Advice For Startups, Based On Our Experience
Genius startup icon and legendary businessman Peter Thiel has a question he asks anybody he’s considering for a key role in one of his ventures: “What’s your secret? What do you know that nobody else believes? What are they all wrong about?”
Why Do Some Startups Fail, While Others Succeed?
According to Startup Genome, it’s often that they self-destruct, not that they’re taken out by competition.
Leaving out uncontrollable factors like timing, which is huge (Airbnb, Lyft and Uber were greatly aided by the 2008 Mortgage Crisis and people searching for side hustle incomes), leaving out temporary fads, and leaving out superficial causes of success, like branding, fear of missing out, or curiosity – when they don’t also accompany product value offering or market demand – what’s the secret of some endeavors’ success ? Is it one thing, or many?
Is there a science to succeeding in business – be it with product, service, experience, access point, or other purchasable something? We believe there is. We have a list. Some permutation of what follows, below, is present in almost every big success story. From 20,000 feet, it’s a product or service reaching a market, and delivering a solution or experience that’s special – either because it’s head-and-shoulders above the rest in terms of quality, because it does something the others do not. In most of these cases, advertising wasn’t really necessary. It met a demand so well that consumers spread the word about it, and it conferred social credit to recommend.
Before we start, here are some great books for entrepreneurs
Common Bad – Or Incomplete – Advice On How To Succeed
- Find a need and fill it. This can work, if you don’t have a mature or competitive market. The problem is it doesn’t put you in your client’s shoes. Ideally, you want to serve your own need. It gives you great insights into your customers – since you are on. Anybody can see a ‘need’ and start any business, knowing nothing about that client demographic. It’s better advice to get into something you know about, or, ideally, love. Boeing famously transitioned out of the timber industry into aerospace, when there weren’t but 10 or so companies making airplanes. They had a massive war chest. They had better management than many. They hired some engineers and the rest was history. Today, this would be bad advice. You want to be inside the demographic you serve, in a place to understand your demographic’s culture.
- Never give up. This is also advice that doesn’t really work every time. There are times when it’s appropriate to throw in the proverbial towel, as it regards one particular pursuit. We hear stories of people persevering and eventually finding success, only when there are other factors – like being differentiated, having a great product, demand existing, the market understanding a product, timing, etc. – that influence success. That’s a limited sample. We don’t hear about failures who never gave up (often due to sunken cost fallacy). We would say keep trying different things, rather than keep trying, in general.
- Follow your passion. Only if people want your passion. If you have a passion for collecting earwax, success is going to be difficult. We are moving toward an ‘artisan economy’, where brands and people are fusing, where public and private are blending, where producers are versatile and cross-functional, and where the technology exists that enables one person to effectively wear an unlimited number of ‘hats’ and produce bespoke products of incredible complexity. This equates to an auteur or artisan economy. It’s not either industrialized, or non-repeatable or crafty. It can be both. It’s a very exciting time, indeed. That said, your passion may not have market demand, or may not have a market you can connect with through Instagram. We’d say consider – amongst your passions, because nobody has just one passion – which one has a demographic, and which one provides the most value to consumers.
- Work harder than the next guy. Again, this seems like good advice, but, as detailed in The End Of Jobs, the ‘new worker’ is starting their career wanting to work on their own terms. We don’t have many ‘workhorses’ these days, who want to grind 2,000 hours a year working for The Man, for 45 years, with the hope of retiring to enjoy what little life they have left. It’s better to have fun with your work, than work hard. And no, it’s not ‘work’ if you’re having fun. And there really shouldn’t be a ‘next guy’, if you’re really doing your calling. We’d say ‘devote yourself’ rather than ‘work hard’.
- Offer the best price. This is absolutely, positively, horrible advice. You never want to compete on price. We recommend The One-Page Marketing Plan for a detailed breakdown on why this is.
- Work smarter. Yes and no. If by ‘smarter’, you mean make things unnecessarily complicated (to show how clever you are), or you automate or otherwise remove your attention from processes, that will hurt quality, and you should never do that. How about be smart, rather than trying to find ways around devoting yourself and your time. Tim Ferriss is wrong. A lot, actually. He’s a gifted inventor, but his advice and book have made him a lot of money.
- What Is Meant To Happen Will Happen (Don’t Have A Dream). Not so much. Again, this is not good advice. It’s so not true we can’t think of anybody who did anything, who didn’t first ideate what it was they were trying to do, even if they ended up with an adjacent iteration of that dream. Nothing great is achieved without enthusiasm.
