Here’s a great list of things founders need to keep in mind from Jason M. Lemkin, Partner at SaaStr Fund on Quora. I’m going to keep the headings, but provide you with my own take on why you can’t afford to forget these success factors:
It almost always takes at least 24 months to really get off the ground from Day 1.
The rule of thumb I was given about startups is that they will always take twice as long and cost four times as much. But this was back in the days of setting up your own server, buying Oracle, etc. I’d say things will only cost 2x your projection. But the most important thing is to work backwards from a launch date 24 months from your founding and focus on meeting weekly, monthly, and quarterly milestones in those 24 months. Simply setting a goal of launching in 24 months is a sure way to fail to meet that goal. Every day when you wake up you need to think “What are the three things I need to do today to move the company forward?”
VCs do not fund very many companies.
The reality is only a tiny fraction of startups get VC funding. It’s an order of magnitude harder than getting into Harvard or Stanford. The year we got funded in my first company Greylock only funded two startups. Jason’s rule of thumb is very good: in medium size funds each partner does about two investments a year; in large funds it is often just one investment per partner per year; and even in seed funds each partner only does three to four. Make sure you are investor ready.
You can’t hire some magic salesperson to “get you more sales”. You have to figure it out first yourself.
Too many engineer founders believe in the magic salesperson! What they don’t realize is that really great salespeople are hard to hire, expensive, and extremely picky about choosing to work at a startup. In fact, hiring a great sales person means your company probably has a good chance of success. But before you start recruiting you need to build a great product and achieve product/market fit. Great salespeople scale a company, they don’t build it. They are like VC funding – adding fuel to a rocket that is already built and on the launchpad.
Free and Freemium are not marketing strategies.
Again, I see too many founders believe this to be true. The reason is they don’t understand the difference between a business model – which is how you make money, who pays you for what and why – and a marketing strategy – how you will acquire customers. In fact too many decks these days go very light on customer acquisition – a big mistake.
If your co-founder is not as committed as you, he/she will leave, and before it really takes off
Well it’s very hard to judge the commitment of a partner. And sometimes life intervenes, like a death in the family, the spouse of a partner getting a job offer they have to take but it half way around the world, illness, and other “acts of God.” Do your absolute best to bring on a partner you know and have worked with before. If you can’t do that then consider any other partner to be on probation and make sure you give them enough tough assignments early on that test their commitment. Because when everything is going great everyone looks great. But when things go off the rails the true nature of your partner(s) will come out.
Slow growth after a certain point is a sign of a lack of product-market fit.
You have to know when to hold ’em and when to fold ’em. Otherwise you may either give up on a great product too early or hang on to a bad product too long.
First-to-market matters, but so do many other things. Focus instead on being first to do something important 10x better.
Credit where credit is due, Peter Drucker, management guru first said that to displace the market leader the upstart must be 10X better than the incumbent. But how are you 10X better: cheaper? You probably don’t want to compete on price. faster? That’s a spec, how does it translate into a benefit? More features? Will customers actually use them? Figuring out how you are better is critical!
VCs are not out to get you.
You need to understand VCs are portfolio managers who answer to their limited partners. Where you fit in their portfolio in terms of growth, product market fit, buzz and deployment of capital will determine how well you get treated. As a Greylock partner told me, “Build a great company and the exit strategy will take care of itself. And if you don’t, the exit strategy will also take care of itself. Your job is simply to build a great company.”
You don’t have to spend 100 hours a week in the office. But … Work-life balance is a myth
I totally agree with Jason: you must be obsessed! That doesn’t mean counting the number of hours you spend in the office, but if you aren’t obsessed with making your company 24x 7 you need to get a regular corporate job. It’s that simple.