We have all heard, and read the fame that surrounds those who started startups and germinated them in to successful businesses. We have all seen the glitter and glamour that surrounds these instant millionaires. While watching their success videos, and reading quotes on how they did it, and what it takes to get to the top, Don’t we all wonder about starting our own startup one day?
Even if you do not have an idea, a product or a marketable service, this article breaks down, and reinterprets start up guru, and entrepreneurial visionary Paul Graham’s 9500+ internationally acclaimed essay on How to start a startup.
Discarded and thrown out are the old concepts of business training, and choosing the right location. Instead Graham lists out the new age way of starting a startup and succeeding, and further advice on how to revamp, refresh and re-launch. Watch the video for a sixty second version OR keep reading to get to the meat of PG’s essay.
Live In The Future
To truly compete in the present market (with a mindset of hyper-growth) you have to live in the future. Trying to replicate what already succeeded (in the past) is the cause of the majority of the present startups not seeing their second anniversary. To win the future you must think “the impossible is possible”. When Google entered the search engine business in 1998, it was buried behind market giants Yahoo, MSN, Infoseek, AOL, Lycos, Excite, and AltaVista. Google founders envisioned something none of the other search engines never even thought about… and now you know what happened afterwards. Google is the second most valuable global brand today. So when thinking about the next startup, think about how you want to radically change how easily things can be done and accomplished or improve something that already exist. There is always a “missing link” to anything that already exists. Imagine… a fully automated fast food chain? OR a cell phone battery that last over 30 days?
“If you follow your instincts it will lead you astray” – PG
Write it Down
No matter how brilliant your ideas, plans and instincts are you will not remember everything. Many of us get inspired and motivated by reading self help books and watching motivational videos, only to forget it within a few days. Same way a brilliant idea or a great concept can be lost in thought. Plan to write down things that may trigger your intellectual observations, and have them listed down in order. Add new ideas, and observations to the list and discard old one’s that no longer hold value.
“No matter how smart you are, you will not remember all your insights” – PG
Make a Prototype
Even if you write down an incredible recipe for a cocktail, it will never be a hit unless you make it. If it is an idea for a website – code it! If it is a great new app – program it! If it is a new look outfit for the summer – design it! A lot of us have ideas on paper and that’s pretty much where they will reside the rest of our lives. So make your ideas, concepts and products more than a thought on a piece of paper.
“The only way to make something customers want is to get a prototype in front of them and refine it based on their reactions” – PG
Show the Prototype/Concept to 100 people
Now you have a prototype that you have tested out and think it is the Next Big Thing (NBT). But what good is your “biased” opinion on your “own” product? Showing it to 100 people will get you a realistic idea of what needs fixing – or better yet if you need to turn full circle and re-invent a better version.
“Of all things Microsoft’s original plan was to make money selling programming languages. Their current business model didn’t occur to them until IBM dropped it in their lap five years later” – PG
Improve and Modify Your Prototype/Concept
Unless your product is a magic spell for a mosquito repellent learned at Hogwarts, getting it right on the first try is a rarerity. Now that you have 100 opinions, it is time to re-evaluate, re-think, re-invent and re-do (if necessary).
“A 10% improvement in ease of use doesn’t just increase your sales 10%. It’s more likely to double your sales” – PG
Find a Co-Founder
It would be hard to start a startup by yourself. Bill Gates, seemed to be fine by himself, yet he had to find a co-founder. At first you don’t need as many co-founders, because the disagreements will pile on while forming factions. Once you know the company is heading in the right direction you can find a few more. Your co-founder needs to be smart, active and knowledgeable in what needs be done. He/she should be the catalyst of your startup (after you).
“The reason why you need a co-founder is to counter your instincts and your intuition because he/she has an equal interest in making the enterprise a success” – PG
Register your business
Pick the right type of business registration suited to what your startup will shape up in the future. If you need a lawyer – get one. This can change as your enterprise evolves.
