail

Everyone reads about how many startups fail. What are a few of the reasons?

Dog design. According to a recent study of 101 failed startups, 42% cited ‘no market need’ as the reason they failed. In other words, they created their product ‘because they could,’ not because of any perceived market need.

ultimatestartupguidenew2Running out of money.  Obvious but it happens more often than you’d think. Because of parsimony (giving away as little of the company as possible) or optimism (I’ve never missed a deadline in my life), first-time CEOs work from budgets and schedules that assume that everything will go right. It usually doesn’t—and so the founders fold shop.

‘Camel Design.’  If a camel is a horse designed by a committee, a camel product is one where the founders listened to too many people, didn’t trust their initial instincts, and built a product that is a little of everything and compelling to no one.

A single, dictatorial founder. It’s one thing to have a strong vision. It’s another to refuse to tolerate questions or input about that vision, especially when that input comes not just from employees but from the market. One way to track how much of a martinet you’re being is by tracking employee retention:  this may be your first rodeo as CEO, but most startup employees are on their third or fourth.

Underestimating the competition.  Sometimes it’s hubris; other times it’s just not enough time. Either way, most startups don’t respect—or keep an eye on—the competition the way they should.  Give the competition their due:  The analysts who cover your market—and who have probably had nice things to say about the competition—don’t want to look like they’re stupid. Same for the prospects who either own or are considering the competition. So keep your derisive comments to yourself.

 

“Data driven marketing is…one of the best investments an early-stage start-up can make.” -Moe Kermani

 

Translate Failure into Success

How can past failures translate to a positive experience?

It all starts with humility and honesty. Virtually every team has one or more scars from failed past ventures. The key is to admit it to other key team members and then use the lessons learned to avoid making the same mistake a second time. The other element is pattern recognition:  If you can use your past failures to recognize a mistake in its early stages (say, a bad hire), you can take corrective action before the mistake takes root and does damage.

 

“Less is more. If you think you have focus, focus some more.” -Jishnu Bhattacharjee

 

Why Diversity is Important

I love this. Many people think diversity is for more mature businesses, yet you argue otherwise. Why is diversity important for startups? 

Diversity of multiple types is healthy and invigorating for startups, not only to build a strong culture but to build better businesses. All the survey data shows that diverse teams make better decisions and improve profitability. So, just like startups benefit by being able to start fresh at the whiteboard to design a better product or service, we believe startups should try to build in diversity from their founding. We encourage startup founders to focus not only on gender and ethnic diversity, but also to consider hiring staff who bring both big-company and small-company backgrounds and to consider embracing the oddballs and misfits who represent “disruptive” thinkers. When tech titans like Apple, Google, and Salesforce have heads of HR and cross-functional teams chartered to lead diversity initiatives, you know diversity is a big deal, not just because it’s the right thing to do but because it translates into better businesses.

 

“You never really know what the market really is until you go to market.” -Pete Sonsini

 

What is post-launch depression? How do you guard against it? 

What A Caterpillar Can Teach You About Growing Your Business

Master Near Constant Change

 

Many people think that businesses should develop a strategy and stick to it at all costs.

But Sid Mohasseb, serial entrepreneur, investor, venture capitalist, and former the Head of Strategic Innovation for KPMG’s Strategy Practice teaches an entirely different approach: It’s the ability to adjust your strategy, almost constantly, that brings success. The environment is uncertain and changing, and changing with it is vital.

Sid teaches that we must push for more and evolve from one approach to another.

I recently had the opportunity to talk with him about his new book, The Caterpillar’s Edge: Evolve, Evolve Again, and Thrive in Business.

 

Prepare for Constant Flux

Why a caterpillar?

The caterpillar evolves many times over before it becomes a butterfly. It changes form until it turns into a completely different species. The caterpillar teaches us the wisdom of constant and incremental evolution and offers the promise of flying.  To compete, to advance and to win, in our businesses and in our personal lives, we must evolve constantly and purposefully, always.

 

“Things do not change. We change.” -Henry David Thoreau

 

How is the game changing? And how do leaders prepare for the constant flux?

Innovation is constantly approaching from every corner of the world. The speed of change fueled by unprecedented technological advancements and constantly increasing customer expectations are challenging companies to “stay relevant” – competitive advantages are temporary. The game has changed from, “How do I gain an advantage and defend it?” to “How do I change to stay relevant?”

To win in a state of constant flux, leaders must shift their minds and change their actions. First, by realizing their addictions (old assumptions, orthodoxies, biases, etc.). Next, by aligning with uncertainty – no plans can be permanent and no decisions are certain. Leaders must learn to live with probability and a portfolio of related plans – always ready to take the path that offers the most likelihood of success. They should also appreciate the reality of their capabilities and aim to build the future in increments; success cycles must be shorter and capabilities (people & systems) have to be created accordingly. Last, leaders must constantly look for the next advantage and aspire for more “Aha’s.” They should look for and discover the next challenge or opportunity, always; innovate, always (create new value), and evolve, always.

