3 Things Besides Money You Need to Start a Successful Business
Over the past four years I’ve met hundreds of entrepreneurs and worked closely with a number of them. I’ve helped in all aspects of starting a business, from the initial legal setup, to defining the product and business model, to actually designing, building and iterating on the product. I’ve seen a ton of different approaches to building a business. There’s no one “right” way to do it.
However, what I have realized is that those who succeed have three things in place. When one of the three is missing, success becomes a lot more difficult.
Those three things are: knowledge and expertise; strategy; and execution.
Knowledge and expertise.
The most successful entrepreneurs I’ve worked with have an advantage of an acute knowledge in whatever industry they are targeting. They have become experts by spending time learning about the problem they are trying to solve and the target market. Thus they are naturally in a better position to start a company.
For example, Jopwell (a company I worked with) connects Black, Hispanic/Latino and Native American professionals and students to amazing companies. Jopwell has two black founders that have personally experienced the recruitment challenges with top tier companies. Since founding the company a couple years ago they have partnered with the top companies from Finance, Technology, and Media amongst other industries, gone through the prestigious Y Combinator and recently raised $3.25MM from great investors like Andreessen Horowitz.
There are many factors that have contributed to their success, but I am confident that they were in a much better position to found the company than someone like me. The two founders collectively spent seven summers interning in high school and college, assisted with diversity recruitment efforts and listened to what the pain points were for recruiters. This isn’t to say that every black person would be able to build a diversity recruitment platform. Rather, the point is that their experiences and research gave them the knowledge and expertise to solve this problem better than others.
This same principle applies to other industries as well. For example, if you are trying to start a commercial real estate startup, you’ll have a huge advantage if you’ve worked in commercial real estate or have someone on your team who has.
After reading this section you may think this is common sense. But don’t overlook it. When you have an idea make sure you have a knowledge advantage over others.
Now, just because you have knowledge of the industry doesn’t mean you will be a success automatically. You also need a solid strategy. How will you acquire users or customers? How will you make money? How will you deliver the product or service that people want? Without a strategy, you are shooting in the dark and just working like a chicken with your head cut off. Gary Vaynerchuck describes this well in his article “First Comes Smarts, Then Comes the Hustle”. Without a proper strategy, hustle is aimless and ineffective. Fred Wilson of Union Square Ventures also agrees in his article: “Get the Strategy Right and The Execution Is Easy”.
Along the way things won’t always go according to plan. You will have to adjust and react to things. But if you have a strategy in place, it will be much easier to do this.
A classic example of getting the strategy right comes from PayPal. PayPal realized it could offer a better payment method for eBay customers. Before PayPal, paying on eBay was painful and typically done by check. By offering instant payment, PayPal soon became the primary means of transferring money. As eBay grew, so did PayPal.
Great. You have a knowledge advantage and a strategy in place, now it’s time to execute. Execution is a combination of two things: hard work (aka grit and hustle) and having the right team in place. Regarding hard work, Sam Altman, president of Y Combinator, sums it up well in a tweet: “[The] biggest predictor of massive success vs. minor success among founders: years and years of relentless determination.”
But hard work alone won’t see you through. You need the right team in place. For example, if you are trying to build a software product to solve the problem you’ve identified but don’t have anyone on your team that can build it, the expertise and strategy don’t mean anything. The nice thing about our world today is that there are so many people that have skills you can leverage to help with the execution. You don’t necessarily need to have everything directly on your team and can begin executing by working with an external team of consultants like JAKT.
So there you have it, the three things you need to start a business. These aren’t the only things you will need, but if you do have these three, the probability of success will be much higher.