Jul 31, 2014

2 most important principles behind successful startups

Over the last few years working for a couple of startups, I have learnt this important lesson -  For a startup to be successful, the following 2 principles are extremely important and in the same order as below:
  1. Focus
  2. Momentum
These 2 principles are crucial, especially in the initial few years when you are trying to establish your foothold.

Focus:
I came across an interesting article this morning which reiterated my learnings. It talks about how Facebook in the initial years was relentlessly pursuing "growth" to be the key focus area, although many skeptics wondered how they would monetize or generate revenue eventually.

I believe - "A startup should have a vision that is so big, that it inspires everyone around you. At the same time, it should have a focus that is so clearly defined, that it serves as a guiding light to everyone around you."

Focus is even more important if you are entering a new product category. Yes, you will foresee multiple opportunities in different target segments, geographies, customer profiles etc. There could also be a scenario where these markets are not yet tapped by any incumbent players. And it creates an attractive push to go after all of them, from a business point of view. The end result - you go after all these markets with unclear vision, undefined targets, product strategy being pulled across different directions, more strain on limited and precious resources that leads to burnout and eventually, let alone win, you don't even make a presence in any of them.

If you have a solid vision, an empowered and motivated team and a validated product-market fit, the business strategy can be easily simplified by going after ONE specific target market and addressing a specific problem area in that market. The other opportunities / markets can be prioritized and executed based on the learnings from the previous experiences.

It's also important to define how much time is necessary to validate a market. Is it enough to just spend 2-3 months and conclude if a market is attractive? Or do you need more time? Can this exercise be carried out, without investing significant product and technology efforts?

Apart from the markets perspective, what is the ONE metric that you want to focus and improve upon? Is it growth/acquisition (number of users), engagement (number of active/engaged users), conversions (number of premium/paid users)? Decide on that ONE metric and ensure you focus on it for atleast a quarter. Iterations have to be faster but the core focus shouldn't change as much as the number of iterations you take up.

That leads me to the next principle.

Momentum:
The proliferation of different variations of lean startup principles is a concrete proof that emphasizes the importance of momentum/speed in a startup. Yet, there is no dearth of ego clashes and back-and-forth discussions/meetings that act as speed breakers to quick experimentation and execution. Opposite views are important though, to get a wide range of perspectives. But opposition/criticism for the sake of getting your ego elevated MUST be avoided at all costs.

When I attended Scott Cook's session a few weeks back, it was an "aha" moment when he talked about the importance of rapid experimentation and that decisions shouldn't be made through powerpoint, politics and persuasion.

How does a startup come into existence in the first place? The startup founder had a hypothesis that a certain problem statement exists which can be solved by him/her and that there is potential business if it's solved well. There begins the experimentation phase, through multiple rounds of iterations, quantitative and qualitative proof which results in defining the next set of experiments to run.

I attended a Google hangout on the concept of Lean Design. Eric Ries, the author of "Lean startup" said "A startup is an experiment. Focus on the best ways to learn earlier".

Time spent in debating or arguing takes you nowhere. With simpler tools and processes available at your disposal, why not run an experiment on a small scale and see how it works? Momentum keeps you on your feet and learn from your customers. The author of this article stresses the point even further - "Experimentation beats expertise".

I truly believe in the value behind these 2 principles. Whenever I plunge into the "startup" mode, I will ensure they are being followed diligently.

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