Startups are complex, with many variables and figuring out how all those variables fit together with that specific time in that a specific market is more art than science. Kinda like cooking.
“Cooking is an art, baking is a science”
I have often heard that, when baking, the difference between something delicious and something inedible is following exact formulas. When cooking with new ingredients you may never know which combinations or ingredients go together without trying to actually put them together.
There is an aspect of experience, instinct and somewhat luck that can result in something uniquely successful. Because it can be both horrible and transcendent it is an art.
If you set out to bake something and burn it, the first question a bystander will probably ask you is “Did you follow the exact measurements on the recipe?”. When you set out to cook something that has never been cooked before you’re more likely to be asked “Why are you doing it that way” or “Those ingredients sound like they wouldn’t work together at all!”
This analogy applies to the act of starting a new business venture.
There are ventures that have a proven recipe, which if you follow, you’ll make progress. Then there are those that are so half-baked that it will be an art and a miracle for you to get it off the ground. It is important to know the difference.
All too often I see that people deem it fit to call themselves or someone an Entrepreneur and their venture a Startup merely because they have left their job and employed themselves…
Firstly, does a recipe exist for your business venture? Are there companies operating in the same space with very similar products OR are you trying to create a product or service to an unknown market or customer?Can you generate revenue quickly by delivering a product or service that already has a market (existing need) OR are you unsure if you can even charge someone for your product or service.
The Proven but yet New Venture (Baking)
If the recipe and the need for your service or product (in the form that you envision it) is mostly known then you are a Proven New Venture. There is a general recipe for success that mainly involves understanding existing best practices.
Examples of these businesses include selling services consulting, software development, IT services, online stores, agencies, starting a laundromat or a restaurant.
No one treats a McDonalds franchise as a startup because it isn’t really. It’s already a product with a proven market need, existing customer base and a set of processes that, when executed, create value and a steady rate of return for the business owner.
This is a type of business where having previous experience in the industry or business is a great advantage as you can implement best practices and put your own spin on your business.
What to focus on:
- A deep understanding of the business model and the capital required to run your business. Expected Return on Investment (ROI) over time
- A strong handle of your costs and how your revenue will grow
- Immersing yourself in the recipe’s that other’s have followed in terms of People, Process and Product/Service that have grown their businesses.
- Having had experience in the sector (For example if you were a recruiter at a large firm and are starting your own recruitment agency this is a good start as you’ll know what to do and what not to do)
When you understand the basics of the proven venture you can start on a journey of incremental differentiation to set yourself apart from your competitors and optimize your People, Process and your Product in order to thrive in the market.
Off the top of my head some great resources or approaches include:
- Find a mentor who has worked in the same sort of business and pick their brain as often as you can
- Read books about success in your particular industry or specific business. For example if you’re going into retail read books like “The Luxury Strategy”, “The new rules of Retail” —
- Traditional almost “Academic” approaches can be somewhat helpful. Business courses on management, on SWOT Analysis, PESTLE Analysis etc.
- Maybe even start a franchise first which helps you understand the current best practices around People, Process and Product in your industry
The Bloody Startup
Trying to do something completely new with many variables is where you are in the dark. Even speaking to successful people mostly reveals that they really don’t know what the answers are as the problems are complex and the market is changing. You need experience, instinct but mostly trial and error and the grit to ensure you follow the path you’re going towards.
Listening to a “proven” recipe here can be really bad for you. You’ll encounter many people who are “startup experts” or “innovators” along the way who have never had to create their own recipe for a startup but rather espouse methodologies and principles that they’ve decompiled from successful people like Steve Jobs, Bill gates, and love to shout louder than each other about whose “recipe” is best.
I’m not saying don’t listen to academic approaches but I am saying is be wary of un-earned wisdom
You might be given insight from someone with wisdom, but if you have not earned that wisdom you cannot properly ground that wisdom in experience.
The more you know about trying to get a new product to a new market the more you realize you don’t know all that much. The very nature of what you are trying to do dictates that it is unpredictable and that even great and experienced people have low rates of identifying winners. Brian Chesky (AirBNB founder) spoke of his meeting with PG in their early days:
We met with Paul Graham and he thought the idea was terrible, he said “are people really staying on air beds? what’s wrong with them?”
This is a type of business where having previous experience in the industry may actually be harmful as it can prevent you from thinking clearly as to how things should be done not how others have always done them.
What to focus on:
- A deep understanding of your customer, the person that is using your product and what makes them tick.
- An indescribable obsession to find an unnoticed need in the market and create something that delights someone (Doing things that don’t scale is a method to get to this).
- A sole minded focus on tweaking your product until you achieve Product Market Fit — Until then nothing else matters
- Development of a finely honed instinct of when to accept the learnings and recipe’s that others have developed over time and when to reject them as dogma and forge your own path.
- Forget about your competition. Your competitors are not multi-nationals but rather other startups and actually the apathy of the market
Other resources here are:
- Find mentors and people who have built similar business models
- Pitch at Incubators, accelerators as a method of meeting new people, possible investors and always getting input
- How to start a Startup (YouTube Video Series)
- Evergreen Business on Medium — This is a great resource, spend a day on each article!
- Paul Graham’s Essays from YC Combinator
- Greylock Technology Enabled Blitzscaling (YouTube Video Series)
- Greylock slides on Slideshare
- Sam Altman’s Startup Playbook
- Salesforce SaaS Founder Startup Guide (Volume 1 and Volume 2)
Making a success out of a startup not only requires avoiding all the stupid things that will sink you but doing everything that is required to ensure that you are creating value in the world for a certain group of users and that you can capture this value.
Either way it’s hard
Either way it’s going to be the most difficult thing you can do. Competition exists everywhere and whether you are destroyed by competitors who are more experienced, optimized and have more capital or by the apathy of the market you will need to find a sort of pleasure in overcoming.
As Sisyphus in Greek Mythology was forced to roll an immense boulder up a hill, only to watch it roll back down to hit him you too will have to push your venture up the hill each day.
The key to fulfillment is that, a man’s reach must always exceed his grasp. Over time you will start finding a certain pleasure in overcoming, in solving and in struggle.
”I leave Sisyphus at the foot of the mountain! One always finds one’s burden again. But Sisyphus teaches the higher fidelity that negates the gods and raises rocks. He too concludes that all is well. This universe henceforth without a master seems to him neither sterile nor futile.Each atom of that stone, each mineral flake of that night filled mountain, in itself forms a world. The struggle itself toward the heights is enough to fill a man’s heart. One must imagine Sisyphus happy.Albert CamusThe Myth of Sisyphus (and other Essays)