How to Start a Startup is a multi-part series on the intricacies of creating, sustaining and dominating the startup sphere derived from Y Combinator’s Lecture Series
Welcome to Startup 101. In Part 2 of our series, we discussed the basics of setting up a team and hiring rules. In this part, we will discuss a few things one should keep in mind before their final jump.
Let’s get it straight. Startups are counter-intuitive. This is because startups often focus more on the problem discovery as compared to the problem solution. The mind-set, skills, tools & techniques for problem discovery is completely different for the mind-set needed for problem solution. This essentially means that the skills we all pick up to work and deliver in organizations largely don’t work when doing a startup. In the startup ecosystem, it is as important to suppress an impulsive instinct as much as it is important to act on it. Take baby steps as you tread carefully. Paul Graham of Y Combinator says, “startups are so weird that if you follow your instincts they will lead you astray. If you remember nothing more than that, when you’re about to make a mistake, you can pause before making it.” Although as much as it is important to be careful on business decisions, back your instincts about people. It is an innate quality in humans that we can identify other people instinctively.
Be An Expert In Your Own Users, Not An Expert In Startups
Another counter-intuitive point about startups is that to be a successful in a startup you don’t need to be an expert in startups, but instead an expertise in your own users. So invest your time in developing yourself so. Mark Zuckerberg didn’t make Facebook successful because he was good at creating a website. It was because he understood his user base perfectly and made a product after understanding his users. Many a times, an entrepreneur comes up with a plausible idea, raises some funding and then rents a nice office in Gurgaon, hires a few friends and then realize how screwed they are because although they have replicated all the outward forms of how a startup should be, they didn’t focus on the one essential thing, that is to create something people want.
Learning On the Job is More Important Than Learning In A Classroom
Another important fact to keep in mind is that many entrepreneurs might be very skilled. It is in fact more important to learn by trial, error, potential failure or hopeful success than to learn in the closed box of your classroom. One will realize this when one faces real problems and trials and one with a classroom knowledge will not have the legs to stand, at that point.
Another goal that startup entrepreneurs run after is to secure a funding from an investor and always want to know how to convince an investor to fund their startup. The easiest way to convince an investor is by actually doing well, that is grow fast, and simply tell the investors so. For an entrepreneur, receiving a funding from an investor is often the validation they yearn for, for their product’s success, but in reality, a high growth rate should be the only validation yardstick they should consider.
“You grow so that you have the need for further funding. Not the other way around.”
Faking Progress Will Take You Nowhere
Another thing entrepreneurs should keep in mind, is not to fake it with an investor. Fine, maybe thanks to your sweet talk you will secure one, or maybe two rounds of funding, but it’s absolutely not in your interest to do so since you’re merely pulling a fast one on yourself and wasting your own time because your startup is doomed anyway and all you’re doing is wasting your own time. Other than wasting your own time, you’ll also potentially lose your connections. In business, especially, relationships are very fragile so if you mess it up, you might not have a second chance. To this Graham says, “Someone who knows zero about fundraising, but has made something users really love, will have an easier time raising money than someone who knows every trick in the book, but has a flat usage graph.”
Be Ready To Dedicate All Your Time To The Startup
Startups are all consuming. Chances are that if you’re starting a startup, it will take over your life in ways you cannot imagine. And if it succeeds, it’ll take over your life for a long time. Therefore there is an opportunity cost involved here – always remember that. Be prepared to work so hard that even if you win the race, you’re not allowed to be out – of – breath.
Thinking of Startup Ideas
Well, dont. If you think of startup ideas all the time, you will end up with bad startup ideas. And bad startup ideas are ideas that make you think it is a good idea. Don’t fall for that trap. You will eventually end up wasting a lot of time before realizing it’s no good. The way to come up with a good startup idea is to take a step back. Instead of trying to make a conscious effort to think of startup ideas, turn your brain into the type that has startup ideas unconsciously. In fact, so unconsciously that you don’t even realize at first that they’re startup ideas. Most big startups in the world started off as side projects.
How do you turn your mind into the kind that has startup ideas unconsciously? One, learn about a lot of things that matter. Two, work on problems that interest you. Three, with people you like and or respect. That, is how you get co-founders at the same time as the idea.
These tips and tricks help budding entrepreneurs understand what they’re getting into. In part 4, we will talk about building product and working with users.