My Best Advice for Aspiring Entrepreneurs and Tech Startups
What an incredible time to be a tech startup! The opportunities out there are just tremendous. Digital payments, wearable technology, mobile healthcare, virtual reality and gamification, predictive analytics, and green tech—these are just a few of the startup areas that are expected to be big this year, according to venture capitalists and industry experts.
“Full stack startups” and “dis-intermediation” are the new buzzwords, as companies like Uber and Airbnb revolutionize the way business is done, and demonstrate how it is possible to cut out the middlemen.
Meanwhile, the “Internet of Things” is taking the world by storm, opening up new doors for entrepreneurs and organizations to develop software that can connect products and devices to the Web.
Education technology is also gaining more traction, creating new opportunities to improve education and learning experiences, and teach people new skills through the use of technology.
If you’re an aspiring tech entrepreneur, now is a great time to take the plunge. But before you do, here are a few pieces of advice, observations, and lessons learned from my own career and current role as CEO of MetricStream.
Your Team Matters Most
Many investors will tell you they invest in teams first, and that the business and market aspects follow in priority. Why is that? A company will change and evolve while it grows, and as market dynamics dictate. An “A” team will figure out how to be successful. A “B” team may not. Startups want to attract and retain a workforce that is qualified, smart, motivated, and innovative—those attributes are all important. Here are four primary hiring criteria that you should consider in the early days of building your company, which are in addition to a candidate possessing the necessary skills and experience:
1. Strong Athletes
A strong athlete has the building blocks in place to be able to play most any sport they put their mind to, given an understanding of the rules, and a little practice. When building a team, you need people who are like strong athletes—they have the necessary foundational skills and attributes, but they are also quick learners, versatile and highly adaptable. These kinds of people can perform well in a number of different roles. The needs and focus areas of a growing business are constantly changing, and being able to move experienced and talented people into different roles gives you lots of options internally, without having to rely on recruiting externally to fill a position. In fact, some roles are better filled by your existing talent, which also minimizes any learning curve, especially when it comes to getting a new candidate up to speed on how the company works.
2. Cultural Fit
Each company has its own culture. Culture comprises core beliefs, values, behaviors, and most simply stated—how things get done. If a candidate doesn’t match the culture of your company, odds are he or she won’t last long. Years ago, I sat on the board of an organization, and we hired a president who had all the skills and experience needed to be successful in the job. He was well regarded with an excellent pedigree. However, we missed the culture aspect of our evaluation. He lasted less than a year.
3. Startup Mentality
Most startups are starved for resources and are racing against time to be the first to innovate, or first to market, or first to achieve a critical milestone necessary for funding. Startup employees have to be very resourceful, scrappy, and creative as a result. It is important to hire people who have operated and thrived in this environment. There is so much work to be done with limited time and resources, which means that each member of the team has to have the passion and desire to do what is necessary to succeed. The concept of a 9:00am – 5:00pm job just doesn’t exist in a startup.
Don’t hire team members that are a carbon copy of yourself. Innovation is the lifeblood of a startup. When you bring people together from varying backgrounds, it creates a fertile ground for innovation, developing out-of-the box ideas, and finding creative solutions to complex challenges. Building a diverse “A” team right from the start will significantly improve your odds in building a thriving company.
Time Is Not Your Friend
Much has been said about the first-mover advantage. EBay was first to market with an online consumer auction process, and all latecomers thereafter with similar offerings have struggled to survive. For every first-mover that has succeeded, there are many who have failed to take off or succeed long-term—be it MySpace, Sixdegrees.com, or Overture.
So what really decides a first-mover’s fate? Two factors, according to a study in the Harvard Business Review: (a) the pace at which the technology of the product in question is evolving, and (b) the pace at which the market for that product is expanding.
Consider your product. Are there are many other technology innovations similar to what you are offering? Is demand for your product moving at a pace that will offer continued long-term growth? Think about the market as well. Is it expanding too fast? Is it too crowded? Are customer demands constantly changing? Do you have differentiators that will allow you to attract and keep your customers long-term?
“Knowing how fast or slow the technology and the market are moving will allow you to understand your odds of succeeding with the resources you possess,” according to the Harvard Business Review study.
Once you’re in the market, it’s all about sustaining the momentum. Quickly build a solid customer base of people who can help influence other buyers. And keep innovating—it’s why Apple is still ahead of the game after all of these years. Remember that time is no longer a luxury—and if you want to succeed, you can’t get too comfortable. You have to move, keep moving and innovating.
Go Big or Go Home
Back in 2002, just after the dot-com bubble had burst, I took a big risk to become the CEO of Zaplet—a struggling company that had very strong technology but was running out of cash, and was having trouble attracting new customers. Investors had begun to give up on the company, but I truly believed in its potential and vision. So, we downsized the company, merged it with another startup, MetricStream, and re-focused our vision on compliance and risk management. Today, analysts regard MetricStream as the leader in governance, risk, and compliance apps—we have hundreds of customers around the world and a 50 percent year-over-year growth rate.
If you want to be an entrepreneur, you have to be prepared to take risks—big risks. Jeff Bezos knew this feeling when he quit an established finance job to start a company named Amazon that would sell books online. Elon Musk knew that feeling, too, when he sold his startup to eBay, and used his earnings to fund two risky new businesses—SpaceX and Tesla.
So, my advice: take risks! But don’t gamble blindly. Go in with your eyes wide open. Measure the odds of success, and understand the worst-case scenarios so that you can make informed decisions.
I’ve always said that risk and opportunity are two sides of the same coin. If you know your risks, if you understand how to manage them, then you don’t have to be afraid of risk-taking. In fact, with this approach, you can actually thrive on risks.
Starting a business can be scary, challenging, and a lot of hard work. But if there’s anything I’ve learned, it’s the importance of taking a chance. As American scientist James Bryant Conant once said, “Behold the turtle. He makes progress only when he sticks his neck out.”
So, my advice to all of you aspiring tech entrepreneurs and startups out there is to put your big ideas to work. We need you to help lead us into this exciting world of tomorrow. Just remember along the way: First, focus on building the “A” team by recruiting diverse skill sets and backgrounds; this team will help take your vision forward. Second, don’t forget that speed is the name of the game; move swiftly, and keep riding on that energy, excitement, and momentum. And lastly, go all in; the most successful people I know are the ones who not only have the big vision, but who also put their passion, heart, and soul into everything they do.
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