To answer How to create a successful startup?, I reflected on my journey so far as a first generation and first time entrepreneur to recollect all that I learnt, what I heard from experienced and knowledgeable people, what I agreed or disagreed with, and put it in a simple framework.
I am not an authority or guru on the subject but just another entrepreneur who is trying to be successful and my views are based on learning and experiences that have helped me so far. I hope my experience and learning has something for the first time, would-be or aspiring entrepreneurs.
First thing first – How do you define success?
Even before we start talking about being successful, it is important to first understand what really defines success, which is subjective. Success should always be a moving target for an entrepreneur. The end result sometimes nullifies past successes. Is Ram Linga Raju (the founder and ex-chairman of Satyam, now Mahindra Satyam) a successful entrepreneur? Surely not. Is someone like me, who has managed to set up an enterprise software company out of India with a few paying customers who like the product, successful? My answer again is “No”.
Also, success is relative to your dream. If the dream was to create a multi-million dollar (in revenues) company with a global customer base and you still have a fluctuating revenue of around a million dollar still selling in only one country and face problems of scaling and stability, then you may not consider yourself truly successful. What about someone who starts up, takes it to certain level and then exits via merger or acquisition in a situation of distress sale?
So let’s correct the question and say, how to define success from a long term perspective?
A good way to do this is to look at what constitutes a viable business in the area of your startup. You may have many small successes (wins) along the way but the major milestone is the day when you have managed to successfully set up a viable organization which can flourish even without the founders who also feel they have realized their dreams. Hence, the whole objective of a startup is to eventually build a sustainable business that is scalable and has strong foundations.
The success mantra or framework
To be truly successful, you need to look at a triage of Purpose, Product and Performance.
Entrepreneurs start up to fulfill a dream which they are extremely passionate about. The dream can come in all sizes – Small, Medium, Large or XL. The size doesn’t matter. It, however, must create a sense of purpose, which in turn defines the kind of organization you wish to create and hence the vision. Ideally, you must avoid small or too narrow dreams. You may start small and keep extending your limits as you evolve. Someone who starts up a small restaurant may eventually transform it into a chain of restaurants. That is how most food chains emerged.
The purpose itself has a much deeper and profound meaning. It may not just be about the scale and size of business to build but also the impact on society, and ethics, culture and governance of an organization. Narayan Murthy’s purpose for Infosys was to create a highly professional and ethical organization that values its people, and it took them decades to reach the true success. So do create a core purpose or vision statement and make sure the founders and the team share it with equal clarity. Whenever you need to take hard decisions, the shared understanding and passion for the purpose will give you the clarity and courage to do so.
Note:There is no need to have a poetic verse or perfect sounding statement. your purpose could be simple or broad e.g. “To create a globally respected technology company brand” or “To be among the top 3 ecommerce players in category xyz” or “To empower the masses to bridge the economic divide”. It has to imbibe a larger purpose or guidance and not necessarily focus on impressing upon the larger external world. You can even have any sort of aspiring statement among founders and employees and have a different vision statement for external communication but still imbibing the purpose. Reason is, the purpose statement has to be closer to your people and must create positive vibes and energy to perform for the purpose. So define what suits as the perfect content and mode to use for sharing and imbibing it. Like anthem, song, verse, motto, logo etc. with text, audio or visual representations.
The product is your offering to the market. It can be a tangible or intangible product or service or a combination. The lines between how we conventionally/academically define product and services as two separate entities have almost blurred. Today, no conventional product can survive without providing enabling and other services around it and that’s why we keep adding “aaS” to everything that traditionally used to be a product like Software (SaaS), Content (CaaS), Infrastructure (IaaS) and Anything (XaaS)!.
So product is what you provide to your customers and what they pay you for. It’s just the value you deliver. Focus on what differentiates you from the competition and enables you to grab market share on a sustainable basis.
