By: Hillel Fuld (@hilzfuld)
Before I begin, let me just clarify something. I have never launched a startup. There, I said it. I have insane amounts of respect for someone who can have an idea, execute on that idea, deal with all the struggles involved in that execution, and last all those years not sleeping, barely eating, until that idea becomes a success.
I have spent years meeting such people almost daily and I document those meetings here. So why do I do it? Well, for starters, I love meeting and being inspired by people a whole lot smarter than me. More importantly though, someone who is so deep in executing his or her dream often has a difficult time analyzing it objectively. I try my best to provide that analysis.
Over the years, I have really thought a lot about the common thread between all these inspiring entrepreneurs I meet. I mean besides them being inspiring. I also think a lot about the advice I try to give them and the underlying rule behind said advice. I find that among the hundreds of things to consider before jumping into this insane and volatile world called a startup, there is really one big question that every entrepreneur needs to consider.
Again, there are many many others of course, but this is one aspect I think many startups lack and knowing it in advance would make all the difference. Here is the one rule.
Baseball is the New Business Plan!
Wait, what? Yes, baseball, learn the game. Here is what I tell every startup I meet. You need a homerun to succeed and anything less won’t cut it. What do I mean? Whether raising capital is what you need right now or press coverage, or perhaps you need traction, you know, users, figuring out what your homerun is, is your top priority. Ask yourself this question before spending one more dime or sleepless night on your startup. Do I, or do I not, have a homerun on my hands?
Now here is the good news. That homerun can come in many different shapes and colors. The ideal situation is that every aspect of your startup is a homerun, but that is almost unheard of. Here are your options, as far as I am concerned:
If I had to choose one aspect of a startup to focus on and make that the homerun, it would be the product. Now let’s be clear, many VCs will still ask you to see traction, but the smart ones, the ones you want on your side will try your homerun product and understand that they want to be a part of this. I know, oversimplifying, but really, if a VC tells you that a fantastic product is just not enough (obviously you cannot ignore the market and the reality that you need to figure out how to penetrate it.), I am not sure you want that VC as your investor.
So what is a homerun product? It is a product that when someone picks it up for the first time, they don’t want to put it down. There are, of course, many such products. You want examples? Twitter. Instagram. Any.do. I can go on for hours. The point is execute, execute, execute. Here, read this story to understand what I mean by execute.
Choosing your team is of course super key to the success of your venture. But not only because they should have the skills you need. In fact the skills you require when building your team should play a very little role in choosing the right people. You know what should play a bigger role? Talent. It really doesn’t matter what type of code that person knows, because, let’s face it, that type of code will be replaced in a year from now. Find people who are talented, that are passionate, and sorry to be so cynical, that look good on paper.
It’s true. Going to an investor and showing him a team with members who have built and scaled a billion dollar company in the past, cannot be compared to a team slide that shows a few young guys who have no idea what they are up against. You need rockstars on your team. Period.
Here is some circular logic for ya. Want an investor to look at you very seriously? Tell him that your other investor is someone he knows and respects. Now, how you going to get that initial investor? See above points. But when choosing your investors, this is important to remember.
How will this VC/angel look to other investors? Will it help me? Will it harm me? If your product is not differentiated enough from the competition and your team is a bunch of your friends who had a dream but never did this before, make sure you get yourself some good investors to back that dream.
Again, somewhat circular logic, but if your product cannot be explained in a few sentences so anyone will get it, your team is nothing that will blow away investors, then attack this with traction. Numbers don’t lie and they cannot be denied. Now, let me be very clear here. Big numbers that are not real or sustainable will not only NOT advance your cause, they will hurt it. Vanity metrics, as they have been called, such as “My productivity app has had 500 million mentions on Twitter” (and 15 downloads) will just make you look silly so don’t use them.
You know what else you should never do? Acquire users with spammy tactics. Don’t send tweets or SMS messages for your users without their explicit consent and no, a hidden menu item buried in your app letting a user opt out of these things is not considered their explicit consent.
But if you use legitimate tactics to acquire (I mean acquire like get, not buy.) more users, then yes, that will be interesting to investors and to the press.
This one is a bit different from the rest because, well, it is not 100% independent. Meaning, even if you have patented technology that no one can ever copy and that technology is something that no one needs. well, stop wasting your time. Having said that, if you have a situation in which your product is good, your team is good, or your traction is good and you have a patent on your “invention” (plus a clear strategy of how and why people will want it), well, yes, that is also of interest to many business partners/acquirers, which of course makes it interesting to investors.
So your product is just ok, no ninjas on your team, no investors will look at you, you have no traction, and no IP to speak of, but you just signed a deal with Pepsi and Wallmart on distribution, well, yes, that is most certainly a homerun in my book.
How will you ever accomplish that? That is a topic for another time, but good old biz dev can sure go a long way.
Summing it up
Among the challenges you have faced and will continue to face as a startup founder, having a real homerun on your hands whatever kind of homerun that is, should always be your guiding light. That, and telling me about it and how you intend on changing the world. I want to hear about it.