I was extremely fortunate to be part of the leadership team for two successful technology companies. I helped to steer them from the start-up stage through the entrepreneurial process and into rapid growth. Both companies had public offerings and were ultimately acquired by an industry leader, which is especially remarkable given that 75 percent of all startups and 90 percent of all products fail, according to Harvard Business School statistics.
Thanks for letting me share the characteristics I believe are necessary for a winning start-up.
What is an essential foundation for every new business?
First, you need to make sure you are building a product (or service) that customers can use. Sure, it sounds simple, but you need to balance listening to your customers with keeping an eye on new technology. There’s an old adage that if Henry Ford listened to his customers they would have ended up with faster horses. So, listen to your customers’ pains, but see if you can think of new ways to solve them. So, first and foremost, solve a customer pain point with your product or service.
Can you talk more about focusing on the customer?
In addition to ensuring that your product solves a customer pain point, you need to focus on your customers as your number one priority. One of the ways we listened to our customers was to bring them into our company-wide meetings to share their experiences. In our weekly “Pizza Meetings,” we discussed Product, People, Prospects and Profits to give the entire team the big picture, and customers would often join us. I believe the mantra of a “Relentless Customer Focus” is essential.
What is an area that is often overlooked in start-ups?
I truly feel that Operations often ends up taking a back seat in entrepreneurial ventures, and I can assure you this is a mistake. Although it’s not always seen as the most glamorous function, Operations is truly the company backbone and the workhorse of any startup. From the beginning, we linked Operations into tech support, manufacturing, logistics, and tied it closely to new product introductions. That way, if a customer had a problem with a product, we not only fixed that problem, we tried to figure out why this issue happened and make an operational fix within the company so that the larger problem would be solved long-term.
A cohesive management team is often cited as a success factor for start-ups. Would you agree?
Absolutely. It is vital to build a good core group of people early. The leadership team is important, of course, but every employee also needs to be part of an innovative and collaborative culture to help the company thrive. In the early phases of building a company, I found that the first 50 employees were a very tightly knit core group. But then we needed to scale and replicate that success, so that when we doubled our staff that same culture survived. Nurturing, training and retaining employees were fundamental elements to our success, as was confidence in the company’s leadership.
What about Sales? Any recommendations there?
I would recommend that any new venture start selling early. I can’t overemphasize the importance of establishing an excellent sales force, and the need to start selling as early as possible. At one company, we needed to get customers on board before we could get funding. It was really a leap of faith, but our early sales team delivered. Therefore, our early focus on sales was critical to our future funding – as well as our revenue.
How do you plan your exit strategy?
Although I initially mentioned the successful exits of the two start-up companies I worked with, it is important to build your business as a strong company that can stand on its own, rather than planning a specific exit strategy. An advantage I had with both companies was that as we were developing the right product at the right time, we had the ability to change course as needed – or to “pivot” in today’s terminology. The ability to be flexible and strike at the right point to continue market share and revenue growth was essential.
I believe the right product, a tight team and a focus on customers, tied together with strong operations and sales will be a solid foundation for success.
L&MB Magazine 6 - Q2, 2016
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