What I learned, what you should know
No one launches a startup thinking about how they’re going to exit–at least not if they’re building for the right reasons and not just because they think building a startup is a quick and easy payday. Because it’s not. But if you’re launching a new company of any kind without acknowledging, at least to yourself, that “failure” is a possibility, then you might need a reality check.
While the first company I launched wound up getting acquired, the story of my startup didn’t end the way I would have liked. I imagined growing the company to several dozen people, taking a round of funding, and growing to $20MM in revenue a year. Mind you, I was also coming out of a startup that was once named the fastest growing startup of all-time, so revenue and growth at the very early stage was something that was something I needed to recalibrate. But instead of seeing significant growth and “success” as we all see it, what I get was the source of a lot of lessons learned.
I was able to do the one thing many entrepreneurs fail to do, however. While I don’t consider my exit a “failure,” I did go into the company with the “fail fast” mentality. I knew from the get-go what I needed to prove what was necessary to succeed, or fail, quickly. And this I accomplished. I learned quickly that shipping logistics are a lot harder than anyone tells you–especially if your product is temperature sensitive. I learned that starting with a niche product was able to prove my concept, but the ROI on the product I was really trying to build wasn’t going to be worthwhile–not to mention the amount of funding I would need to take to successfully launch.
What I didn’t accomplish was what I set out to do–run my own company for years to come. I didn’t keep the title of CEO/Founder for many years liked I’d hoped–which is ok. Here are some lessons I learned along the way that will certainly inform my next launch.
Do proper customer development.
What does this mean? Be objective with your customer research. Don’t lead them into telling you what you want to hear. And if you hear what you don’t want to hear? Don’t spin it. I made this mistake myself.
My customers were interested in what I was selling, but were MUCH more interested in something that was different. I launched what I had in mind for a number of reasons–it was easier to launch and was less expensive–but had I taken another four months to build what our customers wanted, my story might look a little bit (or a lot!) different.
Pick a cofounder carefully.
So you’re friends with someone you respect and think is smart. They’ve started other companies. They have access to funding and other resources. Sounds great, right?
Not necessarily. Always vet a cofounder as though they were a complete stranger. What are they good at–and can actually execute? What are their expectations of the company? Of you? What’s their work ethic like?
Picking the right person to go on this journey with you is crucial. Don’t rely on what you already know about the person. Instead, really dig in and attempt a project together side-by-side to see how you work with one another. Because even if you’ve worked together before, the dynamic in a startup changes things, and it can be very trying on any relationship.
Set aside your ego.
Many people like to talk about what they’re building, working on, who they’re working with, etc. Behind the curtain, though, there’s often a different story. Everyone fakes it until they make it, to some extent. And you have to sell yourself, of course, and make others confident in your abilities. But at the end of the day, you need to be honest with yourself, your cofounder, your employees, and your investors.
Don’t let ego get in the way–it’s what distracts so many entrepreneurs from asking for help. I know I asked for help too late in my journey from someone who would have been a great advisor. But it took until I got to a breaking point with my ego to ask for this help.
Constantly reevaluate where you are and where you could use help. And be honest with yourself as to whether the journey is really leading to a successful end-product. It’s smarter to prove, or disprove, your company’s success sooner rather than later. This is what sets apart the most successful entrepreneurs from those who are only mildly successful.
Constantly work on your communication skills.
This goes for anyone, of course, but as an entrepreneur, you’re constantly selling. Whether you’ll be selling to your customers, to your investors (or future investors), or to the startup community, work on your presentation skills, as well as your one-on-one skills.
Early stage startups are constantly changing and evolving while simultaneously moving at a snail’s pace, so you and your cofounder (and employees if you have them) need to be able to be on the same page at all times. This can feel like a lofty, nearly impossible goal, but prioritizing and making an earnest effort at it and will go a long way.
Drive revenue (or user adoption, if that’s your main indicator) as early as possible.
This seems obvious, but then again, I’m from the Midwest. If you can drive the key indicator of your company as soon as possible, not only are you able to prove the concept (yay!), you’re able to see where cracks in business operations will begin to form–and what will get in the way of its success.
Within three months of launching, I was able to get my company in some big media outlets, which was great for sales. It showed me that, ultimately, I didn’t have the operational ability to keep the business scaling at the rate it was, and the investment I’d need in order to do so was immense. I had no interest in running a warehouse business, and all of the alternatives I hypothesized in my business plan fell through.
This is what led me to acquisition earlier than planned. If I had steadily grown and sold products much more slowly, I would have waited too long to find a buyer, and my year+ worth of work would likely have been futile. However, if I had moved a bit faster, I could have spent less money on my website and support services, ultimately profiting more off the sale (or, in this case, at all.) Many will have the opposite experience and not be able to find a market fit. That’s ok, too–so long as you find that out early and don’t make excuses for it. Failing fast, moving on, and starting the journey over again is what makes the entrepreneurship roller coaster so exciting.