I was working on a blog story to share some of my experiences with you but today I came across a great article by Paul Graham on how to start a startup. He shares his experience and says it to you bluntly. I thought I would what I’ve gained from him with you.
Starting a business isn’t that hard. However, starting the right business and running it persistently is hard. You need to have patience and you need to take baby steps to achieve your end goals. Imagine when you were a child, you had no clue how to walk or to run. Well first you saw your parents doing it then you saw your siblings doing it and the first thing you did was to absorb all that information. Then from what you’ve absorbed, you took your first baby step by walking on your four legs, then you stood up on two legs, then you began to walk on two legs and then finally you started running. Starting a business isn’t any different from this analogy.
Mr. Graham says “there is no magically difficult step that requires brilliance to solve.” He is right. There isn’t a step that you can’t overcome and there isn’t a step that is very difficult when it comes to online ventures. You just need to follow the steps and not give up. Just imagine if you had given up standing up on two legs because every time you fall your “bottom” hurts. Well, you know the answer to that question. Why do you think you hear people complaining that they aren’t making any money online or they just burned through hundreds of thousands of dollars without any positive results? Because they come in with high expectation, like taking over Google or something like that, but they fail to achieve their giant goal so they go out and complain. Don’t set yourself up to be one of those people.
This is why Mr. Graham says to come up with simple ideas – don’t expect to beat Google on its own game or don’t try to outplay eBay. In his own words, he says “you don’t need a brilliant idea to start a startup around.”
Coming up with good ideas is only the first step. You need to give it all you got and execute them. This is why Mr. Graham says, “what matters is not ideas, but the people who have them. Good people can fix bad ideas, but good ideas can’t save bad people.”
Hence, according to Mr. Graham, you need three things to be successful with your startup – to start with good people, to make something customers actually want, and to spend as little money as possible. Most startups will fail because they didn’t follow one of these.
Therefore, the first thing is to have the right people to execute them – this must include you. Take your time and look around for very smart, genuine people that are willing to give you all they got. This is very important at the startup stage because this is when your company is vulnerable to fail. Therefore, you need to be able to screen people and have to learn to say “no” and find the right talent – from sales, to programming to customer service. Mr. Graham says it bluntly, so I am not going to elaborate much on this, he says “almost everyone who worked for us was an animal at what they did.”
Second thing is to have the right product for your customers – know what your customer wants. This goes back to my previous post and the questions you need to ask yourself, “why are you starting this company and what are you trying to fulfill for the customers.”
Mr. Graham says, “in nearly every failed startup, the real problem was that customers didn’t want the product. For most, the cause of death is listed as “ran out of funding,” but that’s only the immediate cause. Why couldn’t they get more funding? Probably because the product was a dog, or never seemed likely to be done, or both.”
I can’t say it any better than what he said. Why should your startup fail if you have what the customer wants? Well I think you also know the answer to that question. Don’t just come up with an idea that already exists and then try to outplay someone else. Well you can, only if your product at launch is going to be better than someone else.
The third thing that Mr. Graham talks about is raising money – so spend as little as possible in your early stage. Every startups will need money to pay for their initial prototype and the launch. However, getting money from angel investors or VCs is not that easy. Even if you get it, what Mr. Graham says is, “not spend it, that’s what. In nearly every startup that fails, the proximate cause is running out of money. Usually there is something deeper wrong. But even a proximate cause of death is worth trying hard to avoid.”
If your idea is huge and you are trying to take over the world, then you will be tempted to throw all your capital before you realize that you are not making any progress to attract customers. When you realize it, it will be too late.
So in summary, come up with simple but unique ideas that are easy to execute, find the right team to execute them alongside you and then manage your money wisely so you don’t run out of cash when you really need it.
Paul Graham’s article on “How to Start a Startup” can by found here for more detailed information.