What do you need to know before embarking on a startup journey? A good question to think about if you are interested in startups and entrepreneurship. To me, there are two aspects that you can spend time learning about building companies: 1) what is common among successful companies and founders 2) and what is the hardest part of running a startup. Most other knowledge is either contextual in nature or you don’t need to learn now.
1/ What is common among successful companies and founders across verticals and markets: in simple, they are good at what they do. They work on problems and build products for which there is a need in the market. In summary, they understand the problem they are dealing with. They spend time learning about the product, customers, and the market.
2/ Next what is the hardest part about running a company: almost everything. There is no easy part of running a business. But you don’t need to learn all of it before starting your journey. In fact, you can’t learn about operational intricacies unless you get into the game. What you can and should learn, however, is the commitment, perseverance, and psychological strength you need to run a company.
We have models and programs for launching and building successful companies. There is lean startup model where you take an experimental and low-cost approach to launch, test, and improve your idea/product and grow your business. There is business model canvas that you can use to design your business, strategy, and so on. Blue ocean strategy and disruption theory inform our understanding of how to choose a winning market and effectively compete with the incumbents. But there is scant knowledge regarding how to prepare yourself for a startup journey. It is not that you need a model for that but it is useful to have some understanding of what you are signing up for so that you can have an informed journey.
I don’t subscribe to the idea that you need an MBA degree in how to start a startup in order to really start and build a successful business. In fact, I subscribe to the opposite idea that reading too much about business could potentially reduce your chance of building a successful business. What I believe, however, is that being able to think independently is critical for building companies.
Thus the first aspect of preparation before starting a startup is that you are capable of thinking. The second aspect of the act is knowing what’s important when you are in the process of building a company.
There are aspects of building a business that you can’t learn outside of doing the very job, there are aspects you don’t need to know before doing it and there are aspects that are useful to know. For example, you don’t need to know about the intricacies of funding raising and equity before starting a startup. But you must know your product and service well. Your domain knowledge will make a huge difference.
In this article, my objective is to offer you both a glimpse into what a founder’s journey looks like as well as to inform you what are the things you should truly care about before starting a startup.
1/ The hard thing about hard things
Running an early stage business takes nerve. Many founders suggest that it is close to eating glass. In his excellent book The Hard Thing About Hard Things Ben Horowitz of A16Z illustrates the most important aspect of a founder's journey:
“The hard thing isn’t setting a big, hairy, audacious goal. The hard thing is laying people off when you miss the big goal. The hard thing isn’t hiring great people. The hard thing is when those “great people” develop a sense of entitlement and start demanding unreasonable things. The hard thing isn’t setting up an organizational chart. The hard thing is getting people to communicate within the organization that you just designed. The hard thing isn’t dreaming big. The hard thing is waking up in the middle of the night in a cold sweat when the dream turns into a nightmare.”
This is the reality.
Startups are hard to the extent that it is hard to explain if you have not tried it yourself. There is seldom any parallel. You can’t find anything similar to a startup in the corporate world. The amount of determination, ambition, and commitment a startup requires doesn't equal anything. Knowing that you are signing up for an extremely difficult deal is useful knowledge for founders.
2/ The right time to start a company
There is no ideal age to start a company. Many people try to say that young people do better. Others argue that the average age of successful founders is 35, which means more mature founders do well compared to the young founders.
There are all types of success stories. There are boy millionaires. There are successful founders who started their business after retirement.
I think entrepreneurship is about probability. Your chance of success improves with your ability to play the game for a longer time. It is similar to the idea of robustness. Your room for absorbing error defines your ability to absorb risk. Similarly, founders who have the ability, resources, and room for enduring failures usually succeed.
Starting a business when at university appears practical to me. Your cost of failure is low when you are at university. If your venture doesn’t succeed, you learn some of your best lessons in life.
On the other hand, more mature entrepreneurs do better because by the age of 35 you have seen enough of life, you understand the reality of words like commitment and perseverance better and you have built enough social capital that you can take advantage of. So if you are waiting or trying to understand when you should really start your business, stop. There is none.
3/ The right thing to know
Successful startups build great products that people want and are willing to pay for. This is, in fact, the most useful founder knowledge - learning to build products that people want. The rest, how much you know about startups, raising money, HR, and so on, is often irrelevant as long as you can build something that people want.
As a founder, your most important skill is your ability to understand your users. As long as you can understand your users better and build a product that people want you should be okay. This is where curiosity often works. If you are curious, you can build a knowledge base allowing you to explore ideas across verticals.
Contrarily, your knowledge regarding operational intricacies of running a startup such as raising money, equity, legal issues is seldom necessary. It is probably net-positive if you learn about some of these things but they are unlikely to put you in an advantageous position when you are just getting started.
4/ Startups are the ultimate example of hyper-reality
One meaningful difference between startups and corporate jobs is that startups are the representation of hyper-reality. In a corporate setting, you can game the system. You can build a better relationship with your boss and thus move up in the ladder. There is no such thing in a startup. Your boss is customers and customers seldom pay attention unless they find value in your product or service.
The challenge most people face when starting a company is that they try to game the system, find a shortcut to raise money, or achieve quick success. Unfortunately, they fail because there is no shortcut in a startup.
We are used to gaming the system almost everywhere, from schools to corporate. But it stops working when you get into building a startup. You deal with reality here. You build a product and take it to the market. The market then decides whether your product deserves any attention or not. If you build something that people want, you have a chance to succeed. If not, you fail. That's simple.
5/ Startups are all-consuming
It will keep you occupied all the time and that too for many years. Startups are all-consuming on several levels. In the early days, it is a lot of work. It is likely that you will be doing most of it in the early few years because startups are often resource-constraint organizations. This pressure does not ease as your company grows and matures. In fact, it intensifies. The nature of work changes but the volume does not reduce.
Another layer of all-consuming nature is psychological. There is an endless torrent of challenges in startups. Anything that can go wrong will go wrong. And this goes on for years. There will be things going wrong all the time. In most cases, you will be the only person with understanding and willingness to solve them. Hence, you will almost always be preoccupied with running the business. If you go on a vacation, these challenges will wait for you to return and take care of.
However, I do think that you can have a life while building a startup. It depends on how you approach your work and other areas of your life. For example, having a routine is useful.
6/ Stop trying to come up with winning startup ideas. Instead, follow your curiosity.
Because most winning ideas do not look like one. And if it were, someone would already have built it. Most successful startup ideas are either complex or boring or both. Hence most people overlook these ideas because nobody, unless you are someone supper interested in it, wants to deal with a boring problem.
As a result, if you are actively looking for startup ideas, you are basically wasting your time. Instead, be interested in things and problems. Work on something that you find invigorating.
7/ Startups take a long time to work.
Chaldal was founded in 2013. Shohoz was founded in 2014. Uber was founded in 2009. Startups often take a long time to get to a point where you can consider yourself a success. Many startups go through multiple pivots before getting to a point where things start to look better. If you are looking for an option where you can get rich quickly, you should be warned. It is going to be a long time.
Links and books