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Top 10 things Startups must do

A couple of weeks back, I participated in a panel hosted by Orrick called the Top 10 Startup Mistakes.  In this post, I’ve recreated the list and made a few changes based on my experience which is based primarily on bootstrapping.
1. Cash Is King, Be Frugal

Every penny counts and at an early stage, money should be spent first and foremost in client acquisition and product development.

Use capital frugally.  Remember when you were a hungry student and you thought hard before spending your limited budget.  Well, it turns out that it was good training if you’re leading a startup.  It always takes longer than expected to start generating revenue and you don’t want to run out of capital first.

If you make your capital stretch until you actually start to get revenue, you’ll be in a much better position to attract more capital to develop your channels, grow in sales, and develop your organization.

2. Recruiting Is Your Number One Job
As a first (or even second) time CEO/Founder, you may think you have to do everything.  And that would make you wrong.  To have a chance to succeed, you need to recruit the best team you can.  Hire people smarter and better than you are in Engineering, Marketing, Sales and Finance.

It doesn’t matter if you are great at one function or another, if you are the CEO, you must find somebody even better to run that function.  Your job is to recruit them, lead strategically and build the organization.

And remember, “hire slow, fire fast!”
3. Choose Your Investors
Do not take money from just anybody, even if you desperately need it.  If you do, it will cost you later.

Make sure that your investor’s goals are aligned with yours.  It may sound like a difficult thing to do but it will pay off in the long run.  In the long run, you want an investor that understands your business and can help you connect with customers and other investors.

Remember, your number one job is recruiting and it applies to investors, too.
4. Choose the Best CEO
This is almost always too difficult to accept, but if you are not the best CEO for your company, fire yourself and recruit the best CEO you can find.  Ask your team for help in finding the right person.

BTW, lack of experience is not a disqualifier.  Bill Gates and Scott McNealy had no idea how to run a company when they started doing so.  They did surround themselves with good people, with more experience than they had.  And they were very quick learners.  So, it can be done.

The question is, are you and will you be the best CEO for your company?  Unless the answer is a resolute “yes,” start looking for one.
5. Don’t Go It Alone
We have a saying at Nearsoft, “we don’t want heroes.”  I personally do not want to hand out with “heroes.”  If you want to go far, build a team.  Be a team player yourself.  Understand who is best at what and leverage them.  This is true for your company’s employees but also your Board.  They deal with lots of other startups and companies at other stages of growth and can bring in a different view of things.
6. Focus, Focus, Focus and Execute
What are the three things that you need to do to start getting traction?  Make a list of them, focus on them and do them.

Start by defining a long-term vision of where you want to take the company.  But then, break that down into actionable steps that can be done in 90-day chunks.  Then, break them down into weekly tasks and get them done.  At an early stage, execution is 95% of your team’s job and your job to make sure they understand this.

I’ve had the experience of developing a great strategy but failing at execution.  Make sure everyone in your team understands this: most businesses fail because they fail to deliver.
7. Listen to Your Customers
Your customers are your best friend.  They will determine if your strategy is right and if your team is executing correctly.  Having a good strategy followed with great execution is ideal.  But you’ll only find out how right (or wrong) you are by going out and starting to sell.  If you’re not getting traction, your brilliant execution may need changing.  Your customers and potential customers will tell you by their actions if your product really helps them.

Stay close to them.  Call them.  Meet them.  Conduct a Focus Group.  Listen on Twitter.  Whatever, the point is to stay in communications with your customers and follow their directions.
8. Differentiate, Differentiate, Differentiate.
You do not want to copy the competition, but you do want to know all about them.  In particular, you want to know what their customers are complaining about.  That little tidbit of information will let you know how to differentiate.

More likely than not, your product is trying to solve a problem that somebody else is already addressing.  Hopefully, your solution is intrinsically better or cheaper or greener or whatever.  But that’s not enough.  You have to be able to convince customers that your solution is more valuable to them.

So, listen to them and learn how they talk about your competitor’s products.  If you are good at it, they will tell you clearly what they consider valuable.  Maybe your product is technically better, but if that’s not important to your customers, it leaves you as a “me, too.”

Follow them on Twitter, check their product reviews.  This is not a very sophisticated approach, but, as simple as it sounds, it is business intelligence.  Use this information to frame your offering based on what your customers value.

9. Create a Sales and Marketing Organization
I personally think this is one of the most important things you must do as quickly as possible.  Every company needs a machine that attracts customers and generates revenue.  This is the only way you’re going to grow your business.

Depending on your product or service, you will either sell direct or go through channels.  Whatever form it takes, your company success depends on it.

And remember, that it takes more time to get sales going than you can imagine.  You must start to develop an excellent marketing and sales team from the start.  More than anything else, you must make sure this aspect of the business is successful.
10. Measure Everything that’s Important
Don’t depend of anybody’s opinion on whether your company is doing well or not.  You need to measure, measure and then measure some more.  You also need to use what you learn from these metrics to course correct often.

Choose three to five indicators and track them. Take time to really know what external factors impact them and what can you control. Setting up the system to collect this data is not easy but it worth the effort. Everyone needs to know how they’re doing against expectations.  We all need feedback and your indicators will tell you this.

That’s it.  I hope this can be of some help in your current venture or the next.

BTW, events hosted by Orrick are excellent.  They offer good information and good networking.  They’re a great service.

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