Key Ingredients for a Successful Startup
Date: Wednesday , December 30, 2009
Today’s tough economy and financial outlook provides a sobering reminder that an abundance of capital (as was the case recently) is not the only ingredient to building a business. Young entrepreneurs often see ‘access to capital’ as their biggest challenge. However, the two more important factors to successful entrepreneurship and start-ups are:
1. The business idea/gap in the economic fabric that is being patched by the new products/ services offerings and an incredible focus on that alone
2. The attitude of the founders and the incessant inner drive to succeed in business.
Entrepreneurs must focus on building an incredibly enduring business—one that can last for a long time, all the while demonstrating a sustained market value. The business idea/gap one is trying to fulfill must be based upon a solid foundation of innovation; without which the value proposition always will remain on a shaky ground.
Innovation does not mean radical changes but rather, a consistent dose of enhancements to products/services and a continual desire to explore better means of conducting business. The reason for a large number of failures in the world of start-ups is the lack of real innovation in business ideas despite the abundance of available capital. Without innovation in an already-crowded market, start-ups will have an extremely hard time solidifying their value proposition for their core target audience and creating a business that is built for the long term.
For example, consider the role of innovation at Apple. The company was founded on the principle of changing the world and “thinking differently”, yet in the 80’s became stagnant due to failed products, poor business decisions and a lack of creativity after Steve Jobs’ departure. With his return to Apple in 1996, the company re-ignited its innovation engine and has become the global standard— not only for PCs but also for the entire category of consumer electronics. Their product mix spans across hardware, software, audio, video, PCs, servers and cloud computing. Talk about how to “Think Different”!
The second point is the most important one in creating a successful start-up, the attitude of the founders. It is a vital aspect of success as it deals with letting go of one’s own ego, the biggest roadblock for founders in building a successful business and forming a winning team. Generally, successful founders come with ‘Type A’ personalities, a necessary ingredient in making a start-up successful. Type A personalities come with a healthy mix of personal ego, impatience, a sense of urgency, aggression and ambition – all qualities needed to push a start-up through each stage in its lifecycle. However, the key for successful founders is to understand when to set aside their egos and how to focus on core business essentials.
The young entrepreneurs should focus on solving actual problems and not the perceived ones. One must look at the business problem with the critical eyes of an outsider rather than the complacency of an insider, at the same time mindless of the trap of the endless loop of ‘analysis paralysis’. Make quick but thoughtful, well-researched decisions. Ask yourself honestly – why will you succeed? Why will customers buy products from you? How big is the problem? If the problem is not big, chances are either there are many “me-too” players already in the market or the barriers to entry are very low.
Spend time in understanding of your future customers and their behaviors. Once you have a clear problem definition to solve and good understanding of the customer, be incredibly focused on that alone. Remove all other distractions from your mind, follow your passion and commit to your own success relentlessly.
Ajay Jain, President and CEO, Quantum Secure