20 Basic Principles For Aspiring Entrepreneurs
Hi there! You are thinking about launching your first startup but you don’t exactly know where or how to start?
I have been in this situation myself and I see more and more people like you and me. In this perspective, I have decided to gather everything that I have learned through my own startup experience and make a list of 20 principles that I would recommend to anyone having the ambition of launching a startup.
I really hope this will be helpful to you.
THE IDEA
“Your SOLUTION is not my PROBLEM.”
1. Problem should come first, idea second, startup third. The worst path to entrepreneurship is wanting to build a startup, looking for ideas and then thinking about what kind of problems this could solve (because you have read somewhere that solving problems is important). You should do the exact opposite : your starting point to any project should be a problem that you have noticed. The easiest way is to solve problems that you’re experiencing yourself. It can be as simple as parking your car, finding a doctor urgently, renting an apartment, learning a new language, finding a new job, etc. You can also look at macro problems like feeding the world population, educating the next generation, resettling millions of refugees, etc. If you don’t have or see any problem (lucky you!), just look around, travel, meet people, observe your Facebook newsfeed, there are opportunities everywhere.
2. Work on something that matters to you. Entrepreneurs generally don’t get this the first time because they are already in the thrill of launching a startup and are very excited about it (and they should be!). Whatever your startup is doing, it has to be something that you would love to solve, that you really enjoy working on or reading about. As you know, building a company requires extreme resilience. Only a true and deep commitment can bring you this. A good exercise is to picture yourself working on the problem you are solving for the next 5 years (because in the end that’s what you are aiming for), and see if you are still excited about it.
3. Focus on your audience. Over the past few months I have played a game : pitching ideas of million $ companies that already exist without mentioning any numbers, users or valuation — just the basic idea as if it was mine and pretend I was going to launch it. Know what happened? Complete randomness. Sometimes I got pushback, sometimes scepticism and sometimes adoption. What’s to learn from that? Discussing random ideas to random people will get you nowhere but lost. If you looking for user feedback, you should definitely focus on your audience. By doing that you will understand who they are, what they think, what they do and most importantly what their problems are. Once you’ve done that, discussing with experts, investors and other entrepreneurs within industry is also the right thing to do.
4. Problem vs. Market Opportunity. We have talked about problem-solving a lot but I see you coming: not 100% of successful startups have solved a real “problem” per se. That’s correct. For example, most of all Digital Native Vertical Brands did not solve anything: Le Slip Français, Merci Handy or Tediber. The reason we are talking a lot about problem-solving is because this approach reduces the probability of you building something that no one cares about. So it’s fine going after market opportunities but keep in mind that if there is no problem, people are not waiting for your solution, so you better have a very strong value proposition for them.
5. Answer the question “Why now? ”. If something looks obvious to you but does not exist, there is a 99% chance that there are reasons to it but you don’t know them yet. Luckily, there is also a 1% chance that it’s because something has recently come up that now makes it the perfect time for your startup to be launched. It could be a new technology, a regulatory change, an industry shift, falling costs of cloud storage, etc. As hard as it is, try to understand why your solution did not emerge in the past but most importantly get strong beliefs on why it should work now. Here are some famous “Why now?” of companies like Uber, Twitter, Youtube or Dropbox.
THE PRODUCT
“If you don’t get the product right, nothing else will save you.”
6. Love is exponential. Getting users to love your product is what you are aiming for. This is the only way to get organic and exponential growth. The bad news is that making a great product is hard. So hard that it’s actually one of the main reasons why startups fail. A good way to approach this challenge is the following: “Better to build a product that a small number of users love than one a large number of users like”. In other words, it’s already so hard that you should better focus on a specific audience and on matching a single specific need. From there, it will be easier to expand: new features, new audiences, new use cases, etc. If you get users to love your product, you will get growth from word of mouth. Think about the last apps or services that you’ve tried. Have you recommended them all to your friends? No. Only the one that you’ve really loved, the one that solved a problem so important to you that you have told your friends about it. This behavior of yours should be your target for your customers.
7. Start with the simplest version of your product. It’s not because the problem you’re solving is complex that your product should be. It’s actually much easier to make a great product if you start with something simple: this will force you to do this one thing extremely well. Think about Google, Uber, Lydia, Snapchat, Tinder. They are all incredibly simple to use. It sounds more obvious with consumer products but it’s still true for SaaS products as well.
8. Get a solid framework to improve your product. As we said before, building a great product is hard. Therefore, improving it should be your day-to-day focus. How? Definitely not with your own feelings or intuitions of the day. Any change you make should be driven by user feedback and be measured through a KPI. In other words, the loop you are aiming for is :
1. Collect feedback: call users one by one, ask people to use your product in front of you, record live sessions with Hotjar 2. Transform these feedback into product decisions 3. Measure your actions through specific KPIs, using tools like Google Analytics or Mixpanel. The faster the repeat loop, the better.
9. Don’t put anyone between yourself and your users. Whatever your startup is doing, you should always start by doing all user-facing activities by yourself: sales, customer support, etc. As we said, improving your product is key and there is no better way to get feedback than by talking directly to customers. In addition, you will be so much better at scaling when the time for hiring and delegating comes.