“When you set up the company, you should get all the founders to sign an agreeing that everyone’s ideas belong to this company (Non Disclosure Agreement), and that this company is going to be everyone’s only job” – PG
Give your co-founder(s) as much equity as will make them work their hardest. Give them as much as they feel they are truly a big part of your company, while you keep as much as will make you give it everything.
“One advantage startups have over established companies is that there are no discrimination laws about starting businesses. For example, I would be reluctant to start a startup with a woman who had small children, or was likely to have them soon. But you’re not allowed to ask prospective employees if they plan to have kids soon. Believe it or not, under current US law, you’re not even allowed to discriminate on the basis of intelligence. Whereas when you’re starting a company, you can discriminate on any basis you want about who you start it with” – PG
Look for Funding
The first capitol you need is a few tens of thousands of dollars to pay for expenses while you develop and improve the prototype. Because so little money is required this is called “seed capital” and it is relatively easy to find it (in most cases seed capital is extracted from savings, or borrowing from friends and family). While there is no guarantee of a timeline when you can secure a funding source, keep working on improving your prototype.
“The way to get rich from a startup is to maximize the company’s chances of succeeding, not to maximize the amount of stock you retain. So if you can trade stock for something that improves your odds, it’s probably a smart move” – PG
By the time you have a rough idea that your product’s/service’s “core feature” will help improve and transform the lives of those who will receive it – Launch it. Do not delay your launch by sweating the small stuff. If you invented a cell phone battery which can last 1000 hours of usage, that is what will matter the most to users – Don’t waste time perfecting a logo and a color scheme to appear on the casing.
“There is nothing more important than understanding your business. Google’s secret weapon was simply that they understood search much more than Yahoo did” – PG
Follow up With Users
Are they coming back? Do they Love what they received? Are they igniting the right conversation with others in social media?
“The rock that sinks more startups than anything else is not understanding users/clients or customers. Can you think of one restaurant that had really good food (and bad service) which went out of business?” – PG
If users are NOT coming back, NOT loving what they received and NOT igniting the right conversation… Go back to the drawing board – fix what did not work – figure out why users left, and bounce ideas around and LAUNCH again (and again if necessary)… Majority of successful enterprises had to launch at least two times. So… don’t worry! Don’t give up! Avoid Distractions and Avoid Detractors.
“We officially launched in early 1996. By the end of that year we had about 70 users. Since this was the era of “get big fast,” I worried about how small and obscure we were. But in fact we were doing exactly the right thing. Once you get big (in users or employees) it gets hard to change your product” – PG
Get up to 1000 Users
You’ve already showed your prototype/concept to 100 people, and based on their suggestions you have improved it further. Getting 1000 users will give you a broader perspective about how people like what you created. Getting to 1000 users is tough enough. How do you do it? Now you understand why a co-founder can become invaluable?
“Avoid starting a startup to sell things to the biggest company of all, the government. Yes, there are lots of opportunities to sell them technology. But let someone else start those startups” – PG
Grow at 5% a Week
This may seem like an unimaginable number, if your new business is a barber shop or a restaurant. The startups Paul Graham discusses in his essay are businesses geared for hyper-growth. While it is unimaginable for a restaurant to grow at 5% a week, a tech company which launched a revolutionary search engine can reach beyond that figure.
“In technology, the low end always eats the high end. It’s easier to make an inexpensive product more powerful than to make a powerful product cheaper” – PG
If your startup accumulate 100 users and grows at 5% every week, you will reach 25 million users when reaching your four year anniversary. Now you have left your footprint on the world, and can decide if you want to keep working at improving and building your company via an IPO or sell it off.
“You need three things to create a successful startup: to start with good people, to make something customers actually want, and to spend as little money as possible” – PG
Remember… the fundamental reason behind the success of any business is to effectively communicate any idea to any audience
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* How to Start a Startup and Succeed with Paul Graham as illustrated by Anna Vital