Characteristics of Successful Startups and EntrepreneursAccording to Mark successful entrepreneurs and startups possess the following traits. Can you be successful without them? Maybe. But these characteristics will greatly improve the chances of successfully building, funding and selling a tech startup. The most important character traits of successful tech companies and their leaders are:
- Street Smarts
- Risk tolerance
- Attention to detail
- Domain experience
- Technical DNA
- Ability to pivot
- Solve real problems
- Meet investors early
- Take 50 coffee meetings
- Always be raising (ABR)
- Ship product
- Lean startup method
All Startups are Naked in the MirrorMark started his talk by reminding us that all startups are naked in the mirror. When you read about a competitor in a press release, or see them successfully courting investors at an event, keep in mind that’s your competition at their best. You don’t see them at their worst, when cofounders fight, when product has bugs, or when cashflow is running low. At the end of the day, all startups are naked in the mirror. Focus on your company, keep an eye on the competitive landscape but know that all startups face challenges, just like yours.
Tenacity and ResilienceGet kicked in the face? Get back up. Hear no 100 times? Ask again. Didn’t get an email reply? Don’t take it personal and resend. Launching a startup is not about being timid, being a pushover, or sensitive. In many cases, entrepreneurs have a vision that others haven’t even begun to think about yet. You only need one VC to say yes, one major company to sign up for your product, and one reporter to write about your company. Be tenacious and don’t take no for an answer. Be resilient, don’t let any VC, angel investor or anyone else lower your confidence and belief in your product. Without tenacity and resilience, you’ll never make it.
Street SmartsWe all love degrees and an alphabet soup of credentials after our names, but according to Mark, street smarts goes a lot further in running a successful startup than formal education. People skills, resourcefulness, chutzpah, thinking outside the box, and poise in the most uncomfortable circumstances are more important than a 4.5 GPA. Don’t get him wrong, higher education and domain expertise is still highly regarded in startup culture, but not at the expense of the ability to read customers, lead a team, make friends, schmooz investors, and the gusto to take your company and your industry by the horns.
Technical DNA on the Founding TeamI’ve heard Mark and other VCs and angel investors say many times they would rather invest in a B idea with an A team, than an A idea with a B team. What makes an A team? Many of the traits described here, including a technical engineer on the founding or executive team. While development of a website, social network or mobile application can be outsourced, investors strongly prefer programming to be done in-house. Many investors won’t even consider a company without a technical engineer as part of the team. These are engineers who have 100s lucrative job opportunities, so the ability to convince them to eat Taco Bell for a year, suck it up, and join your startup is important. If programming is outsourced it will almost surely need to be rebuilt once a technology engineer joins the team, and the development costs will be high, draining funds that could be better spent on marketing and talent acquisition.
Lean Startup Methodology: Build Product, IterateMark echoed Steve Blank’s thesis on “Why the Lean Startup Changes Everything“, recently published in the Harvard Business Review. Under Steve Blank’s lean startup methodology, the conventional method of launching a startup by researching and programming for 6 months in stealth mode, then rolling out a product that no one wants is over. Entrepreneurs are now encouraged to build product, build it fast, and iterate fast. Of course with an engineer on the team a startup’s ability to execute this type of agile development is much higher.
Take 50 Coffee Meetings and Always Be Raising (ABR)Fundraising doesn’t happen overnight and relationships aren’t built overnight. The average fundraising round takes four to six months to close. I also typically advise clients to meet investors early, under-promise, then over-deliver two quarters later. That’s almost a year of progress in product development, marketing, and courting investors. ABR. Raising capital takes time and resources, and eats into the many other hats an entrepreneur wears, such as business development, recruiting talent, dealing with customers and sales, marketing, technical issues, legal, accounting, product management, and HR. Rationing resources for fundraising is vital. Mark suggests to take 50 coffee meetings from companies in your region, authentically build relationships with venture capital backed CEOs and their investors, and ask questions like “Is there 1 or 2 Angels you recommend I meet?” Remember if your request for a meeting gets no response, ask again.
Acquisition StrategyIt’s never too early to think about exit strategy. Entrepreneurs should always be thinking about how they want to position their company for acquisition. To do this, Mark suggests to know why companies buy other companies. As the value to the buying party increases, so does the price. From low to high, the reasons companies get acquired are:
- Acqui-hire: Buy the company for the talent, usually technical talent.
- Product Gap: Buy the company for the intellectual property because the acquirer does not want to, wish to, or cannot invest in independent development.
- Revenue Driver: Buy a cash cow, cut the fat, and drive up profits through efficiencies and synergies.
- Strategic threat: Facebook buys Instagram because people are spending more time on Instagram and less time spent on Facebook.
- Defensive purchase: Google buys Waze social mapping platform so Apple or Facebook don’t, sometimes creating a bidding war which drives up the purchase price.
If It Was Easy Everyone Would Do ItLaunching a tech startup is probably one of the most difficult things you can do professionally. But following the above road map, adding a dash of sticktoitivenss, passion, and maybe a little luck will greatly increase your chances of successfully launching, funding and selling a technology startup in today’s market. And remember, it’s not easy for your competitors either. No company is flawless, but usually the ones who make the fewest mistakes win. Mark’s closing remarks: “You gotta love the game. If you do, have fun with it.”
Author: David N. Sharifi, Esq. is a Los Angeles based intellectual property attorney and technology startup consultant with focuses in entertainment law, emerging technologies, trademark protection, and “the internet of things”. David was recognized as one of the Top 30 Most Influential Attorneys in Digital Media and E-Commerce Law by the Los Angeles Business Journal in 2014. Office: Ph: 310-751-0181; firstname.lastname@example.org.Disclaimer: The content above is a discussion of legal issues and general information; it does not constitute legal advice and should not be used as such without seeking professional legal counsel. Reading the content above does not create an attorney-client relationship. All trademarks are the property of L.A. Tech & Media Law Firm or their respective owners. Copyright 2013. All rights reserved.