Startup/Early Stage

8 Obvious (and Not So Obvious) Keys to Tech Startup Success

A lot of tech startup success advice tends to be recycled over and over. I do find that much, but not all, of that conventional wisdom tends to ring true in a high percentage of circumstances. But I also think that it’s important to be open to strategies and tactics that go against the grain of that conventional wisdom. Below is a list of things I think are important for entrepreneurs to consider for their companies to become successful startups; some conventional and some that may surprise you:

There are Forks in the Road to Tech Startup Success

Don’t look too far ahead

I think that looking too far ahead in a startup is usually foolish. There are so many unknowns and potholes in the upcoming road that most long term planning turns out to be wildly wrong. It’s far more important to immerse yourself in the current marketplace to optimize that next step or two, because regardless of best laid plans there is almost always much pivoting ahead. If you spend too much time theorizing and planning for the distant future, it will take away precious focus and bandwidth that can be used to master your grasp of the present.

Go against the grain: Ignore conventional wisdom and negative statistics (mostly)

I have often argued that starting up a tech business is seldom a rational act. To ultimately reach tech startup success there needs to be some belief, faith, whatever you want to call it, in both yourself and the mission itself. Of course, if you are an entrepreneur that doesn’t recognize that the odds are long, you aren’t a realistic person. But some of that blind faith is essential to carry you through the many inevitable dips in the road. A statistic that you often hear is that 50% of all startups fail within 5 years. It may or may not be true; but I know for sure that if you survive into the second year, the third year, etc. the odds go up for tech startup success. I’m not suggesting that ignore “facts”. But paying too much attention to “probabilities” can overwhelm you and deter you from the task at hand. So keep that short term focus and aim first at creating a going concern. But also always remember, you’re a startup. If you do everything the same as your older, more established (and hopefully slower moving) competitor, it’s likely that you’ll come out on the wrong side of the ledger. So go against the grain and introduce something new and different into your market segment; whether that means a twist on pricing, distribution, promotion or the product itself. Your company’s existence literally depends upon it.

Have a “never quit” attitude

You always want to be rational about a business; when it’s absolutely time to “turn off the lights”, there is no advantage to hanging on further. But folks that see this scenario too early probably don’t have what it takes to reach tech startup success. There needs to be some innate stubbornness in your makeup; an almost irrational belief in yourself and your idea is often required to get you through the lows of any tech startup. Most technology startup companies go through many “near death” experiences prior to making it – or actually fading away. It’s critical to understand the difference between these serious setbacks and the real end of the road, and a “never quit” attitude can help you get past the former.

Do what you like (and hopefully what you know)

Many, but not all, startups begin as “passion projects”. Some passion projects don’t have the makings of real businesses, but that’s a story for another time. I think that in most cases this passion for what you’re doing is a huge advantage. You’ll likely start out with more knowledge than an entrepreneur who starts a business for strictly monetary reasons. Not that you’ll know everything you need to succeed; you won’t. But you should be ahead of the game. Also, during the low times of your tech startup, doing what you like will sustain you; where something viewed as just an opportunity to make money may not. And remember, if your business does prosper you achieve tech startup success, you will be doing this 5 or 10 years from now as well. Burnout is an inevitable problem in all types of occupations, especially in a tech startup, and especially the longer you are doing the same thing. But it you are doing something that you truly like (or even love), there is a much greater chance that you will be able to push past those inevitable periods of burnout and reach sustained success.

Successful Startups are Born in Persistence and Perseverance

Don’t just be dedicated to startup success, be obsessed

While you need to make sure to maintain some level of work/life balance for sanity sake, don’t mistake a startup role for a 9 to 5 job. It’s closer to 24/7 at the beginning if you want to be successful. Again – it can’t actually be 24/7 or you’ll go crazy! But be prepared to spend WAY more time and effort than most people would consider sane. I’ve written previously about the importance of work/life balance in a tech startup. This advice may seem contrary to my previous writings. But I don’t think it really is. In a tech startup it’s really impossible to maintain a work/life balance that most normal humans would consider rational. It’s important to get away from work enough that you don’t “blow a fuse” and lose it. But at the same time, you need to have a level of commitment that most would consider an obsession. In normal society, obsessions are generally considered unhealthy. But in a successful software or hardware startup, normal dedication may not cut it. So don’t be afraid of being obsessed. Accept it as part of the cost of doing business. Just try to not let it go so far that it destroys important relationships or other critical aspects of your “real” life.