Startups must develop not just the right product or offering but the entire capability that will be required to successfully sell, scale up and create competitive edge.
This requires holistic and synergistic effort towards:
1. Technology (What is required to build the value?)
2. Market (What you wish to or can potentially target and how you sell it given the competition?)
3. Customers (How to delight them and create success stories?)
The path to evolve an offering and create a strong value proposition emerges from the interplay of TMC. This will not happen unless you intentionally explore and experiment with each of these elements in a larger and long term business perspective. You must not see it mainly as a product development or a management challenge but as a challenge to develop right-TMC capability over a period of time. This ensures your innovation is solving real problems and is perfectly aligned to customer needs.
Note: Always follow the philosophy of “purpose bigger than product” (By Mats Lederhausen). It is the best way to stay focused and not get married to a product that may not work. If the purpose is bigger than the product then you will never be rigid and always be open to evolve your product. It will also help not to be myopic and look at creating larger organizational values and culture that will enable success of your product and lead to sustainable growth of business.
The most significant, complex and evolutionary aspect for success is performance. It is all about how you execute your plans created on the basis of defined purpose and the product.
Performance is not just about developing a viable product. It is more about execution; it’s about creating everything else that is required to successfully sell a product, create delighted customers, and grow your business by laying the foundations of the organization that can do it continuously, consistently and sustainably.
Performance of an organization largely depends on the 3Ps of People, Passion and Party!
An organization is all about people; both the founders/core members and the larger team. Right people with right attitude and capabilities in right roles are critical for the core/founding execution team and for everyone who joins you on the way.
The core team must set the foundations by putting together the right enablers like strategy, processes, and culture for the rest of the organization. At all times, you must ensure that people and skills are complimentary and in perfect harmony for perfect execution.
When selecting people, attitude becomes more important than capability. However great a person may be but if s/he does not have the required passion then they may not be able to produce the desired output because ups and downs are part of a startup struggle. Chips are often down and you face challenges on a daily basis. So entrepreneurs (sole or team) must imbibe “Passion” as a key personality trait and make it a virtue.
Many a times, you will feel that nothing is going right and somewhere you may start doubting your business itself and begin losing faith. At such times, passion for what you are doing only comes to rescue and guides you out of such situations. Passion, itself takes care of other required traits like perseverance, positive attitude etc. and drives you to develop the required abilities and fill the gaps in your performance or execution.
Having said that, you will still need to be always positive and don’t let negative thoughts affect you, which can become self-fulfilling. So keep introspecting as a team and keep correcting the course; you must stay positively aligned and help each other maintain faith with positive energy. Passion is the only driver of perseverance which is the most important trait for success.
In a startup’s journey to become a sustainable enterprise you will face innumerable challenges and desperate situations while having a relatively lesser number of events to cheer for. So any and every small event of happiness must be celebrated with all people like a new order, any recognition you receive, new people who join you, birthdays of employees, your startup anniversary, new launches etc.
Such celebrations will bring people closer make them feel good about themselves and their small or big achievements. It will help in positive thinking and encourage perseverance.
Creating a sustainable startup is not guaranteed within a time frame. Despite everything on business/value fundamentals going right, you may run out of fuel or not get enough runway to take off and rise (grow) adequately. So it is always advisable that entrepreneurs keep exit in mind and have multiple potential options and targets for each option identified and mapped. In times of crunch, especially lack of capital and investment (over 99% of startups dont get VC funding despite being viable thus are bootstrapped), you may face threat of closure. Remember that purpose is bigger than everything else and don’t shy away from intelligent exit to save the team, IP and purpose through merger, substantial stake sale or acquisition.
There could be no formula for success, being successful itself is an attitude where fear of failure doesn’t stop you from action, you believe success is mandatory and are open to evolve. What you need is to stick to the fundamentals of business and keep improving your performance by learning from mistakes, not repeating them, not being blind or rigid and continuously evolving your business with new ideas and experience.