 

“To win in a state of constant flux, leaders must shift their minds and actions.” -Sid Mohasseb

 

How to Embrace Change

Why do we so often refuse to deal with change and uncertainty?caterpillar-cover

The refusal is more natural than intentional. We refuse to deal with change because of our fears of unknown (what is on the other side of change) and comfort with the status quo (comfortable routines we are used to and have served us well in the past). Most people embrace change when they i) realize the severity of the problem they face and ii) gain trust that what they can change to is a better state. We often refuse to change because we believe that the status quo does not present a major danger and/or we don’t trust the alternative paths offered by our leaders.

At business school and later at work, we are trained to look for certainty to plan to and execute against – assuming reduced risk. In our personal lives, we are comfortable living with probability and operating in uncertainly – there is a 40% chance of rain, and we decide, based on our risk tolerance, to take an umbrella or not. In our professional lives, we are expected to be certain and execute with confidence in outcomes. People, on a personal level, can innately adjust to uncertainty. However, they are reluctant operating with uncertainty at work because corporations expect and reward the illusion of certainty.

 

“The only thing that is constant is change.” -Heraclitus

 

3 Categories for Leaders to Plan in a World of Change

23 Hacks to Boost Your Creativity Instantly: FREE Webinar

Awaken the Creative Genius Inside

 

Do you think of yourself as creative?

Ever wish you could be just 5% more innovative?

Do you know how to create an environment that fuels your creative genius?

 

“Vision is the art of seeing the invisible.” –Jonathan Swift

 

Each of us can become more creative. Inside YOU is creative genius, as unique to you as your fingerprints.

It’s up to you to unlock it.

Over many years, I’ve had the opportunity to interview numerous experts in the field of creativity and innovation. Whether learning from an entrepreneur or an artist, I have collected some of the best advice available on how to boost your creativity.

And these experts have shared with me what we get wrong when we think about innovation. There are myths that we believe to our own creative detriment. Don’t believe these limitations which lock you in to a dull, gray world!

 

“This world is but a canvas to our imagination.” –Henry David Thoreau

 

Unlock Your Creative Genius!

You can now access a FREE webinar designed to Unlock Your Creative Genius.

It’s free to all Leadership Insight subscribers.

So, don’t wait! Subscribe today and claim your seat in this online webinar.

If you do, you’ll learn the:

  • #1 true enemy of innovation
  • 9 myths and misconceptions about creativity
  • Why being stubborn and unreasonable may be just the ticket
  • 8 symptoms of a culture lacking in innovation
  • 4 creative styles
  • 23 hacks to boost your creativity instantly
  • What color to paint your room to increase your creativity
  • How to use exhaustion to your creative benefit
  • What color to make your wallpaper on your phone
  • How to use procrastination to help create masterpieces

Unlock YOUR creative genius! Learn how anyone, anywhere can tap into the innovator inside.

 

“You can’t use up creativity. The more you use, the more you have.” –Maya Angelou

 

“Creativity is the way I share my soul with the world.” -Brene Brown

 

“Creativity is a wild mind and a disciplined eye.” -Dorothy Parker

 

Why not make this the year where you uncover the artist, the innovator, the creative genius inside of you?

 

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How to Create a Culture of Innovation

Create an Innovation Culture

 

How do organizations revolutionize their products and services?

Is it possible to create a culture of innovation?

Is organizational culture linked to innovation and competitive advantage?

 

Soren Kaplan, Ph.D. answers these and other questions in his new book,Invisible Advantage: How to Create a Culture of Innovation. After reading his book, I had the opportunity to ask him some questions about his research in the area of innovation, disruption, and corporate culture. Soren has been recognized as a Thinkers50 Global Thought Leader. He’s a keynote speaker, a consultant, and an author. You may have read his previous book, Leapfrogging.

 

“Competitive advantage is temporary.” -Soren Kaplan

 

What is Missing from Culture Discussions

Organizational culture has been the rage in discussions for quite some time. What have many of these discussions missed?

People have been talking about organizational culture for years. But few discussions on the topic have explicitly linked culture directly to innovation.  Even fewer focus on the integrated set of things that leaders can do that directly create a culture of innovation in a truly systematic way.

It’s one thing to create rewards for example. It’s another to look at how rewards, metrics, processes, and storytelling can all be used together to change culture for the better. The problem is that most leaders do things that both support and contradict a culture of innovation all at the same time, like telling people they want innovation but then not giving people time to innovate.

