So you want to start a startup? Or maybe you’ve started one already and want to navigate its treacherous waters successfully. No matter where you are in the lifecycle of a startup, there’s no place in the world where you can learn more about it than in Silicon Valley.
Sure, I argued in my previous article that Silicon Valley is slowly but surely losing its grip on the technology world. Nevertheless, it still has a storied history of startup excellence that we can learn from.
Silicon Valley has undoubtedly birthed some of the most iconic companies of the past 50 years. These companies have gone on to transform the world and unseat the incumbent energy and finance behemoths to become some of the most valuable companies in the world.
In fact, out of the 10 largest companies in the world by market cap, five are headquartered in Silicon Valley, and two more are just north of Silicon Valley in Seattle, Washington.
Having lived in different parts of Silicon Valley and having been instrumental in starting three startups – one of which was recently acquired by a multi-billion dollar Silicon Valley technology giant – I have had the privilege of learning a lot from these experiences.
Here is a distillation of some of what I have gleaned from the valley about starting a tech startup:
- You probably shouldn’t start a startup
This is probably the last thing you expected to hear in a column discussing how to start a startup, but it’s a very important disclaimer that we need to get out of the way as starting a startup is in vogue now. Everyone wants to do it, everyone thinks it’s bold and sexy.
Even universities are teaching entrepreneurship now, which sounds laughable to me. Entrepreneurship can’t be taught. Rather, it needs to be learnt on the ground. Sure, some technical matters can be taught – such as how to value a startup, or how to develop a pitch deck – but most things need to be learnt by grinding it out in the real world, not by pleasing professors in a safe, sterile, institution-constructed sandbox.
When something becomes institutionalised and accepted culturally, it pays to be wary of it. Besides, the university as an institution is, in many ways, the very antithesis of entrepreneurship. Universities are large, traditional, stratified institutions that value conformists and incrementalists. Entrepreneurship is anything but.
Also, I fear many are being led down a path they might not want to tread, as there is real value in working for a large company. It offers stability, a consistent pay, and most importantly, the ability to have work-life balance that is essential to nurturing your hobbies and your relationships with your loved ones.
Large companies can often accomplish a lot more, have much more resources at their disposal and offer an environment where you can meet similar-minded people. Many might find climbing the corporate ladder in such an environment much more enabling and rewarding than starting something from scratch with little resources and help.
But if you’re convinced that corporate life still isn’t for you, please read on.
2. You need to feel compelled to start a startup.
You shouldn’t start one because it seems like a cool thing to do; you shouldn’t start one because you want to become rich; and you certainly shouldn’t start one because you don’t know what else to do.
Starting a startup should feel like being in love. Remember the first time you laid eyes on your significant other? How you yearned to be with them, how you craved their company – even through all the fights and disagreements?
That’s how starting a startup should feel. It’s not all rainbows and sunshine but you know in your heart that you couldn’t imagine doing anything else.
Just as you think your partner is the most attractive person you’ve ever seen, you should think your startup is the best thing you could possibly be working on. A decent dose of delusion in this case is healthy, required even.
3. Validate your compulsion
We’ve established that you’re startup-sick (similar to being lovesick). Now, it’s important that the problem you’re trying to solve is acute enough to merit a solution. It needs to meet either or both of these criteria:
- The problem can’t be an annoyance; it can’t be a nuisance that might or might not benefit from a solution. It needs to cause considerable pain to those who are afflicted by the problem. In fact, it doesn’t even need to be a problem to a large number of people. It’s okay if the problem only afflicts a small subset of the population, as long as it’s a painful enough problem that they’ll gladly part with their money if a promising solution comes their way.
- The solution you have devised is an order of magnitude (ten times) better than what’s already in the market. This should, of course, be corroborated by someone who isn’t biased – preferably a non-team member or family. It can’t be a little bit better or even twice as good. That’s just not good enough and will likely fail, especially if you are competing with deep-pocketed incumbents with a moat.
This is an incredibly important step and unless you and your co-founders are convinced (based on solid evidence) that your product or service is 10 times better than what’s already existing, you should not start the startup. Instead, you should tweak the idea until you think it is in fact 10 times better than what’s already existing.
However, if your product or service is attempting something new, your customers might be much more tolerant towards an offering that’s not very polished for the simple reason that there aren’t any existing offerings in the market they can benchmark yours against. But this is invariably a riskier endeavour as you are treading uncharted territory.
4. Get a minimum viable product (MVP) out ASAP
A minimum viable product (MVP) is startup lingo for a first-pass, bare-bones version of the product or service you would eventually develop. It doesn’t need to have all the bells and whistles you hope to incorporate into a fully fleshed out product.
Rather, it just needs to function well enough to not break. It can be thought of as a proof-of-concept, but one that performs a singular function – solves the problem you’re aiming to solve, albeit in an unattractive fashion.
For instance, when I joined my startup, the core team consisted of just me and the founder. Together, we worked day and night to design and build an entire salad-making robot in a mere four months – an endeavour that would take a dozen engineers and many months, if not a year or two, for most companies.
Sure, our MVP wasn’t pretty, nor did it do much. All it did was make salads and mostly not break in the process. But that was enough for us to get the attention of some notable people in the startup scene, get funded, get accepted into one of the premier tech accelerators in the US (Techstars), improve on it, ship hundreds of our robots across the world, and eventually get acquired.
5. Bootstrap until you achieve product-market fit
Don’t rush to raise money. Getting too much money too soon can and does often result in the founding team throwing money at seemingly important endeavours that more often than not turn out to be non-essential to the success of the business.
Instead, try as much as possible to develop the MVP using your own money or money pooled from family and friends. You’ll be much more careful about spending your hard-earned money than money given to you by professional investors.
Plus, if you don’t have the conviction necessary to put your money on the line, you shouldn’t be starting a startup in the first place.
And once the MVP is developed, gauge demand for it. Observe how potential customers interact with it, whether they care for it and what improvements they would like to see in it.
Iterate your MVP based on this data. Once you are convinced that you have product-market fit – meaning your product or service is garnering lots of users or customers in a short span of time – then go ask investors for money. It’s a lot easier to get funded when the product or service is loved by those who use it and has provable, quantifiable traction.
6. Work your rear off
Expect to work 14 hours a day for at least six days a week. Holidays are a luxury you shouldn’t entertain unless you’re feeling burnt out. And expect to do this for a minimum of two years. This might sound extreme but unless you’re mentally prepared for near-non-stop work for a considerable amount of time, you’re going to feel miserable.
This is obviously unsustainable and that’s why this is something that should only be done for the first few years of the startup. A startup demands this sort of intensity in order to achieve the escape velocity it needs to be sustainably profitable. If you’re lucky, this might take a year or less, but more often than not, you’re going to be looking at doing it for anywhere from two to five years.
At the end of the day, you could do all this right and still end up failing. Startups are serious business and should be attempted only after careful deliberation. But from personal experience, I can say that if you do attempt it – irrespective of the outcome – it will likely be the most productive and meaningful years of your life.
The writer can be contacted at [email protected].
The views expressed are those of the writer and do not necessarily reflect those of FMT.