This blog post is the one of three chronicling my experiences at The C100′s investor/entrepreneur event called 48 Hours in the Valley. My introduction to this post can be found here: Every entrepreneur should do 48 Hours in Silicon Valley. The second post can be found here: 4 standout experiences from ’48 Hours in the Valley’
These days there is no shortage of places entrepreneurs can find tips and advice to improve their business. In fact, Business Insider just published a list of 24 blogs you can follow for startup resources. Depending on where you are on the experience scale, some of the advice you get at 48 Hours in the Valley (subsequently referred to as “48 Hours”) is common knowledge and some of it may be new information or a different angle on something you already knew. What makes 48 Hours stand out is the background info on why advice makes sense and how real-world examples can affect your entrepreneurial career.
In this post, I am going to list several things I learned from 48 Hours and things you should know if you want to be an entrepreneur or run a startup. While I knew a lot of the more general advice, there were tidbits and context that I hadn’t heard before and this experience has made me better than I was a week ago.
So here are eight takeaways from 48 Hours that you should consider when building a startup:
1) Network and get out
I know, this comes right out of the Department of Obvious Tips: Get out of your office and network. Network with investors. Network with other CEOs. Network with competitors. While this may seem like common knowledge, I was continually reminded that startups and entrepreneurs are not all good at this approach.
Sure, networking is great for opening doors and getting new opportunities, but the biggest value I’ve found in networking was that I get a chance to know what I don’t know. The more I have surrounded myself with smart people getting stuff done, the more I’ve learned about where I am strong and where I fall short. Asking lots of questions gives you perspective you wouldn’t otherwise have, and it can come from people who have no interest in telling you what you want to hear.
Networking is a staple in the startup world, but doing it effectively and constantly is not something all entrepreneurs do. So many of us (including myself on occasion) put our heads down and focus too much on shipping product, inking deals, putting out fires, hiring, scaling and more. Doing a startup is hard work, so coming up for air can sometimes be challenging and you always ask yourself whether going to an event will help you, or simply waste your precious time.
While the day-to-day is important, coming up for air to network is just as vital. It helps you realign yourself with internal challenges and goals and enables you to see the world around you and take in outside learning to make your decisions more informed.
Who else in the industry is in your space? What are they doing? What have they failed at and why? What can you learn from an investor? How can figure out what your customers are looking for in an industry that changes constantly? All of these answers are right in front of you, but you have to network and get out. You won’t learn them sitting at your desk.
2) Think Big
If you’re building a company, sit back and ask yourself how big you are truly thinking. Do you want to build a million-dollar business? How about a $100-million company? What do you need to do to scale that to $1 billion? Are you building a lifestyle business where you make a good living, or do you want to change the world and you will need big backers to make it happen? Only you will know the answer to how big you want to be, but the answer will dictate who you should be talking to for help and whether taking outside investment is right for you.
Depending on the entrepreneur and business, you need to take a 10,000-foot view of your opportunities and try to figure out a way to be in a massive market. If you’re raising money to grow, don’t waste your time pitching a VC on a business that addresses a $50-million market. That may be a nice lifestyle business for you, but a VC is looking for the irrational exit. They need to multiply their investment many times over to generate a return for their LPs. Think about how you can build a company worth $500 million, or $5 billion.
The bigger you can go, the more likely you are to have powerhouse investors at the table with you.
3) Unrelenting willingness to help
The C100 and 48 Hours stands out in my mind for one simple reason: Everyone wants to help, constantly; it’s relentless and comes with no strings attached. Whether it’s an introduction or advice, 48 Hours showed me The C100 is absolutely unrivaled in its generosity and Pay-It-Forward attitude.
4) Fail fast
Anyone who knows Eric Ries and the Lean Startup movement knows about this advice. I had lunch with Eric at an event in Toronto recently, and then I went to see him speak to hundreds of people in an auditorioum on how to incorporate the lean startup approach into any business. Watching Eric present is inspiring, and his teaching should be mandatory reading if you are an entrepreneur.
My experience at 48 Hours reminded me a lot of what Eric has taught me. One big nugget is that it’s important to fail fast. What that means is you should be building a minimum viable product (MVP) and testing whether it works. Don’t go on a hunch, and don’t build something in stealth mode, paranoid someone is going to steal your idea. You need to know if your idea has legs as quickly as possible.
Instead, build a product, get it to a customer and then see what happens. If it’s going to fail, you’ll learn that quickly and you can put a process and a methodology around the development of your future iterations to make sure your success is repeatable and scalable.
Too many companies waste way too much money and time on coming up with plans and ideas without actually testing their hypotheses. Failing fast lets you avoid all of that and shorten the cycle of learning. After all, if you work in a startup your business is embedded in extreme uncertainty about its future. You can’t afford to do anything but fail fast.
