“You don’t learn to walk by following rules. You learn by doing and falling over.” — Richard Branson
Entrepreneurs are luck makers, not risk takers.
They only go all in when they know they have their best chance of winning.
Entrepreneurs measure their success in two simple ways: 1) finding customers, and 2) generating revenue.
If you know the 4 principles of entrepreneurial success, you can dramatically improve your chance as a start-up or as an entrepreneur, whether you are part of an existing organization or out on your own.
In All in Startup: Launching a New Idea When Everything is On the Line, Diana Kander shares the secrets of start-up success. Kander shares 4 profound principles of start-up success and how to avoid the zombification of your company.
Don’t Zombify Your Startup
According to Kander, It’s a fate worse than death:
“Ignoring these four principles virtually guarantees that you’ll join the hundreds of thousands of people every year who put their life and soul into a new venture only to watch it fail. And if you don’t fail right away, your company will meet a fate that is arguably even worse: wandering the Earth for years as a zombie startup, never growing or making any money, just barely surviving.”
Here’s the good news, according to Kander:
“There is no secret NDA sequence or genetic lottery ticket necessary to find success at the end of the entrepreneurial path. No academic pedigree or corporate background can prevent the zombification of your startup. Learning and applying the lessons in this book will be the difference between playing entrepreneur and creating a real company.”
With that in mind here are the 4 principles for entrepreneurial success:
1. Startups are About Finding Customers, not Building Products.
The first principle for avoiding the zombification of your startup is to avoid the startup loop of despair.
Via All in Startup: Launching a New Idea When Everything is On the Line:
“No entrepreneur fails because he couldn’t build his product. He fails because no one wanted to buy what he built.”
Here is the startup loop of despair according to Kander:
If you want to avoid the startup loop of despair, then start with customers, not your product.
“But successful entrepreneurs know that the startup loop of despair is completely avoidable. They know that once you come up with a great idea, the very next step should be to find potential customers and determine if your product is even worth building.”
Here is the success path for start-ups according to Kander:
Find customers first, so you know what to build.
“Finding customers before building your product will guarantee that you will build a product people actually want by figuring out which features and benefits are the most valuable. Above all, this means your startup will actually generate revenue.”
2. People Don’t Buy Products or Services; They Buy Solutions to Their Problems.
Find problems worth solving. That’s how you find customers.
“People don’t go to the store looking for features and benefits. They don’t walk down the aisles or surf the web looking for the longest-lasting this or the least expensive that. They have problems that need solving. They shop because they can’t get a stain out of their carpet, they can’t reach their kids when they are out at night, or they are worried about having enough money for retirement. People look for things that can solve these problems, and they will pay money for them. These people are called customers.”
Customers aren’t rational.
“The trouble with customers is that they are totally irrational and unpredictable. You can’t assume that because you’ve diagnosed a problem customers will agree with your assessment. Or, if they do consider it a problem, you can’t assume that it’s the kind of problem they’d pay money to solve.”
3. Entrepreneurs are Detectives, Not Fortunetellers.
It’s not a creative writing exercise.
“Developing a business model that makes money is not a creative writing exercise. You can’t just put your best guesses down on paper, wait for a bank or investor to believe your story, and then start executing on your plan.”
If you search for facts, you’ll be a more successful entrepreneur.
“What separates real entrepreneurs from daydreamers and wanna-preneurs is the search for facts. Successful business owners understand that their initial ideas are filled with a number of assumptions, many of which, if guessed incorrectly could change the entire trajectory of their business. The only way to determine whether your guesses are right is to test them in the real world.”
If you think you have an idea, test it. Seriously.
“Think you can sell your product online that than with a sales force? Test it. Think that you’ll be able to find a huge partner that will distribute your idea for you? Test it. Think you can charge $49.99? Test it!”
4. Successful Entrepreneurs are Luck Makers, Not Risk Takers.
Successful entrepreneurs are like successful gamblers, but it’s not what you think.
“Most people assume that successful entrepreneurs are a lot like professional poker players — gamblers who take huge risks with their capital. The analogy is a good one because successful entrepreneurs and professional poker players do have a lot in common, but it’s not what you expect. In reality, neither views himself as a gambler or a risk taker.”
Successful entrepreneurs make small bets until they create opportunities to exploit.
“Instead, they have learned how to minimize risk and generate luck. They do this by making a series of small, calculated bets to test their assumptions and find new opportunities. Each small bet is something they afford to lose because it’s a small investment of time or money. Eventually, these strategic bets yield opportunities that both professional poker players and successful entrepreneurs will use all of their resources to exploit.”
You can avoid being a zombie.
You can avoid your business turning into a zombie.
It starts with customers, not products.
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Image by Pelle Sten.