5 key things all startup founders should know before starting a company
- Best-selling author of "The Founder's Dilemmas" and "Life is a Startup," said a founder should ensure their career, personal life, and market are in good-standing before starting a business.
- Traditional advice that startup founders should "follow their heart" is misguided. It's more important to think logically about the opportunity, and your appetite for risk.
- One of the biggest challenges startups face are "people problems." Founders need to learn to recognize their biases and ability to see the strengths and weaknesses of team members.
- An archive of this event is available for Prime members.
Launching a successful startup starts with the success of its founder. Although not all startups succeed, those that do seem to get over every bump in the road. Best-selling author, business-school dean, and startup expert, Noam Wasserman, believes one of the best ways to get through the bumps is to prepare for them before launching.
In a BI Prime Live event moderated by Shana Lebowitz, Wasserman answered key questions on how to successfully launch and run a startup.
Founders shouldn't always follow their heart
When starting a company, many founders are enthusiastic about their company and product. Their passion comes from the heart, but Wasserman has found that for those looking for success, that feeling and gut instinct can lead companies down the wrong path.
"Before you go and follow that gut, make sure you're thinking [logically] a little bit more," he said. "Make sure you put up the periscope and look down the road, take a look in a far-sighted way [to see] where it might be likely to lead."
Circumstances need to be aligned
According to Wasserman, there are three elements that need to be "favorable" before starting a company: the market, a founder's career, and personal circumstances.
In his research, he found many of them do not have all of these elements in great condition, therefore misreading their circumstances "in a rosy direction," he said.
He recommends proactively evaluating where each of these elements stands, find the gray areas, and take the time to work on them. A lack of all three from the jump, Wasserman said, could "lead to major problems."
Do your homework
Before starting a company, he suggests potential startup founders do their research and find out how to reduce the risks that come with starting a business.
"We should go and try to learn what we can about [risks]," he said. "Take as many of them off the table as we can."
He advises this because it trains a founder to use their muscles of dealing "with the unknown" such as looking into the future strategically and removing roadblocks ahead of time.
Learn to give up control
For those starting a company outside of the industry they've been working in, they may not have all of the knowledge needed to be successful within it. To offset the challenges, Wasserman recommends spending time figuring out what skills are necessary for success in the industry.
A checklist is his method for finding out what knowledge is already had and what needs to be learned. Once a founder knows what they're lacking, they should accept their limitations and find someone who can do the things they can't.
The success of a startup isn't only based on its funding. According to Wasserman, "only 1% of ventures that go and try to raise money are able to raise venture capital money."
Even with strong financial backing, many startups still fail. Wasserman attributes a third of the reason for failures is due to issues with product development, problems within the market and management of a company.
More so than that, a major reason for a startup to go under is due to "people problems," he said.
To offset this, Wasserman recommends founders tune into their own biases and aversions by forcing themselves to "recognize the pitfalls." Once they're recognized, bring them up with others on the team and find solutions.
This method trains a founder's ability to deal with difficult conversations and build help their team's strength.
- Not hard, not soft, the earliest dino eggs may have been of a 'leathery' texture to protect against damage: study
- Don't need to go big to go home: Australia is turning to sustainable 'tiny houses' to fix their housing crisis!
- Affordability levels to buy homes hit in last 2 years; to improve in 2024 on likely repo rate cut: JLL
- Carbon tax turns into climate fight at COP28
- Market to focus on macro data, global trends: Analysts