In January 2020, just as COVID-19 was starting to show up in the news, I had the idea for what would soon become my sixth startup, PlexiCam. I wasn’t alone. In 2020, the U.S. Internal Revenue Service received 4.4 million applications for new businesses.
What many of those new business owners will soon learn is that ideas are easy but execution is infinitely harder. It’s why two-thirds of the 4.4. million new companies will fail within two years.
Why do so many startups tank so quickly? According to San Francisco-based startup studio Wilbur Labs, if you ask that question of founders whose startups failed their top two answers will be that they ran out of money or couldn’t get funding.
While you clearly need financial runway and solid financial controls to make any business work, great startups rarely fail because they lack funding. The reason so many founders disagree is because few want to admit that they just couldn’t execute.
I’ve built and worked with companies funded on a shoestring and others with a blank check. The challenges of turning a new idea into a business are daunting in both cases. If anything, deep pockets can just as often prolong the inevitable demise of a really bad idea.
Even with a great idea, startups are never easy. They’re not supposed to be. If what you’re doing has novelty, if it addresses an unsolved problem, or if it paves the way for a new product, it will also come with unexpected challenges.
The things that are most important for a startup to have in place to handle those challenges are also the ones most easily ignored in the euphoria of a new idea. So, assuming your idea is sound, here are five of the most important cornerstones that I’ve found present in the most successful startups.
1. Find a great partner.
Consider that your partner is someone with whom you’ll be joined at the hip 24/7/365 for the next five to 10 years.
Startups are draining. They will take every ounce energy you have to give and then some. And they always take longer than you had expected. Without a partner to share the load, you will soon find yourself drained and overwhelmed. There’s no formula for a great business partnership, but I like to use the metaphor of a kite and a string. Great partnerships balance lofty ambitions with practical grounding.
2. Protect your intellectual property.
Trademarks and patents are validation for you, the market, and investors. Yet, I consistently encounter founders who barely have a clue as to how both work. Get very familiar with trademark and patent law. Yes, at some point, you will need lawyers, but there’s much you can do on your own.
In my experience, IP protection has been absolutely critical to realizing long-term value. Keep in mind that patents will not prevent infringement. Instead, they give you the right to enforce the novelty of your idea. If your idea is successful, it will be copied. Be ready for that.
3. Be prepared to pivot.
I’ve yet to see any startup, be it a digital, physical, or service business that is not reshaped radically by the market, often to the point where it barely resembles its original form. Your market and your customers are the only ones who can ultimately decide if what you have is worthwhile. The result is that whatever you bring to market will be reshaped. If it isn’t, then you’d better take the blinders off real fast.
Pivots are hard for founders, but they are essential. Seventy-five percent of all startup founders attribute their success to a pivot. By the way, a pivot can just as easily be with your business model as with your product.
4. Digital marketing takes patience.
One of the greatest and least-understood assets that your startup has is digital marketing. Unfortunately, most startups think that this is synonymous with search engine optimization or SEO. Digital marketing involves a long-term sustained effort of training search and social algorithms to recognize your social posts, investing in social media advertising, and constantly analyzing results.
Start small, but keep at it. As with patents and trademarks, if you do not spend time educating yourself here, you simply are being lazy.
5. Customer satisfaction is your only product.
The single greatest point of differentiation that you have as a startup is not your product, it’s customer service. Treat all customer communication and support as though it was your only product. Take every little bit of customer and prospect feedback, criticism, frustration, and praise and acknowledge it with gratitude and respect.
Respond to every single customer communication directly and quickly. The minute you get defensive with a customer, you’re closing the door to the most important contributor to innovation. Clearly there is much more involved in the long term success of any startup, but with these cornerstones in place you’ve put in place a foundation that gives you the best chance of overcoming the many unforeseen challenges that your startup is bound to face.