A Grizzled Veteran’s Tips for Start-ups

As a founder of a company whose business model is built on supporting development teams by being a strategic development partner, I’ve been up close and personal with dozens of start-ups in my 25+ years of experience. My team has had the privilege to provide technology and expertise to help them jumpstart their development.

During this time, I have seen many companies flourish, and many companies crash and burn. The reasons why a company succeeds or fails are many, and there are a complex set of forces at play, but over time I have noticed that certain factors are pretty highly correlated with success.

In no particular order of importance, here are a few success factors I have noticed with start-ups I have interacted with over my career:

Don’t Take Too Much Money Too Soon

A massive influx of cash can be tempting, and while companies can fail because of a lack of funding, I’ve seen first-hand the dangers of the opposite: too much money too soon.

Having access to that much money sets unrealistic expectations for you, your team, and investors and those expectations can create a focus on short-term metrics rather than building sustainable, long-term value.

The more tangible danger of money comes from our tendency to spend it. A small company can quickly lose sight of what a Dollar, Yen, or Euro is worth and how to turn it into customer value. With cash aplenty, it’s hard to turn down the fancier offices and bloated teams. Necessity is the mother of innovation, and teams with tighter budgets focus on spending only where it really makes sense.

Once this commitment to ROI is built into a team's core DNA, it tends to stay there. Working within a well-considered budget helps build a startup's culture, processes, and professional foundation for long-term success.

Push Decisions Down the Company Ladder

Speed is particularly critical when a company is in start-up mode. To move fast, not all the decisions can be made from the top, especially technical and product ones. The solution is obvious but essential: Let your smart engineers make smart decisions, and keep moving.

SOLIDWORKS was a great example of this in action. When we began working with them, they were a start-up and were moving very quickly. I dealt with them often and was consistently impressed with the quality of the people they had and the freedom they gave them to make decisions. That combination helped them go exceedingly fast.

Let smart, talented people do what they do best, and your organization will benefit hugely.

Make Products that are Built to Last

I have seen many companies make the mistake of using free/cheap tools to build the core components of their project. This is often done in the name of conserving precious financial resources, but in most situations, this is a mistake.

The cost to switch out modules and do re-work later tends to be much, much greater than it would be to use professional, high-quality tools in the first place. Time-to-market can also be negatively impacted, as your teams are working around limitations in the cheap or free tools. Your sales team will also have to try and sell a product that is below the performance and functionality standards of the market. The point is, there are many hidden costs embedded in the choice.

Saying this may seem obvious and self-serving: after all, we sell the robust, relatively expensive tools I’d love you to use. In the interest of transparency, there absolutely are citations where free, cheap alternatives are the way to go. If you are simply proving something out or making a demonstration to investors, perfect. These are also well-suited to basic demos. But if you’re building something that will be the foundation of your future product, make it robust from the start. Don’t undercut your own work with a flimsy foundation. It will only cost you more time and money in the long run.

Focus On What Matters

There are two core areas where this advice applies: In product and market.

Let’s start with the product. You need to be very clear on what differentiates your product from the competition - and then put as much energy as possible into that. Buy, rather than build, everything else. It is not always about what your development team can do, but what they should do. Their time is a resource like everything else, spend it wisely on what makes you special.

If you focus intensely on your value-add you will be able to move faster and get to market quickly with a product that is truly differentiated from the competition.

When it comes to your market, it’s far better to strongly solve the problems of a narrow, clearly defined set of customers rather than partially solve the problems of a much broader market. Too many companies and investors get excited talking about huge potential markets and never address any beachhead market fully. Fragmentation is not your friend, especially when you have limited resources and speed is paramount

Invest in Marketing and Sales Early

The most successful startups I’ve seen have someone in the founding group who is focused on selling the product, not just making it. This person can articulate what the product can provide in terms of value, not just what it does.

Those who tend to focus on the feature set, with the mindset that “if we build a better mousetrap the world will beat a path to our door” tend to spend a lot of time waiting for that crowd to ever arrive. Quite often, it never does.

So start investing in marketing early. The right marketing leadership can help you cement how you fit into your market and clearly state your value proposition.

This is essential for initial market traction and getting your name out there. Name recognition goes a long way. Invest in these areas early, invest often, and invest aggressively.

Be Relentlessly Curious

I engage directly with the CEO at every company we work with. 90% of them want to talk about their product and the huge market disruption opportunities they have. 10% come in with a strong desire to learn. The latter are more successful.

This is true from the C-level all the way down. The start-up that learns fastest is likely the one that wins. Turn your company into a lean, mean, learning machine, one that actively seeks out, processes, and reacts to new information.

Building a Culture Matters

Once again, so many start-ups hyperfocus on technology, and hiring people who are excited about a particular technology. This is fantastic, but it is not a replacement for developing a core culture. Think carefully about the vibe you want to create, and try to articulate this as clearly as possible. Hire people that align with the workforce you want to create, and then reinforce it.

Without this, 5 years down the road, your culture will simply be a product of your team's personalities. This is very hard to change, so be intentional about the culture you are building and it will pay dividends in alignment, velocity, and employee engagement.

Beware Vanity Metrics

As the title says, a focus on “vanity metrics” can be extremely dangerous. While less common, when we see this, failure usually follows. These include site traffic, seat count, employee count, big-name pilot projects, and funds raised.

These are by no means irrelevant, but they are not the Key Performance Indicators (KPIs) that track the real value you provide to paying customers. Early on, make sure everyone in your company knows that the KPIs that matter are those that show that you’re achieving product-market fit, and measure how your users feel about the value of your product. These tell a story independent of ego or a misguided sense of success.

Good Luck

Understanding the common pitfalls start-ups fall into is essential. Following this advice is not a guarantee of success and ignoring one or more of these items does not doom a start-up to failure by any means – but having seen so many start-ups take this journey, these are the things we have noticed that seem more correlated with success.

I hope it helps and good luck on your journey!