- Have A Plan. Plans don’t work. Have a goal. Have a system.
A transaction happens at the intersection of needs, but it’s a selection by a buyer. Look at things from a buyer’s point-of-view, and give them a reason to choose you.
- Have A Direction To Go; Answer The Call Of Your Dream. This sounds self-explanatory, but a lot of people chose to fail by not choosing anything, or not getting going after it when they do know what they want or want to do. You have to have a direction go to. And you have to move. It helps if it’s something you love, that you’re good at, and that there’s a demand in the market for.
- Have A Plan. Don’t Have A Plan. “A plan is just a list of things that doesn’t happen.” (Way Of The Gun.) Plans get you nowhere. A) They’re written in the beginning when you know absolutely nothing about what you’re trying to achieve. B) They don’t account for eventualities – both good and bad. C) Inasmuch as they do take eventualities into consideration, they aren’t ‘plans’. You’re dealing with interactive elements, not static elements; it’s game theory and strategy, not tactics you use on a dead system, so ‘planning’ is useless. You do better with principles and priorities, goals and dreams, than plans.
- Offer Value. Value can come in a variety of different forms. It can be the unrivaled feeling of owning a Picasso, or an easy checkout. Here are some ways to provide value to customers:
- Execute. Yes, we have to say it. Many often never implement their goal or dream.
- Get Good At What You Do. Yes, you have to work. That’s basically a value-add for any idea, product or service offering. It’s self-evident, but we’ll say it anyway.
- Do What You Do Differently (Or Make Your Product Different) Be different. Don’t worry about the size of the market that doing things (or making things) your way, is. Make sure there’s some market, but don’t get greedy. It only takes 1,000 true fans to support a comfortable lifestyle. And that’s not hard to find. You Will Produce A Different Product By Allowing Yourself To Be Different, Personally. Many business legends are eccentric. But it wasn’t being rich and successful that made them different. They thought different from the beginning. And that was why they succeeded. This is a great point from the book Rework: de-commoditize yourself. We call it ‘differentiating’. Be different so that you don’t fear competition. At a cellular level, if you’re following your sensibilities, necessarily, it will be impossible for anybody to imitate you.
- Get Even Better At What You Do. Get even better at what you do, or what your product does. Don’t rest with being better or different. Make the decision easy for your customers. This is key. The dividends you get from this are more than just sales; you get to such a revered place that you are the hands-down choice, and your customers actually do your marketing for you, telling the world about you.
- Do What You Do What You Do Consistently. Self-evident, but believe it or not, many people switch endeavors too often to get traction. While you don’t want to grind yourself down when you’re meeting failure (without diagnosing or pivoting), you don’t want to skip from pursuit to pursuit.
- Let People Know What You Do (Share – In Both Clever And Obvious Ways) This is where a lot of people get tripped up. They don’t share what they’re doing. Either because they’re afraid, or shy, or lazy. But all success is crowdsourced. That ‘selective sale’ needs to happen thousands of times to create a ‘success’. It’s not hard to know where people should submit their work for people in their client demographic to see it, but people don’t always do this.
- Find Allies (If It Makes Sense) Not every venture requires a team, but many do. If you’re struggling to realize what you’re trying to do, it might make sense to find allies or investors. That said, they should pull their weight, and not be there for moral support or out of sentimentality (see Silicon Valley for examples).
- Scale, But Don’t Sacrifice Quality. This is a basic equation, more sales means more profits. If what you’re doing is limited to what you, yourself, are able to produce, it’s going to limit your profit potential. Just something to consider.
- Be Nimble Enough To Pivot If You See An Opportunity. This is a tough issue: when to pivot vs. stay the course. We offer no advice on this; you’re the person in the best place to know whether an adjustment will help you find a market, or meet success. It’s been said that ‘customers tell you what your business is’. PayPal, famously, was begun to permit Palm OS users to send money to each other. People began to pay each other for eBay purchases. Thiel and Musk and the other PayPal founders initially resisted this, but then they didn’t. They were in a place to know what was the best option. We’ve never heard of a company pivoting away from something that would have worked, given enough time, though that would be hard to prove. Usually, people fail to pivot and the thing dies. Or they pivot and the thing dies.