In 2018 your website content matters, especially in tech startup success

In 2018 I would hope that this is really just preaching to the choir. But in all honesty, I find very few software, hardware and SaaS startup senior management teams who aren’t giving short shrift to their content creation and overall content strategy. For almost EVERY business this should be considered a strategic activity today. The forces against traditional outbound sales and marketing activities continue to build over time. Sales reps cold calling have become almost a cultural no-no, and with all the telemarketing SPAM almost no one answers their phone anymore. I’ve seen email marketing response rates continue to degrade over time. Nearly no one uses the old direct mail channels these days, and advertising (both traditional and digital) are a hard way to lead a successful marketing effort. Don’t get me wrong; all of these things mentioned here still should play a role in the marketing mix of most tech companies.

But I find that these traditional marketing activities rarely are enough these days to reach tech startup success. I believe that an essential piece of any tech company marketing mix in these times is content creation which positions the company and its employees as thought leaders in the target market segment. It’s important to understand that I’m talking about thought leadership, not thinly veiled product promotion. In 2018 the customer prospect has unprecedented controls and tools at his/her disposal to decide where to spend their product acquisition time. In most cases, they will gravitate to those companies that educate them with their content, which serves the role for the content creator of subtly taking on the role of expert in the prospect’s mind. Who do you think they will call first when they are ready to buy? Great content creation is the ultimate leveler of the playing field for startups against bigger competitors. It’s where a startup can “win” with lesser overall resources. In addition to creating great content, it’s important to have a sound content promotion and distribution strategy as well using social media, PR etc. Of course, creating great content is the starting point and core to the overall strategy. If the content isn’t unique, educational and “great” overall, nothing downstream will matter much. But I don’t find many C-Suite executives in tech companies beating the drum to spend more time, effort and money on content creation. You should.

Raising Money in a Tech Startup Shouldn’t be an End Unto Itself

Build your business instead of raising money

There are some businesses that absolutely need to raise money early on to achieve tech startup success. But raising outside funding is a huge time sink, almost an all-consuming task. Fundraising also tends to become an end unto itself for some tech CEOs. Tech startups that raise money very early on are usually pushed by institutional investors to grow so fast that you never really get to breakeven. this keeps the company dependent upon these investors and creates a vicious cycle of being nearly constantly focused on raising the next round. This can cause the business itself to suffer. Again, it’s important to point out that in some cases this approach is ENTIRELY appropriate. But in the great majority of mobile software, SaaS and hardware startups I believe this doesn’t make the most sense. It’s far better to proceed a bit more slowly in the beginning and build an attractive business that can stand on its own in most cases.  It may be frustrating at times and take longer than you like. But if you do it this way you’ll not only retain far more of the upside, but also will have investors chasing YOU.  So if you move forward without raising money, avoid it for as long as you can. If and when you HAVE to raise money, it’s generally best to raise as little as you can. Again, there are exceptions to this advice; every situation is unique. But for most, focus all of your precious time in the early days on building a business folks will want to invest in. If you do this successfully you’ll be in the catbird seat.

Keep your day job (until it makes sense)

This point only applies to startup folks in the very early days, of course. I find it’s very common (and only natural) to get excited and want to dive wholeheartedly into your startup at the earliest possible stage. But I caution you to slow down; there are many advantages to keeping your day job as long as possible. Many successful tech startups aren’t all that capital intensive these days; most notably mobile software and SaaS. Especially in these instances, taking things are far as possible while still earning a paycheck to help you bootstrap your company can allow you to test the concept more fully, before making a huge professional leap that you could later regret. In addition, the farther you can bootstrap things the more of the upside you’ll be able to hang onto. Obviously, with some business plans and personal situations this may not be practical. But if you can continue to work for a while, there are benefits to be had that enhance successful startups.

That’s my list of 10 keys to tech startup success. Some conventional, some maybe more controversial. What do you think of this list? What would go on yours. Please enlighten us with you views by using the comment field below.

Follow Phil Morettini and Morettini on Management via Twitter, Facebook, LinkedIn, RSS, or the PJM Consulting Quarterly Newsletter. Contact PJM Consulting directly at info@pjmconsult.com

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Phil Morettini

Phil Morettini is the author of the Morettini on Management Tech Blog and President of PJM Consulting. Mr. Morettini has an extensive C-level software and hardware company executive background. PJM Consulting provides management consulting and interim management services to technology companies.

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