Recently I gave a presentation at Yale University on top recommendations to aspiring entrepreneurs. I probably could have shared 100 recommendations from what I’ve learned starting more than 10 companies all over the world, so this post will be the first in a series called, “What Every Future Entrepreneur Needs to Know.” Enjoy!
1. There is never a good time to start
I meet a lot of people with great ideas, but they never take action on them. “I don’t have the money, I don’t have the time, I can’t because of x, y and z,” they say. These are all excuses created to justify why you shouldn’t take the risk of starting a company.
Instead, try to answer one very simple question: Do you want to be an entrepreneur?
If you really want to be an entrepreneur, the answer is simple. You’re not choosing a project to work on, you’re choosing an entrepreneurial lifestyle, and that life needs to be lived now and not next month, next year or next decade. There’s never a perfect time for that.
The second you start; all your excuses have a way of sorting themselves out, or fade in the light of the new exciting challenges your startup provides. Start now, not later.
2. Choose the industry, not the idea
It’s a romantic fairytale that you have to have the perfect idea. The idea no one ever thought of. You must be the only one out of 7,4 billion people on this earth who thought of this.
But the second you get a good idea, you can rest assured that other resourceful human beings already thought of the same, or have been working on it for years. It’s your ability to execute on that idea that creates success, not the idea itself.
Any day, I would choose an entrepreneur with a mediocre idea, but great execution skills, over an entrepreneur with a great idea, but poor execution skills.
Ideas are a dime a dozen. Success lies in execution.
Also, your idea will change over time as you learn more about the industry and what your users want. And so, think about what you find meaningful and interesting. Think about what you would like to spend the next 3,5,10 years doing. Choose an industry you want to become an expert in, and that will eventually become your competitive advantage.
3. Choose the right cofounders
AirHelp, my most recent startup, went through the world-renowned Silicon Valley incubator Y Combinator. And according to their research, the biggest reason for startup failure is founder disputes.
Picture this: You find out you can’t work together, or they didn’t have the skills they said they had, or they disagree with the company strategy, or they’re not investing as much time as you in the company. What do you do?
First, always see if you can find someone you’ve worked with before and who you trust. And agree to spend minimum a year full time without pay. That’s typically how long it takes before you either have enough revenue to start paying yourself a very low salary, or the time you need to show enough traction to raise capital. Also, be equal in your share distribution. The vast majority of work is ahead of you, not behind you. Everyone has to be equally motivated.
Choosing the right people for your startup is the most important decision when starting a company. Do not choose with your heart. Do not choose your close friends unless you’re willing to lose them or never return to the same friendship again. Instead, look at what skills your startup need in order to be successful (also called a gap analysis).
If you don’t have the necessary skills to get things up and running, you’ll inevitably fail. Do you need a technical guy, financial guy, marketing and sales to reach first traction. Choose someone who are experts in their field and where you couldn’t possibly do what they do better.
4. Don’t start with fundraising
This is the biggest mistake you can make as an entrepreneur. Unless you’ve started a lot of companies in the past with a couple of successful exits, you’re not able to raise capital without showing traction first.
The first year of a startup you need to spend all your time validating your business model and getting traction. When you have a beautiful hockey stick curve to show, you’re ready to fundraise. Any time sooner and you’ll end up wasting your time and more seriously spend less time on actually building your company.
Imagine being the investor. Ask yourself: Would you invest in a startup with an idea, but no traction? Would you invest in a startup that shows an increasing customer base, retention and revenue?
“But I can’t afford a year without salary,” you say.
Of course you can! Ask your bank or your friends for a loan. If you’re not willing to make sacrifices, entrepreneurship isn’t for you. Going down in living standard is only the beginning.
5. Get customer validation
The lean startup bible told us to always get customer validation first. It’s now easier, faster and cheaper to do exactly that. With a few hundred dollars you can start a Facebook campaign, direct people to a simple landing page explaining your service/product, and ask them to sign up to know more.
Despite that, it’s still one of the biggest pitfalls of entrepreneurship. The old adage, “If you build it, they will come,” hardly ever works. Therefore, launch quickly and get customer feedback.
Reid Hoffman, Co-Founder of LinkedIn, says it best: “If you’re not embarrassed by the first version of your product, you’ve launched too late.”
6. Implement sense of urgency
The day you decide to start your company, you also start the timer. That timer shows you how much you got left before you run out. You have to run as fast as possible to reach the necessary traction to pay yourself a salary or raise capital. That means you have to make your mistakes fast.
Here’s what I told the students at Yale: Work as if there was no day tomorrow.
The most successful entrepreneurs I know get shit done today, not tomorrow. And they are able to motivate their team to do the same, which is extremely important in those first crazy years. A startup is a marathon, not a sprint. But make sure to run that marathon.
7. Bootstrap by breaking rules, not laws
Today you can get very far for very little money. The cost of setting up servers, building products, getting customer attention is much cheaper today than 10 years ago. Also, by breaking some rules (not laws) you can often achieve much better results and knowledge because you’re doing it yourself and not paying someone else to do it for you.
At AirHelp we used to buy cheap flight tickets that allowed us to pass security in the airport, so we could get to the gates with delayed air passengers and inform them about their rights to compensation. Eventually we were thrown out of all airports, but it got us our first customers for almost nothing.
It doesn’t need to be scalable in the beginning. Bootstrapping also creates a healthy relationship to spending, so that everything is carefully considered before spending your very limited capital on it. Check out my post on the global startup for more bootstrapping ideas.
8. Focus on sales
Sales rules them all. Sales fixes everything. Get people to buy or use your stuff. Period.
I often talk to askholes, people who ask for advice, but never follow it, who don’t like to be told to grab the phone and start calling their first 500 potential customers.
It’s so important that you, as a founder, do this yourself. It will help you understand your customers and convert that knowledge into making a better product. You cannot delegate sales to others before you’ve done it yourself.
Partnerships are another way of saying, “I’m having sales trouble.” If you can’t sell directly to your customer or user, there’s no point in trying to convince someone else’s customers to buy it.
9. Get used to wearing many hats
Startups are so much fun (and hard) in the beginning because you learn like crazy. You handle all aspects of your company since there is nobody else besides you and your cofounders.
If there is a need, you take responsibility, even if you have no prerequisites besides willpower and analytical sense.
When you wear many hats, you also do things in parallel. If you’re an entrepreneur, you are raising money, writing software, selling, recruiting and bookkeeping at the same time. You don’t have time to do one thing at a time. Everything has to move down the road at the same time.
10. Enjoy the ride
Starting a company will be one of the toughest things you’ve ever done in your life. It will feel like one long, tough rollercoaster ride with ups and downs and a ton of sacrifices. But if you’re an entrepreneur, you wouldn’t have it any other way.
Besides, if you have a team of smart, hardworking people riding the rollercoaster with you, at least you can all scream together.
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These are just a few of the lessons I’ve learned starting 10 companies all over the world. But there are more. And I’ve love to share them with you.
Here are three ways to do so:
If you would like to read my exclusive white paper, “10 Lies Every Entrepreneur Tells Themselves,” send an email to firstname.lastname@example.org.
If you would like to invite me to speak about tech, legal or entrepreneurship at your next conference, university or company, send an email to email@example.com
If you would like to learn more about partnering together with my startup, AirHelp, please visit www.airhelp.com