- Adapt As Obstacles Emerge Along Your Path. There is no straight line to the win. There are always challenges and obstacles that emerge. To talk about PayPal again: there was massive fraud when it first emerged. They had to use a variety of stacked technologies to limit fraudulent use, early-on. The entire idea was in jeopardy. But eventually they got it figured out. The thing to note is: when they had problems with fraud, they dealt with the problems with fraud. They didn’t ignore it. They didn’t pretend it didn’t exist. They didn’t focus on another area. There’s primarily one breakdown point with anything, one area that costs the most. So, the things you do to adapt an idea or product or service to success, seen in retrospect, is a narrative, or story.
- Make The Journey The Destination. Enjoy the ride. “With a job, you can’t wait for the day to end. With a career, there aren’t enough hours in the day to get done what you need to get done.” (Chris Rock). Lose yourself in your work. You’ll burn out if you’re not having fun, and you’ll produce lower-quality work along the way.
- You May Not Be Able To Get Where You’re Going As ‘You’. Joe Dispenza And Deepak Chopra point out that, in your most relaxed state, you are really just potential. Your ‘personality’ is a collection of habits and ‘takes’ that you selected at some point, and are somewhat arbitrary. We’re not talking about values or preferences. If a person builds confidence as a public speaker, or acquires a great social skill set, can we say they are the same person? This raises interesting philosophical questions. While needing to change, or pressuring yourself or rejecting your ‘self’ is not a good idea for your self-esteem, it’s only natural to be transformed by a journey.
- Your Frenemies Gotta’ Go. Haters often aren’t supportive because you expose their failings. Naysayers have derailed more than one dream. We can often deny that they’re bad for us, because the realization that people close to us can be so petty and fearful is painful. Cut them loose. It’s a childish mistake to believe any toxic relationship (one that doesn’t support your dream) is worth giving up your dream for. Sometimes people come around later on, when they’ve been proven irrelevant, and when you’re blindingly successful, but not always. So, cut the dead weight. This ranges from friends and family to paramours. Success can transform you, if you devote yourself. Holding on to the person you used to be may not be optimal. If you identify as a stoner, than getting up early – regularly – to train for a marathon is going to be a problem. That’s the extreme and obvious example. But what if you see yourself as ‘shy’ and need social networking or sales skills?
- If You Fail, Learn And Try Again.
- Focus On Systems, Rather Than Goals. Goals often fail because we’re not happy when we are in pursuit of them, and we are only briefly happy when we’ve attained them. In other words, make the new iterations of what you naturally, organically to, independent of outcomes. Scott Adams talks about this in his book: How To Fail At Almost Everything And Still Win Big In The End.
The Example Of Ray Kroc And McDonalds
There’s a film, The Founder, about Ray Kroc, the man credited with creating what we all know as McDonald’s, today. Along his journey, he did almost everything we cite here, and he was able to adapt to exigencies and obstacles.
Kroc had a dream, he followed it. It was differentiated. There was demand for it. He worked consistently. He found investors who believed in what he was doing. He adapted as problems arose. He scaled.
Kroc was a milkshake blender salesman who discovered the first McDonald’s in San Bernadino, California, when he goes to investigate why they need so many blenders.
- Differentiating. It turned out they had a system for delivering burgers faster than anybody else, by using thoughtful and clever implements and systems.
- Answering The Call. Kroc takes them to dinner and asks them about franchising, but they explain they already tried that, and it didn’t work: franchisees were lackadaisical about following their system. Kroc persists, and they eventually agree.
- Adapting. Kroc opens a McDonald’s franchise in Illinois, after finding some investors, but encounters the same problem McDonalds’ had seen before: wealth owners didn’t realize the value, the speed and differentiation, stemmed from a system. And that the class of franchise owner he’d been choosing was the problem. Kroc starts to find family-minded, middle-class owners, setting up financing for them to own McDonald’s franchises, and offering the dream of owning their own business.
- Adapting Again. Kroc eventually has problems with refrigeration costs, which he deals with by implementing the innovation of powdered shakes.
- Seeing An Adjacent Opportunity. At one point, despite a number of McDonald’s locations being open, Kroc is pinched financially because of the binding contract he has with the McDonald’s brothers. His accountant recognizes the real value of the franchise is in the real estate the restaurants sit on. Kroc gets some investors, and begins Franchise Realty Corporation.
So, that’s it. That’s what we know about when and how things succeed. There are companies, like Amazon, that succeed brilliantly by being better able to serve a large demographic. They aren’t really competing on price, or a feature set; it’s more that they’ve just made things so easy, that they’re the obvious choice. Like McDonald’s making things fast.