Survive a startup: Don't consider failure shameful!
I know doing a startup these days is considered ‘socially super cool’. The disclaimer here is ‘Most of the things you knew about a startup are wrong!’ And this is the single-most important reason why most entrepreneurs end up failing or they hide in the dark alleys with almost a no identity, pining for funding.
The moment one gets an idea, he would enquire about it. And after all that, we have a handful of rumors. What happened to ‘Whatchamacallit.com?’ Take a guess…the truth is it fails because of the same reasons so many other startups fail. It is indeed surprising sometimes that there are some special people who find exceptional ways to kill their business. However, majority of the startups fail in far more mundane ways.
Let’s look at the hypothesis of this first generation entrepreneur:
A 34-year-old professional with exceptional credentials has one killer product idea (better call it his ‘Passion’). He conducts market research (always looks absolutely and flawlessly amazing). So, he writes a glorious business plan which resulted in funding and he started building the startup. Thanks to the funding, he makes headlines and gives keynote speeches. But he SLIPPED!
So what went wrong?
There are exactly seven things that went wrong; either most of them or all of them. The plan is based on what you think the user wants. Of course, first find out, what they like to do. Ask a real customer! Don’t tell your users how they should act, it usually backfires!
It is very easy to get carried away for any sane human. With too many entrepreneurs these days, it is indeed a fact that they are too much in love with the tech! The simplest thing to do is to keep it simple and to the core. The thumb-rule is to always ‘Market Test’ before going wild with your idea in the entrepreneurial ecosystem.
A lot of entrepreneurs gel extremely slow. It is a fact that if you are building an elephant, you will keep holding back until everything is ‘perfect’. But, it will never be fully ready and tested. Also, since we are talking about building an elephant, you will have a never-ending ‘funding’ problem. The most dangerous risk here is that the competition will hit the market with a good basic solution. The sane way, is to go-to-market with a minimum viable product and then build the ‘Functions, Features and Jazz’ as the ‘user requirement’ warrants it. Isn’t it more logical? Remember, more startups fail due to a lack of customers and not due to a failure of product development.
The next reason is on the ‘Jokes’ list. The sales strategy was to acquire 1% market share. Hey! This is not a sales strategy. It is only a way of making your excel sheets look linear and ideal (You are still thinking that even a bad product would get 1% market share, so for me it is simply conservative!). So if you are chasing a billion-dollar market, you are thinking, ten Million is a walk in the park. Instead, answer tougher questions: Who will be my first few customers? How will I reach them? What will it take to close a sale? How many sales people do I need? And then based on this capability, you should be able to project a more real sales forecast. Bottoms-up is the only real ‘way’.
Another one on the ‘Jokes’ list is: ‘My product has no competition!’ One, even if you are chasing a very small market, there is competition. Maybe not feature-to-feature on comparison, but there is competition. Make sure you are chasing a big market. Two, make sure you know even the smaller indirect competitor extremely well. If you don’t know the players, how will you play the game? Forget about winning at it!
The next reason is a rational one. Basics: A copycat! It is launching an internationally-successful work model locally. Sure, they have been launched successfully. Still, you are the first one to do it locally! Be ‘different’ not ‘same but be ‘better’. Being a copycat in a lousy market just because you see the current player in the same segment internationally is making loads of money is a sure shot recipe to burn cash and stay small.
The last and a very critical reason is something we all have heard about—‘Burning too much cash, too fast’. A lot of entrepreneurs tend to ramp up costs in the hope to see that ‘Projected’ revenue quickly. However, these excel sheets are known to be notorious and spineless. The better way and the more rational way is to approach the market fast with a basic product and generate revenue while tracking your conversion metrics. Only when the latter indicates you that you are getting it right, you should grow your expenditure.
These are some of the most crucial aspects due to which most startups have failed. And of course, the most risky among all is ‘TO NOT START AT ALL’. Now after petrifying you so much, I owe you one glass of red wine and an answer to ‘How to get rich via a startup?’
‘JUST AVOID DYING, MAN! YOU WILL GET RICH!’
Finally without the intent of discouraging startups and killing my own business, entrepreneurship achievement is not a child’s play. It is generally for those who have the courage to fail in the eyes of the society while remaining mentally strong and balanced.
I will tell you a small secret. There are 2 ways to avoid dying—‘Make Money OR Take Money!’