Ever had a business idea that kept you up at night? Or dreamt about your own start-up, only to be stumped by how to actually get your ideas off the ground?
Entrepreneurship is a tricky and idiosyncratic career path that’s less path, more untraversed terrain. It’s a career trajectory that not only demands but requires you to forge your own way, rather than follow in the footsteps of those before you.
So for those of you with an entrepreneurial fire in your belly, we thought we’d look at what it takes to start up a start-up, making it that bit easier for you to nurture your ideas into fully-fledged companies and products.
First things first, let’s be clear. Being an entrepreneur comes with huge risks. The odds are simply not in your favour. While it’s easy to fixate on the success stories, the reality is, most start-ups fail. And nobody really likes to talk about it.
Harvard Business School lecturer, Shikhar Ghosh, says venture capitalists ‘like to bury their dead very quietly … they emphasise the successes but they don’t talk about the failures at all.’
Ghosh recently led a study on start-up mortality and found that approximately 75 per cent of venture-backed firms in the US fail, while a report by analytics firm, CB Insights, found start-ups typically die 20 months after their last financing round and after having raised $1.3 million.
It’s why Drew Houston, CEO and co-founder of Dropbox, likens being an entrepreneur to ‘jumping off a cliff and having to build your own parachute’.
The risks are huge, the payoff is unknown, and you’re always a nanosecond away from either soaring to great heights – think Facebook – or crashing spectacularly down to earth – think Friendster. Friend who? Exactly my point.
To succeed you need to, ironically, accept that you may fail. In saying that, if you do manage to succeed, the payoff can be astronomical.
So, still dreaming the start-up dream, even after those bleak stats? Here’s some sage advice from start-up experts and established venture capitalists.
Don’t go it alone. A study led by the MIT Entrepreneurship Centre found that for each additional co-founder (up to four), the odds of a company’s success increased. ‘Two to three co-founders seems to be a sweet spot,’ says Y Combinator partner, Paul Buchheit.
Having other co-founders will:
The best start-ups are the ones that set out to solve problems – real problems – that make founders think, ‘Gee life would be so much easier if X existed or if Y were available!’ When you do this and care deeply about your product or service, it’ll give you drive and passion – two things that’ll excite investors and make them want to jump on board with you.
‘It’s really about having a passion for the problem you’re trying to fix,’ writes angel investor, Ben Yoskovitz. ‘I’ve got to believe in your passion and dedication to the problem you’ve set out to solve, otherwise there’s a good chance that some future shiny object will catch your attention.’
It’s the exact approach Mark Zuckerberg took, who attributes the first pieces of Facebook’s code to the side projects and products he created for himself as a teen.
‘Companies that win are the ones that put users first’, says Paul Graham, the co-founder of start-up school, Y Combinator. Graham lists three rules when it comes to thinking about users and what your attitude should be like towards them:
Strategically placing your start-up is absolutely crucial, and where you set up shop will depend largely on what sort of start-up you are. For tech companies, Silicon Valley is without doubt the place to be, while fashion labels often flock to New York City.
Irrespective of where you land, experts all agree that you’ll increase your chances of success if you have a strong start-up ecosystem to tap into. Start-up hubs give you greater access to:
Based upon statistics from the Startup Genome, Sydney is the 12th best start-up ecosystem in the world, trailing behind the likes of New York, London and Vancouver.
Don’t launch too early, but don’t launch too late either. It’s the perfect ‘Goldilocks conundrum’ of timing a launch just right.
Taking too long to launch creates all sorts of difficulties. It slows down momentum, can bog you down in perfectionism, and stops you from getting on with the real job: improving your service/product to increase profit. So there’s a big case for simply launching something fairly quickly.
Launching too early, however, also comes with its setbacks. The biggest danger here is hurtling into things, and throwing up a subpar product that early adopters reject. While nobody expects your first iteration to be perfect, it still needs to solve a problem or fulfil an actual need.
While determination and a stubborn streak are important traits in an entrepreneur, to succeed there’s no room for tunnel vision. You’ve got to be flexible and willing to drop your original plans when something more promising emerges. In saying that, switching ideas every second week can also be just as fatal.
Graham recommends looking towards users as a guiding post if ever in doubt. ‘If you’re thinking about turning in some new direction and your users seem excited about it, it’s probably a good bet,’ Graham says on his blog.
It all starts with a business idea, doesn’t it? But if you’ve got more ideas than business knowledge in your brain, we’d recommend getting acquainted with Australia’s start-up community, quick smart.
There are plenty of incubator and accelerator programs out there designed to help you network with investors, bounce ideas around with serial entrepreneurs, and steer your start-up dreams in the right direction.
Below are some programs and resources to help you get started:
ATP Innovations, Sydney
Melbourne Accelerator Program (MAP), Melbourne
Springboard Enterprises (SB) Australia, Sydney