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? 

5 Tips to Avoid a Branding Collision

 

A few weeks ago, I was in the middle of a traffic jam.  Not the slow moving type, but the “get comfortable you’re going nowhere type” that shouts, “You missed your morning meeting!”  Realizing that a traffic accident could be to blame, I decided to practice gratitude.

“I am thankful that I am in a comfortable car, safe and sound.  God, if someone is in an accident up ahead, please be with them and provide comfort.”

A short time later, the traffic began to move.  It’s a good thing because I can only meditate for so long before I feel trapped.  I’m sure I was there for at least an hour practicing mindfulness and gratitude, which means I was stopped for about 27 seconds.

 

Accident Ahead

As we moved up, sure enough, I could see what was causing the delay:  an accident.  I did what you would do.  I steeled my eyes on the road ahead and drove without so much as glancing.  Yeah, sure you do.  Trying to keep moving, I glanced ever so quickly to note the vehicles, the emergency responders, and a fleeting view of the injured.  I try not to look—I’ve read that rubberneckers cause numerous secondary accidents—but I’ve also read that looking may be good for you.  Eric G. Wilson, the author of Everyone Loves a Good Train Wreck: Why We Can’t Look Away, argues that it helps us understand life’s deeper meaning.

At the very least, we can tell ourselves that studying wrecks helps us learn from others’ mistakes.

As with accidents, I watch corporate disasters the same way.  Several memorable disasters including Bridgestone’s tire recall, JetBlue’s trapping passengers onboard as categorized by Business Insider.  Anything from the Paula Deen meltdown to Target’s PR nightmare qualifies.

This past week, I witnessed a different type of branding wreckage.  Sure, it may not be as noteworthy as the mistakes above.  It doesn’t involve a consumer brand name, and it doesn’t endanger anyone’s health nor involve racist or offensive remarks.

Still, it provides lessons that are worth exploring.

 

“If you are not a brand, you are a commodity.” –Philip Kotler

 

Platform Confusion

Last week, the National Speakers Association (NSA) announced it was jettisoning its venerable brand in favor of a new name.  That name is Platform.  Though I was not in attendance, I almost immediately was made aware of the announcement via emails, texts and tweets. (See also Rory Vaden‘s excellent post on this subject).

Platform?

It was almost as if I could hear the tires screeching, the glass shattering, the metal twisting.  This was a branding collision, and the onlookers would be gathering to watch.  Why?

First two disclosures:

 

DISCLOSURE #1

One of my close friends is Michael Hyatt.  He is the NYT Bestselling author of Platform: Get Noticed in a Noisy World.  He runs a conference called the Platform Conference and has an online community that will make your head spin at Platform University.  He was the driving force encouraging me to blog.  On the book jacket, you will see my endorsement:

“Michael Hyatt, one of the pioneers of social networking and blogging, shares his successful blueprint for raising your visibility. Learn from his experience and save yourself time, money and frustration by following his step-by-step advice.”