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5 Tips for Startups

Posted @ 9:20 am by Tim Ross | Category: Technology, Web Development Process | 0 Comments

This month saw the sad passing of Patrick Swayze after a remarkable fight with cancer.  I was struck by the overwhelming response and postings to this news on various blogs, Twitter, and Facebook.  It was not just the *size* of the response, but the varied nature.  Women wrote nostalgically about Ghost and Dirty Dancing.  Men shared favorite/absurd moments from Red Dawn, Roadhouse, and Point Break.  When you think about it, what other actor can claim lead roles in first-ballot Hall of Fame “chick flicks,” great rewatchable-on-cable action movies, and a top-10 SNL skit?  I can’t think of any.

What does this have to do with advice for startups?  Absolutely nothing.

I was just looking for an excuse to pour back through Swayze’s greatest hits, maybe get a new generation to rent some of his DVDs, and shamelessly look for a theme for a blog post that might get reposted.

We do work with a ton of startups here at SolutionSet and I personally have founded, worked at, raised funding for, and helped build a number of ventures.  When I get asked for advice, here are the 5 most common themes I talk about… as told through some favorite Swayze movie quotes.

Tip #1 – Disrupt from the Bottom
“It’s kind of strange, isn’t it? How the mountains pay us no attention at all.” (Red Dawn, 1984)

My advice to startups usually starts with “Have you read Clayton Christensen?”  I will pass on trying to detail the concept of Disruptive Innovation, but there is one easy lesson to take.  Some of the most successful startups are ones that “disrupt from the bottom” by introducing a new, cheaper/faster/better product into the lower end of a market. These ventures succeed because the incumbent providers dismiss the threat of this low-end offering as being “insufficient.”  Think Flip video cameras vs. Sony, vs. Seibel, Open Source vs. Proprietary Software, etc.

These ventures not only benefit from “flying under the radar”, but by building a base of real, paying customers allowing the venture to move up market steadily over time as they add new, more premium features.

Tip #2 – Build Something that Does One Thing You Love
“It’s not tragic to die doing what you love.” (Point Break, 1991)

Today’s product development environment moves at unprecedented speed.  To gain traction, a company should focus on delivering a single thing that a core of customers will rave about.  Don’t worry about feature complete, worry about being memorable.  The best way to achieve this is not just find that “one thing,” but to make sure you build something YOU would love to use.  Great companies like HP, Apple, and others were built on this simple, but demanding premise.

Tip #3 – Launch Early and Ugly
“You can learn to punch in the barn, but you gotta learn to survive on the ice.” (Youngblood, 1987)

This piece of advice flows directly from the previous.  It is hugely tempting as a new venture to want to wait to launch until your product is perfect.  You’ve poured your life into this new venture and everyone you know is waiting to see it.  You want it to be impressive.  Get over it.

No matter what you think your product will be, it will be different when the market gets a hold of it.  Take a deep breath and launch with the minimal acceptable product.  People will engage with it in ways you never imagined and that data will do more to inform your product strategy than anything else.

Tip #4 – Pick Your VC Wisely
“You ain’t seen bad yet… but it’s coming” (Next of Kin, 1989)

Okay, so now you have launched and have customers/traffic.  You will inevitably face the choice of accepting venture money.  Before you read too much into my quote, I’m not reflexively anti-VC.  They can be hugely helpful in the right circumstances… but there are a few key things to know.  First, choose the specific Partner, not just the firm.  Do your own due diligence on both the person and the firm and make sure you are comfortable with the values, reputation, and focus of each.  Talk to not just portfolio CEOS, but also VPs down the chain (who often will be more willing to share honest feedback.)  But do your research; the wrong decision can be catastrophic and the right one can help you build a much better business.

Tip #5 – Beware of the Big Customer
“He’s stuck, that’s what it is. He’s in between worlds.” (Ghost, 1990)

You’ve built a Version 1.0 product and raised money.  You are now getting introductions to customer prospects you only dreamed of meeting.  Seems great, right?  Beware… many companies have died at the hands of a won deal.

Big customers mean big money.  That’s a good thing.  But they also mean big demands.  Startups can get trapped in an endless cycle of dedicating all of their resources to a single “hail mary” customer.  Instead of building a product for everyone, they get taken off track building a ton of features specific to “Big Customer” that do not help them build a product for the larger market.

The result is a company stuck between two worlds.  You are a trying to build a product company, but instead you are functioning as a professional services firm working on a “project” for a client.  If you want to build a product company, resist building for a world size of one.

* If you liked this blog post, or even if you hated it, please consider donating to the American Cancer Society.

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