Entrepreneurship

The 7 Steps To Success Silicon Valley Startups Swear By

Read more at www.forbes.com

Silicon Valley, in San Francisco’s Bay Area in Northern California, serves as a global centre for technology and high innovation. According to Wikipedia it houses 30 businesses in the Fortune 1000, many of the world’s largest high-tech corporations and accounts for a third of the USA’s venture capital. As of 2013, Silicon Valley employed about a quarter of a million workers in info tech and the region was responsible for technologies including the microprocessor and the microcomputer. Accomplishments in tech are everywhere you look. You don’t have to be in Silicon Valley to be in technology, but it definitely makes sense to learn from their success.

Daniel Priestley is an entrepreneur and multiple bestselling author whose entrepreneur accelerator, Dent Global, has worked with business owners at every phase. His work helps entrepreneurs start and scale through its methods, including the Key Person of Influence, and he learns from the best entrepreneurs in the world to pass insights onto his clients. He’s also seen plenty of mistakes happen.

“Silicon Valley is a fascinating place”, he said. “It’s famously the birthplace of the technology and brands that are fused into our everyday lives. It’s where good ideas rapidly become products and services used by billions of people every day.” Most people know that Silicon Valley is home to some of the most well-funded venture capital firms, not everyone knows the method Silicon Valley firms follow, that means they can “go from an idea to a massive valuation at break-neck speed.”

From Priestley’s work studying entrepreneurs building powerful brands, here is the seven-stage approach that Silicon Valley entrepreneurs adopt for turning ideas into valuable exits.

1.    Ideation

“This is the process of coming up with a pantry of good and bad ideas to choose from,” explained Priestley. “There should be no judgment at first, the goal is to compile at least ten ideas before applying any filter. Once you have at least ten potential ideas, narrow the field with criteria such as passion for the project, size of the problem and value for solving the problem.”

How do you find ideas? Expand your mind and your horizons. Read books outside your normal sphere of interests. Meet new people, go to new places. Go down rabbit holes of exploring and be curious. Ideas arrive to those who are open to them.

2.    Minimum viable product (MVP)

After narrowing down the ideas, entrepreneurs should use “landing pages, brochures or slide decks to gauge how potential customers respond to an offer,” said Priestley, highlighting a crucial omission from this step: product development. The purpose is testing, not being busy with execution. “An entrepreneur can simply see if customers are willing to click the buy button on the page and when they do, the site says, ‘this product is not currently available. Register your interest.’”

This is a valuable stage in ascertaining customer demand and, “the key thing to measure is customer engagement.” No engagement, no viable business idea, and it’s back to the drawing board.

3.    Product-market fit (PMF)

After the MVP stage has revealed which idea is the best to focus on, “now you can begin to develop a product.” At this stage, Priestley advised an entrepreneur “takes a product into the market with the intention of rapidly iterating versions of the product based on customer feedback.” He explained that the goal is to “achieve greater customer satisfaction by making adjustments to the product or service.”

Restricting supply is also key, so fulfilling orders doesn’t get out of hand. “Normally, entrepreneurs deliberately limit the number of users to a smaller group while establishing a good fit. At this stage entrepreneurs are solely measuring customer satisfaction,” a key indicator of product-market fit.

4.    Go-to-market (GTM)

Now much of the testing is complete, the product honed, and customer satisfaction optimal, “it’s time to take your product out to a wider market.” Priestley explains that the go-to market stage “is about ramping up marketing and making sales activities.” This is where “the entrepreneur and their team are trying to find a repeatable way of generating attention and making sales for their new product.”

Think publicity, promotion and all the launch activity they can muster, complete with analysing everything they can measure. Measurements are key within the go-to market stage, especially “allowable customer acquisition cost (AAC) based on the lifetime value of a customer (LTV)” as they both indicate the business’ likely future success.

5.    Scale-up

Next it’s building on the perfect product, aligned customer base and initial traction to ramp up sales further. “Once the entrepreneur is making consistent sales, they begin building their business to meet the growing demands. They recruit a bigger team, build a brand, formalise their culture, and secure additional funding.” This might be where a series A investment round comes in, but it’s also where growing pains can come to light. Focus is key. “It’s important that the entrepreneur builds systems and processes to ensure the business can cope with the growing complexity of their organisation.”

Support from the right places is also paramount when scaling. Priestley advised that entrepreneurs “seek a mentor, coach, or advisor at this stage to ensure they are doing the right things.” The measuring continues, as it’s during the scale-up phase that a business “sets and reviews its objectives and key results (OKRs).”

6.    Exit

Many Silicon Valley tech companies are built to sell, so a well-planned exit often follows a scale-up phase. For some companies, a sale happens after a few years, for some it’s decades. Some tech companies including Basecamp are adamant that selling isn’t their plan.

“Once the product is proven and the company is making money there are several ways to sell the business,” Priestley explained. “The entrepreneur might merge with a complementary business, sell to a private equity fund, get acquired by an established corporation or even conduct its own initial public offering (IPO).” With a strong track record and proven success under the belt of a tech entrepreneur, the opportunity is huge and they hold a lot of sway.

7.    Give back, invest or go again

After a successful exit, what might be next? Contrary to popular belief, it’s not just gardening and golf. Entrepreneurs who have completed successful exits “often become mentors, angel investors or they use their experience and knowledge to build another business,” explained Priestley. “It’s part of the Silicon Valley culture.”

This ecosystem ensures that the location and way of operating keeps going strong, and success breeds more success. The knowledge and contacts made by one entrepreneur on their journey of building a company can be passed on to help dozens more build theirs, and this is replicated for every successful company that Silicon Valley creates.

The Silicon Valley approach to starting, scaling and exiting a business is a useful method even for an entrepreneur without hopes of reaching unicorn status. In Priestley’s work with thousands of entrepreneurs, he has seen many, “get caught up on one idea without exploring others, develop a product too soon without testing it cheaply on real customers.” He has also seen examples of entrepreneurs becoming “stuck under a weight of complexity before they have a chance to succeed.” Following these seven steps is a way to learn from the best entrepreneurs in the world and maximise your chances of success in business.

Read more at www.forbes.com

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