10. Don’t worry about competitors. Understanding the ecosystem in which you operate is essential. However, you should definitely not pay attention to your competitor’s press release, launching parties, interviews, awards or fundraising. Why? First, because 99% of startups die because they don’t have a great product, not because of the competition. Second, because the more you are obsessed with competitors, the more your product will look like everyone else’s. Third, simply because all of these are no guarantee for success. Bottom line: understand your ecosystem, focus on your product, don’t lose your creativity and energy on others.
THE TEAM
“Your project can change, not the people.”
11. Answer the question “Why me?”. Before talking about the Team, let’s make a focus on you first. After a year in entrepreneurship, I am starting to think that we are not made to build any company we would like to. I realized this the day a friend told me: “Could you imagine Amazon in the hands of Mark Zuckerberg and Facebook in Jeff Bezos’s hands?”. I literally laughed. At the same time, I realized that none of these companies would have ever existed that way. The founder should be the incarnation of the company. The underlying question for you is “What do you have in terms of mindset and culture that makes you the right person for your specific project?”.
12. Target should be 2 to 3 co-founders. “How many co-founders?” is a recurring question. Unfortunately, there are no absolute answers to this. Data from Y Combinator, one of the most famous incubators in the world that funded more than 1600 startups, shows that 2 or 3 is statistically the best setup for success. 4 can work sometimes. 5 is really bad. 1 is not great but still better than a bad partnership. Again, no absolute rule on this, but at least you know the data.
13. Better to know your co-founders. Track-record of co-founders that don’t know each other is very poor. Again, this is purely statistical. So if you are still wondering: better work with a friend than someone met at a co-founder speed dating. Your chances of success are simply much higher. Another important point is that not getting along with your co-founders is one of the top 3 reasons for failure. Sharing values, being aligned on ambition and having fun together is a good start.
14. Try not to hire people for as long as possible. It sounds a bit counter-intuitive because great people are what makes a project move faster. However, you need to know that the cost of a bad hire is so high that it can kill your startup in its early days. The error of hiring too soon is a trap because everyone will ask you the same question “How many are you in your startup ?”. It feels like if you were 10, your company would be doing better than if you were 4. Don’t get lost: having more people does not mean getting traction or success. The trigger to hire should be when you desperately need someone to do something.
15. If hiring, hire right. First employees will define your DNA and culture. Fit should therefore come first. Starting from there, a good framework could be: mission-oriented people who get things done and with whom you are prepared to spend a lot of time. Do not compromise. Again, this could kill you. In fact, hiring is probably the only thing in which you should be taking your time as a startup. Also, before doing any hiring move, you should definitely read this book. Another interesting approach from Mark Zuckerberg: “hire people you would be ok to report to”. Food for thought on the humility level you need to have to be a great CEO.
THE EXECUTION
“Great execution is what transforms an idea into a valuable company.”
On the day to day basis, great execution is about two key questions: “Can you figure out what to do?” and “Can you get it done?”. Speed is a huge premium.
16. Good execution takes its roots in the founders. Before discussing anything about execution, you need to know that it relies on you. If you don’t execute well, no one else will. As a founder, you are in charge of setting the quality bar. It means that if the company goes wrong or moves too slowly, don’t try to push the team, work on yourself first. Additionally, you need to think “execution” the same way you think about any other discipline like sport or music: unless you are gifted, you won’t be an execution machine from day 1. However, you should work hard every day on improving it to reach excellence.
17. Can you figure out what to do? Working hard and fast is great but pointing at the wrong things will get you nowhere. The ultimate goal is GROWTH and everything you decide to add on your to-do list should point towards this goal. Nothing else. A good framework is to ask yourself “does it add value?”. If no, don’t do it. At the beginning it’s very simple, “adding value” only means getting more customers and improving your product. From there, you can set 2 to 3 priorities a day and get to work.
18. Can you get it done? Once you have set your priorities, getting things done is about focus and intensity. Focus means cutting all distractions. Intensity means working hard. If you are good at it, this will make you better than the others in the long run. A good test is to analyze your time allocation by the end of each day and learn from that. You will be surprised how much time you can save with a good organization. It implies saying “no”, cutting notifications, filtering calls, etc. You will find many lectures about personal organization. A good start is this amazing podcast from Nouvelle École.
19. Speed is a huge premium. The first resource you need to manage as a startup is Time. For this, you need to find the right balance between high speed and high quality. A good framework is the 80/20 Pareto principle, meaning obtaining 80% of the results in 20% of the time. Another secret is to constantly work on improving both speed and quality because it will compound over time. Try to get 5% more done and 1% better every week. Does not sound much but the difference by the end of the year will be huge compared to competitors.
20. Project vs. Startup. Try to work in a “project mode” as long as possible. This will directly impact your execution focus. Why? Because if you present yourself as a company, you will start acting like one: scheduling official meetings, building rigid processes, thinking about accounting, drafting legal docs, contracts, etc. This will make you lose your focus which should be to build a product and acquire customers. If you are not convinced yet, I hope this article will.
Bonus: be lucky. It’s very hard to admit it but data shows that it’s true. If you don’t believe me, read this article from MIT Tech Review. How to increase your luck? You will find some answers here.
Building a first startup is a meaningful decision. If you think that these thoughts may help any aspiring entrepreneurs, please share it.
With LOVE. ❤️
Alex
Note: My name is Alexandre (LinkedIn, Twitter), I am 33, spent 5 years in Investment Banking, co-founded 2 startups, now working as a VC investor. My day to day is about people, technology, sport, music and chasing happiness.
