Startups: 10 takeaways from 20 lessons at Stanford University
Why do some people get rich off of their ideas, and others are not able to reach even 100 customers? The renowned Stanford University, which is located in the heart of Silicon Valley, offers a course where students can learn the recipes for founding a successful startup. This course is also available as an audio podcast and on YouTube. Here are my takeaways from 20 lectures with such well-known teachers as Peter Thiel (PayPal), Paul Graham (Y Combinator), and Alex Schultz (Facebook).
In order to launch a successful startup, you actually do not need to take a course in startups, entrepreneurship or digital product development. The only crucial thing is to have a great product. Startup speaker Sam Altman noted the following right at the beginning of the course: "In this course, you will learn something about startups, but that's not the point if you actually want to run a successful startup." On the other hand, what is in fact required is subject expertise in a specific domain. So it might be more important for you to study physics in depth instead of knowing everything about startups.
"Mark Zuckerberg didn't have the slightest idea about how to build a company. But he had a good idea, and he was a genius in how to implement that idea."
Four factors will contribute to your success or condemn you to failure. Only those who are able to check all four boxes successfully will survive. The first three are crystal clear:
Item 4 is "Execution". This last item means not only knowing what to do but implementing it rapidly and with conviction. "Decide quickly, develop quickly, and learn quickly". Startups need a lot of momentum right at the beginning.
"Those who are not prepared to work 18 hours per day, 7 days per week may not be the best fit for a startup." – Alex Schulz.
You can't create a startup by yourself. Each of us has strengths and weaknesses. We should compensate for our own weaknesses with partners. Business, marketing, design, and engineering knowledge are all important to the success of a startup.
The choice of the co-founder is critical. Many startups fail due to disagreements between the founding members. You shouldn't just choose someone who believes in the same product as you do. Rather, you should choose someone who is truly your friend. Because founding a startup is like embarking on a dangerous expedition. It's better to head out into the storm with friends. This rule also applies to the first five comrades-in-arms at your company. Hiring the wrong person can cause the project to fail.
Do not hire other employees too soon. Fixed costs are poison in the initial phase. In addition, employees put psychological pressure on the founder. In the beginning, there is no need for marketing experts. No one needs to provide customer support, and there is certainly no "growth team". Successful startups are characterized by the fact that their founders are totally committed to achieving success day and night.
The founders must be aware that they define the direction of the startup. If everyone on the team works in a highly motivated fashion, but they all follow their own paths, then it will not work. Many startups have had good experiences by defining a clear goal every week that everyone will follow. This can be achieving a product feature or a certain number of users or solving a distribution problem. It is important that everyone is working on the same topic with the maximum amount of focus.
In order to test your own idea and to find out if there is a market for it, a simple test is sufficient for the time being. You don't need a sophisticated website, design or elaborate feature set. A home delivery startup in Essen initially used Google Docs for the order book and Facebook Friends to see where their drivers were on the road. During the initial phase, every single piece of user feedback counts. Conduct conversations, listen, and improve the product. It is expensive to fully develop a product in the basement only to finally find out that users do not like it. Therefore, it is better to test the initial prototypes as soon as possible.
The most important thing at the beginning is to grow. You have no other objective. No excuses will be able to help you if your growth curve flattens out. "But we are currently working on an exciting feature." Or: "We still need to do some marketing." None of these excuses count. Without continuous (and desirably rapid) growth, your product is dead.
Which numbers are worth keeping an eye on? A key value that says a lot about product quality is the retention rate. This will show you if and how often users return and use the product again. If you experience rapid growth, but users do not return after the first use, there is something that isn't right about the product.
It's not worth pondering what you should do to get 100,000 users right at the start. Your next goal is always to add another zero onto the back of the current figure. If you have 1 user, your goal should be to reach 10. If you have 10, it will be challenging enough to then reach your first 100 users. From 100, you will aim for 1,000, and so on, step by step.
Which form of marketing is central to a startup: banner ads, Google AdSense or flyers? None of the above. The most effective form is word of mouth. If the product is good and users really love it, they will tell their friends about it. This is the decisive factor determining growth in the startup phase.
If you are not looking to sell your company within 12 months, it may be good to think about company culture. What is our "mission"? Which values are important to us? How do we behave towards employees and customers? A clear and strong corporate culture is the basis for long-term success. Airbnb co-founder Brian Chesky has said:
"We always decide against hiring outstanding candidates when we get the personal impression that they would not be a good fit for our culture."
Diversity in terms of work experience, background or knowledge is important. But whoever works at Airbnb must share a common set of values.
Venture capital is the injection of funds from investors, which allows startups to plan for larger growth. During a question and answer session with experienced investors Marc Andreessen, Ron Conway, and Parker Conrad, the following insights emerged: serious investors are interested in long-term commitments, not in short-term profit. Knowing this can help startups sell properly. This selling is the key point when it comes to convincing investors.
Business Angel Ron Conway noted, "The idea must be clearly conveyed in a single short sentence."
If it can't be, then the pitch has failed. Accordingly, startup founders should rehearse every sentence of their presentation fairly well. Often a startup is given only one chance to receive an injection of funds. Investors want to feel that "the founders are obsessed with their idea!" Investors are able to tell that the founders are true professionals when they are so passionate about their product that they are committed to making it successful regardless of all the difficulties and challenges that they encounter.
"We are looking for real leaders!"
PS: Student Chris Markl thought it would be fun to watch all of the lectures in one day, from 7:10 AM until just before midnight. Here is his live blog of the experience.
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