An incredible amount of literature is available about what you should and shouldn’t do when founding a startup. The advice is usually a lot of the same thing: Find your niche, hire a strong team, iterate/innovate and get funding. But while these tips are true and valuable, they really only scrape the surface.
Take it from someone who’s been through the startup process – there’s no clear-cut formula for success. So, plenty of aspects of starting a business tend to get overlooked. Here are just a few of these “extra" lessons I’ve learned from my own experience as an entrepreneur.
1. You don’t have to “go it alone.”
Many startups try to function in silos, raising capital to build infrastructure so they can control a particular market. But this is a surefire way to become overextended and burn out.
Remember Webvan? The online credit and delivery grocery business? That failed effort was a prime example of this kind of thinking.
The company purchased its own trucks and warehouses to get a foothold in the grocery delivery market but overlooked the cost required to maintain its presence and fleet. Fast-forward 13 years, and AmazonFresh is now doing the same thing Webvan tried to do, only it’s relying on the U.S. Postal Service to support its logistics.
The moral of the story is that smart startup founders won’t try to do everything on their own. They’ll look to partner with established companies that can loan support on the backend.
2. Your business partner isn’t always the person sitting next to you.
Conjure up a visual of the typical budding Silicon Valley startup and you’ll likely get a picture of two friends – probably classmates – working side by side in a garage.
As a startup founder, you should realize the importance of expanding your network beyond your immediate peers and tapping legacy players, as well, for their insights.
At the end of the day, your business partner likely won’t be a classmate. (In my case, it ended up being a student!) But if you keep your eyes peeled and your mind open, you can find counsel – and the perfect business partner – in the most unlikely people.
3. Going public isn’t the end-all-be-all.
What’s a sure sign a startup has made it? Three little letters: IPO. At least, that’s the impression you’d get from the flurry of businesses climbing the NYSE.
Yet while an IPO can provide a much-needed means of raising capital, it shouldn’t be mistaken as an indicator for success.
When I founded Endicia, my online postage service provider, during the dot-com boom, I decided to personally bootstrap the business (and at a time when venture capital was easy to come by, too). That choice was based on a desire to retain control and conserve cash. We’ve grown immensely since then, but we don’t need an IPO to tell us we’ve succeeded.
4. Hefty advertising can’t save you.
A lot of times, when startups get funding, one of the first things they’ll do is pump money into advertising. But this can often be premature spending.
Case in point: When Endicia debuted, it had a handful of competitors all backed by VCs and just as eager as we were to emerge as the market leader in ecommerce shipping.
These companies outshone us in every regard, whether by purchasing the largest booths at trade shows or by shelling out $50 million just to be on AOL’s front page.
But while other companies were using their money to promote their products, we were using ours to perfect our technology. We had no advertising budget and instead relied on word of mouth to grow our customer base. We even went so far as to comb through eBay’s help forums to solve problems for potential customers.
When the dot-com crash came and went, our business was the one left standing, mainly because we hadn’t wasted all of our resources on flashy promotions.
5. Competition is your greatest motivator.
My last piece of advice is probably the most important: If you’re going to play the startup game, then you have to embrace the competition.
The competition is what keeps you on your toes; it forces you to evolve and innovate beyond what you originally thought possible. Take Apple and Samsung, for example – the latter’s move to buy LoopPay signals its willingness to take on Apple all the way into the mobile payment space.
Bottom line: If you allow yourself to get intimidated – or, worse, to ignore competitors altogether – then you won’t stand a chance in business. Greet competitors with open arms and a problem-solving attitude, and you’ll likely endure and thrive for many years to come.