“Now I’ll be bold as well as strong. Use my head alongside my heart.”
I Will Wait – Mumford and Sons
In my last post, I talked about lessons I learned about myself during my continuing journey as an entrepreneur. You gain knowledge, mostly from your mistakes and your peers. You try to keep making constant improvements to your business, your team and your leadership skills. In the true entrepreneurial spirit of paying it forward, I thought I’d share some lessons about what I’ve learned about actually managing a business:
1. Be smart about funding. Raise money when you don’t need it, and raise it from the right investors. Don’t wait until you’re cash strapped to push the panic button, and look for investors who go beyond the wire transfer; those that will provide consistent guidance and be true coaches along the way.
This is clearly easier said than done. I have seen too many first time founders who have focused on the wrong things like valuation or control issues instead of getting investors who will add value beyond their cash. Some investors can actually harm your business- I was unfortunate to have a few of those in my first company and it had a very negative impact on our growth.
2. Fail fast. Most new ideas won’t work but you need to keep trying. Then, be ruthless about killing the ones that aren’t working and try to do it as quickly as possible. Time, money and focus are very limited resources in a startup. An idea that isn’t working can be a big drain.
3. Build a business, not just a great product or service. While it is fine to start with a great idea for a service or product and not worry about revenue immediately, you want to have a clear picture of where you will get paid and how you will build a sustainable business. Today, in the internet space, you can build interesting products quickly but it is much harder to build long term businesses with deep competitive moats.
4. Look at each market differently. When expanding beyond your own backyard, be prepared to address the specific concerns of multiple markets – a one-size-fits-all global strategy doesn’t work. Geo-specific insights, customer feedback, local case studies and social media channels are pivotal resources for establishing a voice that resonates with consumers in local markets across the globe.
5. Embrace competition. Don’t let competitors keep you from pursuing your idea. Good competitors can help your efforts by laying a foundation of credibility for your product category, help isolate your competitive niche and compel you to bring your best to the marketplace. We often wished we had more competition in my first business because we had to create the market by ourselves.
Running a start up today was different than it was 20 years ago. In 1994, when I started my first company, Incubators didn’t really exist outside of biology class. “Online” meant Compuserve and Prodigy on a speedy 28.8 modem. Mobile apps were eating Taco Bell nachos while driving.
Today, capital, knowledge, bandwidth and talent are in great abundance. What hasn’t changed is the belief that an inspired idea paired with an entrepreneurial spirit can lead to great things.