Brent Beshore | Forbes
My life revolves around startups. I read about startup news and trends over my morning coffee. I spend my days advising my portfolio companies and interacting with members of the startup community. I travel to conferences regularly, where I meet startup founders outside of my city.
Because of my immersion in the startup world, I’ve witnessed a lot of trip-ups. Here are six common misperceptions about launching a venture – and what you should know:
“I need venture capital.” Despite how some startup news outlets treat it, raising funds is the means, not the end. There are plenty of companies that have raised large amounts, only to fail spectacularly. Conversely, there are highly successful companies that bootstrapped the entire way. High-growth companies that require long periods of unprofitable user acquisition are great candidates for venture capital. But, in reality, they are a tiny minority of startups. Look to get your company what it needs – and not a penny more.
“If I build it, sales will come.” As Steve Blank is famous for saying, no startup has failed for a lack of code. Of course, product matters, but sales will likely be your biggest challenge. People are busy and distracted. Outside of your friends and family, no one really cares that you have an amazing solution. From day one, be sales-focused. Look at your company first as a sales company, and you’ll put yourself in the best possible position.
“People are a commodity.” Uh, no. Based on my experience, “A” talent is worth approximately five times more than “B” talent. People can be your biggest asset or your biggest pain in the ass. Focus on recruiting top talent, and then let them do their thing. Treat your talent well, and you’ll be in great shape to grow and establish a strong company culture. Neglect your people, and it will be disastrous.
“We’ll worry about an operating agreement later.” As they say, people are funny about money. Entrepreneurship is messy, but your agreements should be organized. Keep things clean, crisp, and clear from the beginning, or risk years of heartache, misunderstandings, and hurt feelings. If you don’t have documents in place now, do it this week. If you’re thinking about starting something, start here.
“I’ve got a couple startups.” As soon as someone says this to you, run. One startup is ridiculously challenging. Two is suicide. Jack Dorsey is well-known for running both Twitter and Square. Besides being a wildly intelligent freak of nature, this stint has recently and publicly taken its toll. In fact, I’ve never seen any startup succeed without it being the singular focus. Pick your best horse and ride it. If it doesn’t work, kill it and pick another horse to ride.
“We’re growing like crazy.” That’s fantastic, but massive growth can be extremely dangerous. It usually interferes with cash flow, magnifies communication challenges, and forces logistical errors. I’ve seen more than a few companies look up one day and realize that they need to either slow things down or risk growing to death. Ultimately, profits matter. Aim to grow at a sustainable, profitable pace.
No one wants to launch a startup that fails, but it’s easier to trip over your own feet than you’d guess. Make sure you realign your expectations and cut these six phrases from your vocabulary. The fastest way to avoid failure is by getting out of your own way.