Failure: Did You Give Your Startup a Fighting Chance?
There is a lot to learn from successful start-up entrepreneurs such as Mind Candy’s Michael Acton Smith and Huddle’s Alistair Mitchell, which is why I’m really pleased to present you more advice from them in the following article.
Whether you’re building on your first startup idea or your third, learning from the experience of those who’ve done it and done it well is always a positive step. Give your start-ups a fighting chance or learn from past mistakes by asking yourself the following:
Were you Realistic about Your Idea?
Was it good enough?
Just because you think your concept is going to change the world, doesn’t mean anyone else has to agree. Mind Candy’s Michael Acton Smith says you need “wonderful, creative ideas that connect you with your customers.” If connecting with users isn’t a key part of your concept, you’ll probably struggle to drum up business. You also need to test your concept by getting out there and sharing it with other people. Friends and family can be a really good first sounding board, but also try going to tech events and networking groups and talking to as many people as possible. If you can’t get a bunch of techheads excited about your concept, you’re unlikely to thrill potential users.
Were you open?
An idea isn’t enough. Any new start-up has to be open to changing its product idea or direction based on the facts on the ground. Facebook did not initially include photo sharing, beyond profile photos, but according to Mark Zuckerberg: “Users didn’t necessarily say they wanted photos, but were uploading new profile pics every day.” So they built in photo sharing. This kind of flexibility and willingness to evolve quickly to meet user demand is vital for growing any tech start-up business.
Did you get the Right People On Board?
This includes you. Huddle’s Alistair Mitchell says you must have “the know-how and the experience to launch the business successfully.” This might seem obvious, but be realistic. If there are holes in your knowledge and experience, hire people to plug those holes. Tech start-ups live and die on their creativity, so follow Michael Acton Smith’s advice and “surround yourself with people who are very positive, very inspirational and very creative.” Nothing is created in a vacuum.
Did you partner up?
According to Spotify’s Martin Lorentzon. “The value of a company is the sum of the problems you solve together.” Give yourself the best chance by choosing your partners wisely. Go to networking events and meet as many people as possible. Tell them about your idea. Ask for advice. Not only will some of the people you meet be able to help you with your concept, they may even be willing to invest. It’s also important to develop clever partnerships with other companies. Spotify would never have got off the ground without deals with major music labels. Its founders’ also got Mark Zuckerberg and Sean Parker onboard early, gaining powerful advocates and helping them to build-in the seamless connectivity with Facebook which has been a major factor in Spotify’s success.
Did you raise enough capital?
How could you have raised funds?
To get going and develop your product, you’ll probably need seed money. If you’re lucky you might be able to cover this by yourself, or from friends and family. The other way is so-called ‘angel’ investors. These tend to be people who got rich from technology companies, so, as well as providing capital, they are also great sources of advice and contacts to help get your start-up off the ground.
Once you’ve already got a working product, you may be able to get money for expansion from venture capitalists, but beware! Their money often comes with severe restrictions, such as requiring start-up founders to surrender all of their stock, then earn in back over a number of years.
A better option might be to approach potential key partners, as television-orientated social networking app Zeebox did. A deal with BSkyB gained them capital in exchange for stock, but also guaranteed integration of their app with BSkyB’s service. This sort of deal can be a really smart move. It gives you money and gives your partners an added incentive to make your product a success.
Did you stay thrifty?
Of course, once you’ve got the money, the most important thing is not to spend it. At least, not all at once. According to Viaweb cofounder Paul Graham: “In nearly every start-up that fails, the proximate cause is running out of money.” Don’t fall into this trap, keep a handle on your finances and let your business stand or fall on your ideas, not a poor grasp of the company purse-strings.
Were you Brave?
Did you take a leap of faith?
By their very nature, tech start-ups are usually exploring unknown territory. Huddle’s Alistair Mitchell says you need “that initial urge to jump off the cliff and keep walking.” If you’re not willing to leap before you look and take a risk on developing a completely unproven idea, you’ll never get going in the first place. Mind Candy’s Michael Acton Smith says: “it’s very high-risk. You just have to be experimental and you have to be open to messing up.” He says the key is to be “willing to try stuff and, if it doesn’t work, move on.”
Did you give up?
Everyone would love to have the rapid success of Facebook, but the reality is many great tech companies spent years in the wilderness before achieving success. Spotify took two years of negotiating before getting the record company deals that allowed it to launch in Europe. It took another three years to do the same in the US. Spotify cofounder Daniel Ek said: “We bet our personal fortunes, and sometimes we bet the entire company.” But they persisted and, in November 2012, Spotify was valued at £1.8billion.
When it comes down to it, the key to creating a successful start up is to have a great idea, surround yourself with great people, get the right funding from the right people and hold your nerve. If you can keep these four key points in mind and approach any problems that crop up with creativity, flexibility and determination, there’s no reason why your start-up shouldn’t be the next great success story.