You woke up one morning and felt the urge to become an entrepreneur. Or maybe you’ve been dreaming about it your whole life and finally dared to try. Anyway, the decision is here — but the experience and a plan of action are not. Let me give you some advice.
Over the past five years, I’ve heard pitches for thousands of startups. I invested in a few dozen of them; some succeeded and others did not. Before I became an investor, I founded several companies that I successfully sold to global leading corporations. These experiences have enabled me to formulate a list of recommendations to help beginning entrepreneurs minimize the risk of failure in the very early stages. Even if you’ve heard some of them before, take a moment to think about them — no matter how well-known and obvious certain mistakes are, people keep making them again and again.
The to-do list for soon-to-be startup founders
When thinking of an idea for your startup, choose a big problem. Something very specific might quickly make you successful in your chosen area, but it won’t give you the flexibility to scale and grow your business.
Verify your startup idea by visiting the «startup graveyard». In addition to looking at successful startups, be sure to also look at the failed ones — and ask why they failed. Some ideas that seem very promising have killed hundreds of startups. If you don’t do this research yourself, you can be sure your potential investors will.
Have a clear understanding who your product or service is for. There are plenty of online survey services you can use to find out if there is a demand for what you’re thinking of offering. Many people are afraid of sharing their ideas this way, but they shouldn’t be: Everybody is too busy with their own life to steal your ideas. Asking people around you for their opinions is a cheap and easy way to get initial feedback from the market, even before you start building anything. Positive feedback minimizes risks and gives you confidence to move ahead.
Choose your business partner wisely. You are probably going to spend more time with this person than with your own family, and face more challenges together. Consider not only their skills, but also their personal qualities and ability to handle stress, and verify that their approach to business and life matches yours.
Prepare for a marathon, not a sprint. Don’t expect any results to come sooner than in 3–4 years; most likely, they will take even longer. Most founders have patience for 2 years max and then burn out and quit, even though success might be waiting for them just around the corner.
Expect the journey to be long and bumpy. There will be challenges and roadblocks along the whole way. It’s better to embrace them from the beginning than to suffer every day. Even things that sound simple in theory can turn into issues in real life. You cannot foresee many little details that hide behind every step you are going to make. But as long as you have enough cash to pay your monthly bills, you’re in business — even if that cash comes from advance payments. Satisfied clients will be the best and most reliable source of funding the growth of your company as long as you’re sure that you can deliver on the promise in the long run.
Let your creativity run free (within the law). I will explain this point with a story:
When I was building the startup Sputnik Labs in Russia, I was going to companies trying to sell the CRM software we had developed, but nobody would buy it. They said things like, “We’ve never heard of you.” “We’ve never heard of this kind of system.” “We have our own back office system; why would we need something else?” “Is there a market? Prove there is a market.” Investors were saying the same thing — there is no market, so we can’t even calculate your market share.
So I sat down and made up research about the CRM market in Russia: I said it was $30M, and we were planning to take 20% of the market in a year. All the numbers were completely fake, but I did honestly say that this was the opinion of the management of Sputnik Labs. I made a slide deck based on the “research,” and then I made a small blog post about it with a link to the slide deck.
Then I talked to a journalist from a big publication who wrote an article using my data, saying that here was a growing market and it was going to be $30M based on the opinion of the management of Sputnik Labs.
One of the big research agencies basically stole that data and presented it as their research. They removed the reference to Sputnik Labs but used the same numbers. After that, I just referenced their research in my slide deck, saying “based on the data of the major research company X.”
The whole cycle took less than three months. But then I was the biggest player in the new market that I just invented for myself.
Don’t underestimate the power of networking. Connections are everything when getting funding, great partnerships and deals. Look for somebody who will introduce and recommend you to people you want to work with; it will improve your chances of getting what you want. Also, take your reputation seriously, have respect for promises and be consistent.
Take care of yourself. The entrepreneurial life is action-packed and busy, often little short of madness. Many entrepreneurs lose themselves completely in this new and exciting life — their business will become their top priority, more significant than their personal happiness and health. These entrepreneurs don’t work to live. They live to work, and work is a game for them (I’m definitely one of them).
In order to not to destroy yourself in the game and to stay sane and healthy, remember these tips:
· Take care of your body and mind by practicing sport and meditation.
· Develop immunity to social pressure, such as hate and ignorance during downturns and euphoria during upturns — those states are going to constantly swing.
· Learn to enjoy the process of creation, not just the results of it. Burning Man is a great example of how to understand yourself and gain the vital skill of creation: Build something extraordinary, allow thousands of people to enjoy your creation, and have no fear or pity to have your creation burned down to free space for new ideas.
As you start walking the entrepreneurial road, you will have a lot of revelations. Probably, just like me, you will see that doing business is not that hard, and that logic and common sense are your best teachers. You will be amazed at how, despite all the unplanned turns, challenges and pains, everything somehow works out, and when it does, this is the best feeling ever, and totally worth it.
To get there, you will most likely need to find investors to develop your ideas. To make sure your startup is the hottest there is, read this post.
Pavel Cherkashin is a cofounder and a managing partner at Mindrock Capital and a managing partner at GVA Capital. A former angel investor and entrepreneur, he now invests in cryptocurrency, artificial intelligence, blockchain and self-driving tech.