How to launch a startup and not die along the way
Want to know the key elements of a successful startup? Focus on being the best in one (and only one) product or service; avoid cheap customers; define a philosophy, and defend it; convince customers to work with LEAN; and promote a happy working ecosystem.
"A startup is a temporary organization searching for a repeatable and scalable business."
Steve Blank, entrepreneur at Silicon Valley.
"A startup is a human institution designed to deliver a new product or service under conditions of extreme uncertainty."
Eric Ries, in his book Lean Startup.
These are possibly two of the most commonly used definitions of a startup. The key concepts are:
· temporary organization
· repeatable and scalable business model
· new product and service
· extreme uncertainty
There is an increasing number of Spanish, entrepreneurs and young professionals that move into the market with the idea and hope of founding a company that meets these conditions. Most of these attempts fail along the way, even when their outlook was good and they had major funding. However, some startups are able to stand out from the crowd, define a brand-new competitive product and attain success. If you have been thinking of implementing a similar idea for a while, these tips may help you make the best decisions in addition to dedicating countless hours of hard work to your enterprise.
1. You don't need to be the best at everything
Often, when you create a startup, you may make the mistake of wanting to be the best in various areas or fields albeit these may be adjacent. To be truly competitive and attract customers, you need to offer added value to the market and this is hard to achieve in multiple areas.
For this reason, it is better to concentrate your resources on being particularly good at something specific rather than diversifying and offering too many dispensable products and services. In the end, a startup should be defined by a product or service that answers the following question in a line of text: "What can we do for our customers that is special?"
You can be the best in the world at making screws, but you don't necessarily need to be good at making nuts. The magical side to startups is that it is enough to be the best at making screws to be successful.
A communication agency may revolve around thousands of issues connected with transmitting ideas and values to the public. However, in the end it must choose what it wishes to be the best in the world at: specialized content, digital marketing, SEO, design and UX, product, infographics and data display... It is hard to be the best in all of these fields at the same time. It is best to choose an area and channel your resources to looking for talent and hope that your customers see the value in your choice.
The same applies to a technology company that offers services on the cloud or a specific product and service through a native application.
2. Talent is good, but it must be loyal to your philosophy
In today's business world, there is a ruthless race for hiring talent at the lowest possible cost. The more talented people you have in your team at the lowest possible cost, the more likely you are to succeed in the market. This sounds like a simple rule except that there is lack of talent and, as such, it is difficult to find it, particularly at low prices. And this is even more difficult if you are clear about the fact that your company's success depends on how this talent adapts to your corporate philosophy. They may be great professionals but not have a good relationship with their team, management, customers... the ecosystem.
As the founder of a startup, you have hundreds of duties, obligations, tasks to do. However, the most important role consists in being the number one guardian of your company's philosophy – the soul that turns a company into a quasi-human being. It enables customers to distinguish the company from its competitors and to distinguish its personality, which is often found in its product or service. This philosophy also tends to create a cohesive group of employees, a community.
3. Customers that are prepared and have enough financial resources
It is often said that, in most cases, companies are a reflection of their customers. Even though this may sound like an exaggeration, it is in fact true. The best tip for any budding company, be it a startup or not, is to rely on the highest possible number of well-prepared customers with substantial financial resources. Customers that are offered a low-cost product with a discount are usually the most reticent to giving a positive score to the end result. A cheap product or service generates a sense of uncertainty, of low-quality result, of lack of exclusivity.
Small-sized enterprises must have a team member with sufficient training, contacts and talent to attract high-value customers. Customers that will demand exclusive products or services that are highly innovative and distinctive, and customers that are willing to pay for the product's actual worth. It is better not to include customers that do not match this profile in the portfolio.
4. Apply LEAN philosophy to the product
A startup must always be focused on two goals: 1) to deliver the greatest possible value to its customers; and 2) to do it using the minimum necessary resources. It is better to reach an agreement with a customer to deliver an adjusted product with no excesses and at a lower cost even if the customer could have paid for a bigger product at a much higher price. In this way, the team at a small company is able to center their efforts on a product's key elements and avoid over-production or waste-filled production.
When you remove this shallow layer, it is easier to achieve quality and value and reduce delivery times, i.e. time to market. These are the main principles of LEAN methodology and the application of continuous innovation, as explained in books such as “LEAN Startup”, by Eric Ries.
This may be particularly difficult when you have applied the above point 3: customers that are prepared and have enough financial resources to commission large-volume products or services. A lot of talent is necessary to complete this negotiation period successfully. This is often an iterative process where the company must convince its customers that getting less is in their best interest. Almost without exception, LEAN methodology stipulates that less is more.
5. A startup with happy employees
Companies may be a reflection of their customers but they are even more so of their employees. The quickest way to fail usually involves demotivated, frustrated teams with no close link to the other team members and the company's philosophy. It should be an indispensable condition to build happy teams that are emotionally connected to what they do and to their physical and personal environment and that identify themselves with the values of their company, their colleagues, a transcendent goal.
Being able to generate an ecosystem that guarantees reasonable happiness with what is done within the company is a complex task; sometimes it disappears without warning, other times it is almost a miracle. When you have team members that are motivated, positive, pleasant and dynamic, their contribution is as valuable or more valuable than the contribution of professional talent, especially if they do not add to the group's happiness.
Sign up to the BBVAOPEN4U newsletter and receive tips, tools and the most innovative events directly in your inbox.