How to build a successful company, Part #1
How not to f*#k up when starting up!
“Today is the day! I’m going to quit my job, live off of my savings, and invest in my entrepreneurial dream so that I can take control of my life and hopefully become rich!”
This is how it usually starts…
Fast forward to 18 months later; you’re $75k in debt, the business you started is losing money (a lot of it), and things are starting to look dire. You stay up at night drowning in panic hoping that you’ll be able to fix it, but deep down you know that you’re f*#ked! All your hard work, money, and sanity…gone.
This happens way too often to people that want to be entrepreneurs and it sucks! To help avoid this, I will be writing a series of posts that will help you start a company and make it successful. I can’t promise you success, but I can give you a framework that will greatly improve your odds of creating a great business, and ultimately a great life.
Why listen to me? My name is Raad Mobrem and I am a successful tech entrepreneur. I raised $3m from investors for my last company Lettuce and sold it to QuickBooks for $30m. I’ve advised and invested in many companies, helping them grow to be multi-million dollar machines.
Part 1: Don’t just start a company, solve a problem first!
Most people I encounter start companies because they want a change. They get fed up with their job, hate their boss, or just want to make a lot more money. While this is a good source of motivation, it’s a horrible reason to start a company. And here’s why:
When building a business, until you improve the lives of your customers, you cannot improve your own (REMEMBER THIS FOREVER!!!).
The key word in the previous statement is “improve”. To improve means to fix. Thus, if you want to start a business, it shouldn’t be because you want to start something of your own, but instead because you want to solve a problem! In addition, the product you create should evolve from a problem that many others have endured. Time and time again, people that want to be entrepreneurs create products that they think will be a success but end up failing because the product didn’t provide significant improvement to the user’s lives.
As a result, if you want to start a “successful” business, you’ll need to find a big problem that a lot of other people have and solve that problem really well.
Tip #1: It’s best to find a problem that you’ve personally felt
My friend Tracy Rose DiNunzio initially started her company Tradesy because she wanted to sell her once-used wedding dress and make some extra cash. She couldn’t find a good outlet to do so and after learning that millions of other people wanted to do the same, she started working on a website that would become the genesis of Tradesy.
One of the key reasons that Tracy has been so successful is because she didn’t give up. In every entrepreneur’s life, there will be times when the business gets to be so difficult that all you’ll want to do is give up. But the main reason why the most successful keep going is because they love working on the problem that they set out to solve, not just because it will help others, but because they can relate to the pain their customers have felt. Their customers problem was their problem too.
The best part of all is this is that after a great deal of hard work, Tracy’s company is now valued in the hundreds of millions! Amazing!
Tip #2: Find a problem that affects people on a daily, or weekly basis
If there is a problem that affects people on a daily, weekly, (or monthly) basis then that means the solution that you’ll create will be used at a higher frequency. In addition, the more often someone has to use your product, the higher the chances that they’ll stick around, which equals success.
For example, I read and write emails for 2 hrs+ a day, everyday. I came across Polymail and it immediately helped me become more productive with email. As a result, I now use their product everyday and shave 30 mins away!
Compare this to an app that helps me pick paint colors for my house. I’ll most likely only paint my house every 5–8 years and thus I’ll only use that app every 5–8 years. Low chances of success…
Tip #3: Find a problem that can be solved and can scale quickly
For example, people need to eat and there is an opportunity to solve that problem by creating restaurants. The problem with this is that each new restaurant takes months to years to build and can really only serve people within a 10 mile radius. As a result, it takes a lot of capital and even more time to scale this business.
Now compare this to Radpad, a tech company founded by Jonathan Eppers that helps people find and pay for apartments. With his product, he and his team can expand their service from one city to a 100 within a few weeks. This allows them to quickly scale enabling them to become a major brand within the space.
Now that you’ve learned best practices on the types of problems to solve, start looking for one. A great tactic that will help you find a problem (and ultimately a solution) is to list out every little thing you do within 24 hours. For example: you wake up, you brush our teeth, you shower, and so on. As you go through this exercise, pay attention over the next month — could something on your list be dramatically improved? If you’ve answered yes, then you’ve identified your problem.
The next step is to find out if other people have (to be continued)…
We will continue this in Part #2 (coming soon) of How to build a successful company.
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