I have made tens of thousands of business decisions and observed many times that number. The most common mistake I see in the decision making process is losing sight of context. The choices you make on Day 1 will affect your actions on Day 1000, and on the Exit Day, which you will eventually reach whether it’s good or bad. Chances are high that, if you are running a startup, whether early or advanced, you will on any given day find some wisdom in this trove of advice I can draw from my recent experiences, my million words in the archives, and the thoughts I hope you as my readers will contribute along the way.
The First Decision: Should I even attempt a startup?
The answer may be yes if all these characteristics apply to you:
1. You can Make Things Happen. The leadership role in a startup requires a knack for getting things done, for making something out of nothing, and for communicating effectively. You must be able to rally others around your cause – employees, customers, investors, partners, and even you own family. You must be a tireless and effective promoter. I have met and worked with many smart and gifted people who just can’t seem to advance toward an objective. They may have great careers elsewhere but are miscast in the startup world.
2. You have a Winning Idea. It doesn’t have to be your idea; it was not my inspiration to write accounting software for the Altair. Most of my startups have formed around ideas introduced to me by people who felt I was equipped to run with them. An idea should have some third-party validation before you get too deeply committed. If you don’t personally know the space well, it behooves you to talk with those who do, especially prospective customers. This is classic de-risking from the lean startup methodology and the syllabi of the I-Corps programs like Venture Lab at Georgia Tech. Few of us have the Steve Jobs gift of knowing what customers would want before they could even imagine what he was planning. But, a few of us can get lucky and guess right. Just don’t fool yourself too easily.
3. You have a Big Idea. As you probably know, I personally prefer fat startups over lean startups. That doesn’t necessarily imply that you need to raise $10M to give something a try, but it does mean that it’s just as easy to pursue a big idea as a small one. You have the gift of only so much time in your career, and you have no way of knowing in advance how much time, so do yourself a favor and spend it on ventures with some potential consequence. That measure may not only be in dollars; it may have to do with a societal benefit that affects hundreds of thousands. Just don’t fall into startup theater at an early age and do yet another free beer on Sixth Street app, which seemed to be a recurring theme in the early years of our Longhorn Startup program for undergraduate students.
4. You have the Resources. That’s not just money, although it helps. I’ve seen many startups struggle to raise money fast enough to meet payrolls, and that’s a tall task. Having some personal reserves so you can focus on the job at hand and roll with a few lean times is a big plus. Perhaps you picked your parents well; there’s nothing wrong with that. The more important resources are in your posse – co-founders, prospective employees, connections into your chosen market, and people who know you well enough to invest in you. Creating a startup is a team endeavor; if you don’t have a team, it’s better to wait until you do. Resources that should influence your decision also include your credentials – your demonstrated achievement in academics or a profession to which others can attest. And, let’s throw in your systemic support. Being located in the right region or city of the country makes a big difference; if you’re isolated in rural America, pack up and move to where the action is. Find your way into an accelerator or incubator if needed. Mix it up with others similarly motivated and with whom you can commiserate on an entrepreneurial journey.
5. You Listen. You aren’t bashful about asking the right questions and absorbing honest answers. You know how to collect and assess data that informs your decision making. You listen to that data, not just to how others might interpret it. You can master the details that determine your company’s success. A long trail of carelessness in company formation and growth eventually will catch up with you; it’s best to stay on top of what’s in your personal domain from the outset. Back to what I said at the top, all decisions you make are in context, or many simultaneous contexts. Very few are binary coin flips; there’s always a need to anticipate what happens next.
6. The Timing is right. Yes, there’s a time when your idea has its maximum potential. I’ve personally more often been too early than too late in my own ventures, but either can limit your upside. Externalities can overrule what you believe you have personally timed to the minute. And, there’s a very personal side of timing as well. If you are young and not yet burdened with family overhead, you can take more risk if you choose, but, on the flip side, you may not yet have accumulated the resources prescribed in #4 above. You may have a patent on the successor to sliced bread, but the timing for you may not be right and may overrule your ambition to cash in too soon. It probably takes more courage to walk away from an opportunity than to get all over it. But, you have one life to live, and if you have a mate and/or children, everybody should get a vote. Always take heart in the Alexander Graham Bell quote: “When one door closes another door opens, but we so often look so long and so regretfully upon the closed door, that we do not see the ones which open for us.”