To many executives, culture has become a complex and mysterious topic.  Business and leaders have lost sight of the fact that organizational culture is actually pretty simple.  Here’s how it works:  Employees have experiences in organizations that are influenced by leaders’ conscious and unconscious decisions and behaviors. Experiences shape assumptions about what is both desirable and undesirable behavior.  Assumptions, in turn, influence and reinforce behavior.  It’s an ongoing cycle. That cycle can be either virtuous or vicious and can lead to innovation or stagnation.

 

Why Culture is a Sustainable Advantage

Share a little about your thinking of culture as a sustainable competitive advantage.

The Invisible AdvantageThe first reality in today’s disruptive world is that competitive advantage is temporary. Products, services, and even business models become commodities over time. If organizations do not continually invent and reinvent their competitive advantage, they risk being disrupted into obsolescence.  Given all the disruption out there, this fact is the no-brainer.

As a result of the commoditization of just about everything, culture becomes the only sustainable competitive advantage. Culture represents the norms and values that drive behavior.  When it’s focused on and reinforces innovation, it becomes the invisible secret sauce that drives employee engagement, business growth, and continuous reinvention.

The bottom line is that the soft stuff is the hardest stuff for competitors to copy.  The goal is to create an “invisible competitive advantage,” something I call your “Invisible Advantage.”

 

“The only defensible competitive advantage is your culture.” -Soren Kaplan

 

In what ways can culture stifle innovation?

How to Win the Innovation Race

Change A Culture to Change the Game 

 

Why do some companies win at innovation while others fail?

How important is innovation to your growth?

 

From individual entrepreneurs to large global organizations, it seems everyone is chasing innovation. And it’s no wonder: Economists estimate that 80% of business growth comes from innovation.

So how do you develop an innovation culture powerful enough to consistently produce?

Gaia Grant and Andrew Grant are the authors of The Innovation Race: How to Change a Culture to Change the Game. They are the Directors of Tirian International Consultancy and help create innovative cultures for a range of businesses.

I recently spoke with them about global innovation.

 

The top 25% of innovative companies grow 2x as fast.

 

The Pace of Change

How is the accelerating pace of technological innovation impacting strategy and innovation?

Andrew Grant: Most people would be aware of how the pace of technological innovation has been accelerating, but conducting the research for our book The Innovation Race has really highlighted this issue and made us think about the potential impact of this manic race. We have discovered that the pace of change is now so rapid that we are in an unprecedented position. It’s like there’s an automatic speed-up setting on the treadmill that can’t be changed, and if we’re not careful the pace will just become too much to handle. Since the rate of technological innovation in particular has become exponential, a whole new leadership strategy and approach will be required. Small incremental innovations will not be enough to keep up. It will also be necessary to look ahead and anticipate the next new trends. By constantly looking for breakthrough new ideas and being ready to implement them faster, it can be possible to stay ahead of the curve. Agile new systems and structures will need to be built that can respond rapidly and effectively.

What is sustainable innovative action?

Gaia Grant: There’s no point innovating for the quick sale and short-term success. Innovation also needs to be able to be sustained over the long term. And, at a deeper level, it should be socially and environmentally responsible for the good of all people and the planet. Sustainable innovative action requires a balance of focusing on both short-term survival and long-term strategy: On the one hand the organization needs to be flexible enough to adapt to new needs and trends, but it also needs to be stable enough to be able to ride out the stormy times with a firm foundation. This will be both the greatest challenge and the greatest opportunity for success.

 

Authentic Connections Foster Innovation

How is empathy related to innovation?

andrew and gaia grantGaia Grant: Many people will innovate from their own perspective. That is, they will decide what they think the end user wants or what will sell the best and innovate based on this viewpoint. But being able to see from another person’s perspective is essential for innovation that connects with real needs, innovation that can make a difference in people’s lives and in the world – or purpose-driven innovation – and this requires empathy. To really embody empathy, you need to be able to see what someone else sees and, more than that, to be able to feel what someone else feels. This ensures the innovation process is human-centric and user-focused rather than innovator-centric. What’s essential to remember here is that the empathy process should not be a shallow marketing tactic but rather an authentic connection that enables the innovator to address real issues and meet real needs.

 

“Purposeful proximity in clever collaborative spaces can create hothouses for innovation.”

 

How to Create a Culture of Innovation

How do corporate leaders foster and encourage a sustainable innovation culture?

Andrew Grant: Most people assume that innovation is all about openness and freedom, but this is only part of the equation. Sustainable innovation needs to focus on balancing both openness and freedom – as well as the antithesis of these. That is, while there certainly needs to be openness and freedom, there will also need to be some focus and discipline to effectively guide the innovation process. Maintaining this delicate balancing act is at the crux of a sustainable innovation culture. The strategic leader will constantly be adjusting the balance to fit the market changes along with the organization’s current needs and future goals. It needs to be an ongoing constant strategic action, not a set-and-forget approach. It’s situational leadership.

 

4 Paradoxical Challenges to Innovation