Why your startup needs a North Star?
Sigma Squared
Tuesday, June 19th,, 2023
12–1:30 p.m. EST
Dr. Martin Schilling
Bonjour!
I am Yogesh Panchal, a Product Manager Intern at Turmerik working on E-cigarette monitoring and cessation software. In this comprehensive piece, will be sharing my learnings from Dr. Martin Schilling for early-stage startup founders.
When I got to know that I was given an opportunity to represent Turmerik at Setting Your North Star for Early-Stage Startups with Martin Schilling, I was overwhelmed with joy and anticipation. What made it even more thrilling was the fact that Martin hailed from Berlin, a city renowned for its passion for innovation and technological advancements — a perfect match for my background as a chemical engineer.
Martin is the Author of “The Builder’s Guide to the Tech Galaxy — 99 Practices to Scale Startups into Unicorns Companies” and the workshop was an attempt to spread his learnings among the most passionate founders in health care, social impact, and tech to give them their WHY.
I was amazed by his vision of creating 750 unicorns in Europe in the next 10 years. I am sure that his experience of co-creating and scaling successful five ventures, including Orphoz, a subsidiary for McKinsey & Company, a public company in Saudi Arabia, the foundation MARA in Argentina, and the FinTech N26 are stepping stones to his larger-than-life vision.
If you are a startup founder or an individual with an entrepreneurial spirit, I would highly recommend checking about him and I hope this blog gives you a North Star.
The workshop started in an unusual way, I thought we will brainstorm at the very minute the session starts. But, Martin took the approach of first principles. He asked the most fundamental question!
🛠 What are the 3 primary tasks of a CEO/founding team at an early-stage startup?
- Ensured aligned direction
- Recruit and retain an AAA team
- Have enough money in the bank
To get our goldfish’s attention on the topic, he shared the very example from Alice in Wonderland.
Alice: Would you tell me, please which way I ought to go from here?
Cheshire Cat: That depends a good deal on where you want to get to.
Alice: I don’t care where — so long as I get SOMEWHERE.
Cheshire Cat: Then it doesn’t matter which way you go — if you walk long enough.
Alice had a lot of resources and room for experimentation to walk as far as she wants to.
But coming to building your startup there is a limit to resources available, time constraints, and obviously a fear of failure.
It is said that your direction is more important than your speed. And to build great products having a strategic plan with exhaustive execution is a recipe for your startup success!
And to achieve this, every startup needs a ‘North Star’.
❓ Why bother with a clear “North Star”?
- A clear North Star directs growth and profitability.
Companies with high purpose scores are 2x more likely to be amongst the top performers on Total Shareholder Return (TSR).
- A clear North Star helps to attract investments.
Many top investors see a “lack of vision” or “lack of why” as an exclusion criterion when funding startups.
- A clear North Star attracts an AAA team.
Purpose-driven companies report 40% higher levels of employee retention.
A North Star is like an anchor to your startup survival boat and having a strong anchor helps you navigate all the hassle.
🔥 The Six Dimensions for a North Star
- Opportunity
- Future Vision
- Market & Monetization
- Traction
- Rockstar Team
- The Ask
1️⃣ Opportunity
What problem do you solve?
Who is or will be your customer? (Ideal Customer Profile)
Why does your customer buy from you? (unmet need)
What do your customers buy from you?
These questions help you denote your Value Proposition.
Every successful startup begins by addressing a problem. Identify the problem you solve and define your value proposition. Determine your ideal customer profile by understanding their unmet needs. Finally, clearly articulate what your customers buy from you, ensuring it aligns with their requirements.
2️⃣ Future Vision
How does your company make the planet a better place in 10–20 years?
Your startup — a global leader of X? (X — category).
Define your startup’s purpose and how it contributes to making the planet a better place in 10–20 years. Formulate a compelling business ambition that positions your startup as a global leader in a specific category. This vision will inspire your team and attract investors who share your long-term goals.
3️⃣ Market & Monetization
How do you get to USD 70–100 ARR in 10–20 years without capturing more than 10% of your respective market?
Can you prove strong unit economics (e.g. LTV/CAC > 3 and a huge contribution margin (e.g. > 50%)?
Are you avoiding crowded markets?
Successfully navigating the market and generating revenue is the key to your startup’s success. By considering market dynamics, optimizing revenue generation, proving strong unit economics, and focusing on differentiation, you lay a solid foundation for your startup’s long-term success.
4️⃣ Traction
Show progress, customer acquisition, revenue growth, and user engagement.
It provides evidence that your solution is addressing a real need and has the potential for long-term success.
To assess traction, you need to consider several key metrics such as customer acquisition, revenue growth, and user engagement. These metrics will help you gauge the effectiveness of your marketing and sales efforts, as well as the overall value proposition of your offering.
5️⃣ Rockstar Team
Build a skilled and passionate team aligned with the startup’s mission and values.
A rockstar team comprises individuals who are not only talented but also aligned with the startup’s mission and values. These individuals bring diverse perspectives and complementary skills to the table. They are relentless in their pursuit of excellence, adaptable to change, and resilient in the face of setbacks.
6️⃣ The Ask
Seek funding, partnerships, or mentorship that align with the startup’s growth trajectory.
It is essential to articulate your ask clearly and concisely, highlighting what you need and how it aligns with your startup’s growth trajectory.
When making your ask, consider the resources, expertise, or connections that would provide the most significant value to your startup. Be prepared to demonstrate how these resources will accelerate your growth and contribute to the achievement of your North Star.
Martin highlighted that the best companies in the world have worked heavily on these dimensions and we went on to break down the North Star of Shopify!
🛍️ Shopify
Ideal customer Profile? …….(Who?)
Key unmet need? ……..(Why?)
Features or services? ………..(What?)
We help online merchants to sell online easier and more by enabling them to create their platforms to sell to anyone, anywhere, execute digital marketing campaigns, and manage their shop with their dashboard.
~North Star of Shopify
Another example of a company named VOID:
“Fast-growing small and medium online merchants in Europe selling on Shopify with an annual revenue of EUR 5 to 15 million in verticals with seasonal products and complex supply chains such as beauty & health, food or fashion.”
~North Star of VOID
🛠 An exercise to find your own Anchor aka North Star:
Who? Define your ideal customer profile (buyers and users)
Why? Define 1–2 key unmet needs (e.g. B2B, save costs, save time, mitigate risk/compliance; e.g. B2C: connect with others, save time, provide access)
What? Define your top 3–4 (unique) features (i.e. your product) that address this need.
📢 My Takeaways!
In the turbulent sea of entrepreneurship, a strong North Star is your guiding light. By embracing the six dimensions of Opportunity, Future Vision, Market & Monetization, Traction, Rockstar Team, and The Ask, you’ll unlock the secrets to startup triumph. Solve a pressing problem, envision a brighter future, devise a winning market strategy, showcase your progress, assemble a rockstar team, and confidently articulate your needs. With these dimensions as your compass, your startup will sail towards unprecedented success, leaving a trail of innovation and impact in its wake.
Aha! You are closer to building your own North Star.
Comment what you are building, let’s connect!
