Many aspiring entrepreneurs find themselves facing this conundrum — “What are the considerations you think of as you plunge headlong into entrepreneurship?”
First some context — while many of these considerations would be common between businesses, regardless of the nature of funding, this note is most relevant for entrepreneurs looking to build venture-funded tech businesses.
And, these three key considerations can help inform your thinking.
Are you prepared for a long ride?
Startups are like road trips where the length of the journey is variable. In some journeys, you end up quickly to a bright shiny destination, and for some, it’s a long winding road. Meanwhile, some end up cancelling the whole trip after a while and start from the beginning.
Since you have no way of knowing which path your startup will take, the best mindset is to prepare for a long one. Five to seven years is a good rule of thumb.
It is fine to say, “I will try really hard for a couple of years, and if doesn’t become a demonstrable success, will wind it down.” It is emotionally very hard to pull the plug on your startup.
It is further complicated, practically, when you have taken money from investors who might differ in their outlook or timeframe.
We all know friends, or friends of friends, who started a company and sold it to Google for $100 million within a year. It’s best to not get distracted by such outliers.
Every startup is a one-off event where averages are of little relevance. Drawing statical samples is a lot like looking at the stock market historical trends and trying to predict the future; it mostly leads to disappointment.
If you are starting in 2021, by 2026 – 2028, you will be able to build a profitable company. That seems like an eternity. It is not surprising as that is a large chunk of your career, which puts the other considerations below in perspective.
What is your motivation for the startup?
There can be many reasons to start up. One could be that you are impatient to be financially secure or ‘rich’ — however you may define it. Or the idea of saving a little bit from your regular salary over an extended time seems too daunting.
There is merit to this motivation since a step-function jump in wealth through a successful startup can permanently alter the career trajectory and open opportunities that would otherwise never have been accessible.
However, it is worthwhile asking how passionate are you about the problem you are trying to solve. Does the idea of solving this problem get you excited as you wake up in the morning? Do you empathise with the customer’s pain points?
Because if you aren’t, it will feel like a never-ending chore and no different than another job. Startups invariably involve financial sacrifices. But the enormous upside is you get to choose the mission of the company.
The mission of the company needs to be something you care about a lot. If this is a pain point you have acutely felt personally, it is even better. Hence, listening to entrepreneurs describe their motivations for starting a business when they have themselves felt a dire need is so authentic.
This is not a requirement, but it sure helps when you are solving a problem for yourself.
What team are you working with?
Several businesses have single founders. So having a team is not a requirement by any measure. However, single founder companies just tend to be a lot harder to build than those started by a team.
Besides, the other great privilege of starting your own company is you get to choose who you hang out with at work every day.
Having a strong team contributes greatly to the success of a startup. Startups evolve during their journey, and having co-founders to bounce ideas with, makes it better, and more importantly, a more enjoyable journey than being a lone ranger.
Sometimes, a co-founder is very clearly at hand, at other times, finding one takes a conscious effort and outreach.
Can you have a fixed time table for doing a startup, like a commitment to startup something in six or 12 months?
You can have goals for evaluating and screening ideas. However, saying you will do a startup in the next six months or a year, or even a couple of years, is wishing an idea you are passionate about would come along, and you devote five to seven years with the best team you can assemble, in a pre-defined time frame. You can wish, but they usually don’t work.
Amazon’s Jeff Bezos would call starting a company the ‘output metric.’ You have little control over it. But the ‘input metrics’ are actionable now that you can focus on:
- Look into specific areas and talk to a lot of potential customers to understand if there is a big problem that needs to be solved. It is ok to look at several different domains and diverse ideas. In the process, you will also get a better idea of what your own DNA match with a problem looks like.
- Consciously work with other people to identify potential collaborators and co-founders. For all you know, you might find someone else’s idea a lot more exciting, and you jump into the boat with them.
- Move to the right geography — a city or region with a dense tech-centric culture — where you are more likely to bump into other people and encounter new ideas. Everyone needs luck to succeed, but by being in the thick of things, you increase your chances of luck bumping into you.