Two main reasons startups fail
All startups start with an Idea. An idea to change the world, to disrupt the industry, to change how people live and work and make their lives better. We tend to think that idea is everything, but unfortunately, that can’t be further from the truth. If you have an idea of a billion-dollar business you must be prepared for the harsh reality — your idea was probably done already, either successfully or not.
There are two main reasons startups fail — either they fail to find their customers or they fail to build something that those customers will use. I want to focus on the ‘building’ part because there are a lot of resources on finding your customers. If you want to find out if your idea is marketable, you have to talk to your customers. If you don’t know how to do that you need to check out one of these books:
- The Lean Startup by Eric Ries
- Lean customer development by Cindy Alvarez
- The Mom Test by Rob Fitzpatrick
Ideas are a multiplier of execution
Derek Sivers launched CD Baby in 1997 to sell his music online. He was an independent artist and wanted a way to sell his music on the internet. No one did that at the time, so he had to build his own store. In eleven years he sold his business for $22 million and donated all these funds to a charitable trust that will fund music education.
In 2015 Derek wrote a book "Anything You Want: 40 Lessons for a New Kind of Entrepreneur”, sharing lessons he learned during his life and shares his business experience. One of the ideas he expresses in the book is that ideas are just a multiplier of execution. You can have a brilliant idea and weak execution and still go nowhere. But you can have a weak idea and execute it so great that you will still make a multi-million dollar business with it.
Derek knows what he’s saying. He ran his company for more than a decade and hadn’t used any external funding. He didn’t have a great plan, nor he had a perfect team or any business model in the beginning. But he cared about customers and made sure that execution was outstanding.
A Hipster, a Hacker, and a Hustler
If you have an idea and you’ve validated that customers have the problem you are trying to solve and are willing to try your solution, you’ll have to build something. There are tons of books out there describing how to create an app, but they all expect you to have technical expertise. What if you don’t have one, do you have to learn everything yourself?
I don’t think so. Rei Inamoto, a CTO at AKQA, said at 2012 SXSW:
To run an efficient team, you only need three people — a Hipster, a Hacker, and a Hustler
- The Hipster is the creative genius of the team, making sure that the product is designed according to most recent trends, that fonts are thin enough (or bold, whatever the trend is) and that colors are juicy and vibrant.
- The Hacker is the introverted nerd sitting quietly on every meeting (that would typically be me until I moved into management). He’s the one who can turn ideas and sketches into a working product, converting coffee and pizza into lines of code.
- The Hustler usually is the most down-to-earth person. He’s the one who knows what customers want because he spends so much time talking to them. He sets boundaries for the Hipster and the Hacker making sure that their creativity and attention to detail are channeled in the right direction that hopefully brings revenue and joy to the customers.
The idea person
While I think that most of the times three people is not enough, you can get very far with a team like that. But what if you are the idea person and don’t know how and where to find the Hipster and the Hacker? These days it’s easier than it was ever before. When you have all three your chances for great execution will improve dramatically.
Being a developer with the designer background, I think the Hustler is the most important person. I know a lot of very talented and skilled developers, designers and writers that don’t have the domain knowledge and thus can’t create the business outside of their industry.
If you’re an idea person, you’re actually in a better position than any designer or developer. It’s nearly impossible to hire the Hustler, but you can easily hire Hacker and Hipster. I’m not counting marketing and sales professionals — you can hire them too, but you need a deep understanding of the market and customers, you can’t hire for that.
The conventional wisdom is that you need to find at least a technical co-founder if you’re not technical yourself, and you can hire the designer to help you with the creative side. Unfortunately, it’s tough to find people with skills that are good enough for a co-founder, who are willing to commit to executing your idea. Finding a co-founder is as hard as finding your perfect soul-mate for marriage.
Working with a co-founder is a commitment for many years, so you should take your time and make sure that you both will have a good time working together. It can take years to find the right person, and your idea will still be just in your head. And even if you start working with a co-founder the risk that he will be not the kind of person you thought is still high. He might be burned out or lose motivation, or even lack the skills you will need a few months from the start.
Learn how to code
One of the options is to learn how to code. These days there are lots of bootcamps and online courses that will teach you how to build the basic app. There are even app builders that allow you to do basic things without even writing any code. But you can’t expect to learn the skill that takes years to master in just four weeks, even if someone promises that to you. You will build something, but you wouldn’t want to show it to your customers.
What if you did learn to code? You will have to spend time between software development and working with customers, wearing two hats at a time. That’s not an easy task because both of them require full commitment. Inevitably, you will have to spend less time on software development once your startup gets traction and focus more on what your real strength is — working with customers and leveraging your domain knowledge.
When I was 18, I started my first company, a web design agency. I knew how to code, but I had to hire a developer and a designer because I was just too busy meeting with clients and doing other business related stuff. I didn’t have time to code. I was a developer, and I didn’t know how to work with clients at a time, but I realized that I couldn’t sit on two chairs at a time.
After a few years, I launched an online tv with friends. It took some time to find co-founders but eventually the team was set. This time I was a Hacker, and I entirely relied on the Hustler to do the client and promotion side of the business. That didn’t work because the Hustler lost interest after a couple of years. I didn’t want to close the business to again, I became the Hustler, and since it was taking all my time, I hired a developer and then another one to help me. The business didn’t go well and was closed in a few years, probably to my poor marketing skills. But the lesson was the same — no matter how I tried I couldn’t wear two hats at a time, plus I realized that finding a co-founder does not solve any of the people's problem — they can quit any time.
I am the Hacker by nature, but from my experience, it’s only the Hustler who can push the business forward. If you are the idea person, you need to learn how to work with customers and learn how to build and manage the team that will execute your idea. There’s just no way around it. There are lots of ideas living in the heads of people who have no technical expertise, and I think these ideas have the right to become awesome products that customers will enjoy using.