Tuesday, May 24, 2016

Startup Success: Why Everything Must Work Out In Your Favor

Last week I talked to a young, first time founder. Before we even talked about Techstars, he said, "You know what, we have raised a little bit of cash, we have a good advisor, we are probably okay, we don't need an accelerator."

You cannot imagine how much I cringe when I hear that kind of statement.

It is very difficult for me to convey to first time founders what lies ahead of them. Indeed, if they knew, they wouldn't do it. "You don't know what you don't know." I am not a Donald Rumsfeld fan, but he is right.

Building a successful startup is incredibly difficult. The reason is this: In order to build a great startup, EVERYTHING has to work out for you. EVERYTHING.

The CEO, the team, the market, the business model, the pricing, the marketing, the sales, the customer success, the design, the engineering, finance, HR, recruitment, culture, your investors, your board, your advisors, your competitors must screw up, the world changes in ways favourable to you, the tech stacks shift in your favour. And more. EVERYTHING.

If only ONE of those things goes really wrong, you will likely shut down. ONE key aspect wrong, company likely dead. You need to master ALL of them. And if you want to build a world class company, all of these better be world class.

That is very, very hard.

The question every founder needs to ask themselves is whether they think they are world class at those things. Do you know what it takes to be world class? Do you know how to recognize it? Where would you find those kind of people? How would you hire people who are? Which ones do you hire first? How much do you spend? Could you even afford any of them? What would you do with them once you hired them?

I am now 40 years old. I have been involved with startups for the last dozen years or so. I can tell you one thing with total conviction:

If I were doing another startup, I would try to get the best possible people around me. There are so many things that I don't know and so many things I am not good at, and definitely not world class in many of them. The only way to overcome this is having incredible people around me. As many and as early as possible.

In this context, think again about a world class accelerator. In that accelerator, you of course get some cash, but here is what you really get:

An advisory team of 100+ mentors, access to a global network of thousands of founders who are on your side, the accelerator staff, the LPs in their funds, the corporate partners, the sponsors, the companies who provide perks and everybody else who is involved. They all work for the startups, because they want to, not because they get paid to do it.

I wish accelerators had existed 10 years ago. It is the primary reason I do what I do right now. It is the reason why the Managing Directors at Techstars do what they do. We do this, because we wish somebody had done it for us.

I personally think that getting everything I describe above for 6% founder equity is most likely the best way to spend less than 1/3 of a 20% option pool one could ever imagine. Maybe I am wrong. But then the startups I have been involved with had up to $300m annual revenue and 500+ staff. The best CEOs of these startups had the best advisors and mentors very early on.

Something to think about.

Applications are now open for the METRO Accelerator, powered by Techstars. Apply here!




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