5) Execution is everything, ideas are commodities
Startup entrepreneurs (especially first-timers) often think they have an idea that is going to save the world, or change an industry. But with very few exceptions, your idea is not original. At any given time, the chances are high that several other startups are working on the exact same thing, and if they have funding behind them you may already be starting out with a handicap.
But ideas are only as good as how they come to market, how they scale and who is behind them. Don’t obsess over your idea, and don’t keep it so close to your chest that nobody knows what you are doing. Developing in a bubble is dangerous. Get it to market and test it (see number 4 above about failing fast), and push to sell it hard.
Often, young entrepreneurs will build something fantastic and just expect people to flock to it. But in reality we don’t all live in the Field of Dreams, and so you can’t just expect people to show up on your doorstep tomorrow. If you build it, they probably won’t come. It takes relentless pushing, networking, sales, exposure, PR, marketing and a lot of moving parts to scale big quickly.
Focus on execution.
6) Always be recruiting
The talent drain is seriously affecting the startup ecosystem. If you live in a place like the Valley, developers come and go at will and are commanding enormous salaries because really good talent is hard to find.
How do you plan to grow your business if another company down the street can throw an extra $25,000 at your developer to get them to cross the aisle? Poaching happens often in business because everyone is expected to deliver results, but really good talent is scarce. Outside of the Valley the same reality applies and finding strong product and developer talent is challenging.
But even if you don’t have cash on-hand to hire right now, you should always be recruiting. Make sure developers know about you. Make sure you’re always selling the vision. Take them out for coffee or lunch to understand what motivates them and what makes them tick.
The key is to make sure you have a network to call from so once you are ready to hire, it’s fishing in a bucket.
7) Venture capital is hard to get
With the rise of startup blogs and the constant flow of success stories about young twenty-somethings making millions, it’s easy to sit on the outside and become convinced that anyone can succeed with a startup. The reality is startups are hard. Really hard. And in case I wasn’t clear: They’re really hard. But if you do venture into the world of being an entrepreneur and you have major plans to grow fast, make sure you have a Plan A, B and C. You can’t build a prototype and then knock on a VC’s door and expect them to fund you. It’s not as easy as it appears in TechCrunch.
Raising capital is a very long process. If you’re raising venture capital, expect it to take 6 months if you’re good. If you don’t have a killer management team of people who know how to scale a business, you’re probably too early to be looking at VC. Know your battle before doing the raising process because you will save yourself (and your potential investors) a ton of time. Just because you have a good idea doesn’t mean it should be funded. And even if you have a rapidly growing business, VC still might not be right for you.
At 48 Hours, I got a great reality check from Arif Janmohamed of Lightspeed Venture Partners. It was a simple numbers exercise: If the average venture capitalist funds one or two deals a year but receives hundreds or thousands of pitches and intros, what do you need to do in order to stand out as the 1%? How likely are you to be the one person who stands out above everything else? The reality is: You aren’t pitching your killer product. Instead, you are competing against hundreds of other killer products that may or may not have more revenue than you, a better management team, or they’re further along. The reality is you will have more obstacles than checkpoints to get you to funded so you need to find a way to become the 1%.
The easiest way to do that is to think big (you have to be a billion-dollar idea), build a rockstar team around you, get a product in market that you can measure, and then ramp growth. And as you are building traction, keep an ongoing dialogue with VCs. Ask them if you can keep them updated with quarterly growth reports. Tell them what you expect to achieve in what time frame, and then show them how you delivered. Investor-entrepreneur relationships are marriages, so you need to go through the dating stages before anyone is going to jump in bed with you.
And from the entrepreneur’s side: Don’t believe everything a VC tells you. VCs will rarely tell you “no” on an idea because a flat-out rejection could mean they miss out on a future deal. Instead, you’ll hear a VC tell you to hit one number, and once you do, they’ll want you to reach something else. Then something else. Then something else. The bar is always moving up and VCs will often promise you a carrot and praise you for your killer metrics. But the reality is: You won’t get funded unless you’re the 1%.
8) Don’t be married to your original vision
Things change. Often. Get used to that as an entrepreneur and find ways to roll with the punches and keep your focus on how you can open up new opportunities for your business.
While you may be starting out and generating revenue from your original vision for your company, startups often find the real market is much bigger if they pivot.
Pivots are not for everyone, and they don’t always mean you failed at what you set out to do. In fact, if you look across the startup landscape you’ll find many examples of businesses that started out as one thing, and then matured into something completely different.
You should know when and how to pivot.
You may already know a lot of this, and if that’s the case then you’re starting out on the right foot. If you have learned from this blog, then I achieved my goal of paying it forward and giving back to the startup ecosystem.
The C100′s 48 Hours event took years’ worth experience and packed it into two days for me, and if you haven’t yet considered applying to 48 Hours, I strongly encourage you to do so.
Thanks everyone from The C100 and thanks to my 48 Hours alumni and colleagues for contributing to a really amazing week. If you are an investor or entrepreneur and you want to ask any more questions please don’t hesitate to reach out on Twitter or LinkedIn.