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? 

The Only Question that Matters in Personal Branding

Managing A Personal Brand

My friend Robert D. Smith is a master of branding and a creative force. For decades, he has managed the career of best-selling author and speaker Andy Andrews.  In addition to his work with Andy, he is regularly sought after by some of the biggest names for his expert advice, creativity, and innovative approaches.

 

“Whether you think it or not, you are a brand.” @TheRobertD

 

Recently, I spent some time visiting with him in his home and office in Tennessee.  Most people know Robert as THE Robert D.  His energy is so intense that, to prepare, I downed a double espresso before our interview.  I shouldn’t have bothered because just talking with him is like plugging into an unending energy source.

In our video interview, you will hear THE Robert D’s advice on building a personal brand.

What’s the number one question that THE Robert D asks himself to know whether a person will succeed?  Drum roll….

Are you coachable?

Interestingly, when I hire an executive, that is also my number one question. Because if you are not teachable, it usually means you are arrogant. If you aspire to serve others, you are always trying to remain coachable.

 

“Winning is defined by the legacy you create.” @TheRobertD

 

Here are a few highlights from our discussion:

  • Anyone can have a personal brand. “Whether you think it or not, you are a brand.” How you look, dress, talk is part of your brand.

Gender Diversity: The New Balanced Scorecard

G. Shawn Hunter is the author of OUT THINK: How Innovation Leaders Drive Exceptional Outcomesas well as Vice President and Executive Producer for Skillsoft’s leadership video-learning products.

 

“People who are right most of the time are people who change their minds often.”
– Jeff Bezos

 

In his wonderful book, Stumbling on Happiness, Harvard researcher Daniel Gilbert points out that often our best bet for making decisions we will both enjoy and benefit from is to ask our peers who have made similar decisions.  Gilbert’s advice before embarking on an important decision is to ask someone whom we trust, who has also made the decision we are contemplating, and follow their advice.  And as Gilbert points out, once we learn their point of view on the matter, we often refuse that advice on the grounds that our situation is different.  We reject their advice claiming, “But I’m unique! How could they possibly know what’s best for me?”

 

Research conclusion: The inability to accept outside advice and insight increases with power.

 

More recent research concludes that this inability to accept outside advice and insight only increases with power.  The more power and resources controlled by an individual, the more confident they tend to be in their decision-making and the less they tend to listen and be influenced by outside opinions and points of view.  However, in their study women were often an exception.

In two phases of the study, women tended to be more open to outside points of view regardless of their position of power within the organization.  In their study entitled “The detrimental effects of power on confidence, advice taking, and accuracy,” Kelly See and her colleagues discovered that women more often reported less certainty in their decisions than men and solicited the advice and opinions of their colleagues more.  Most interestingly, because women more often solicited the opinion and advice of their colleagues, they were viewed by their peers as more confident leaders.

So while they may have lacked confidence in their decisions, women were regarded as more confident and effective leaders precisely because they asked for advice from their peers.

Take Our Introvert/Extrovert Quiz, Plus 5 Relationship Tips for Your Opposite

Image courtesy of istockphoto/jhorrocks

When I was much younger, I was what you would call an extreme extrovert.  Myers Briggs showed my “E” was almost as high as you could go.  If I went into a small restaurant, I almost felt uncomfortable unless I introduced myself to everyone else in the room.  I wanted to know everyone.  All of my energy came from other people—listening to their stories, learning what made them who they were.

I married someone who was the complete opposite.  My wife was an introvert.  We would go to a social event, and I would come home exhilarated while she would be exhausted.  It’s not that she didn’t love people.  It was just that she tired out around too many people.  She needed alone time.  She preferred one-on-one versus huge gatherings.

I’ve heard many successful relationships are built on differing qualities.  “Opposites attract” is the old saying.  If that’s true, the couples I’ve studied who have been together for many years generally start to inherit qualities from each other.