Quotes of The Day - On Success Factors for Startups
Most people wonder why some startups succeed and some don’t. It is fair to say that there is no guarantee as there are many factors to it and hindsights are always 20/20.
Early in our company startup stage, my partner and I agreed to put our focuses on 3 things: team; product and customer. It is satisfied to see that we have made a lot of progress on all three fronts over the years, although our history is still in the making. As most people with past startup experiences will say, “Doing a startup is always tougher than you thought“. None of these 3 things are easy task (see my previous blog on this), it really takes fancy foot work (1) to hire the right executives and team members; (2) to apply limited resources to build the product that is not too ahead of the market ; and, (3) to acquire the right customers that appreciate your products and solutions. All these three things are essential in my opinion to run a successful startup. Just bear in mind that the process of making progress on all these fronts is as exciting as the success itself if it comes and when it comes.
Recently I ran into an interesting blog on pmarca.com titled “The Pmarca Guide to Startups, part 4: The only thing that matters“. This article has a good spin on the three pillars that I mentioned above. It claims that the only thing matters is getting to product/market fit. I copied some part of the article from their web site below:
“In a great market — a market with lots of real potential customers — the market pulls product out of the startup. … Conversely, in a terrible market, you can have the best product in the world and an absolutely killer team, and it doesn’t matter — you’re going to fail.
(The so called) …Rachleff’s Law of Startup Success:
- When a great team meets a lousy market, market wins.
- When a lousy team meets a great market, market wins.
- When a great team meets a great market, something special happens.
And Rachleff’s Corollary of Startup Success:
The only thing that matters is getting to product/market fit. Product/market fit means being in a good market with a product that can satisfy that market.
You can always feel when product/market fit isn’t happening. The customers aren’t quite getting value out of the product, word of mouth isn’t spreading, usage isn’t growing that fast, press reviews are kind of “blah”, the sales cycle takes too long, and lots of deals never close.
And you can always feel product/market fit when it’s happening. The customers are buying the product just as fast as you can make it — or usage is growing just as fast as you can add more servers. Money from customers is piling up in your company checking account. You’re hiring sales and customer support staff as fast as you can. Reporters are calling because they’ve heard about your hot new thing and they want to talk to you about it. You start getting entrepreneur of the year awards from Harvard Business School. Investment bankers are staking out your house. You could eat free for a year at Buck’s.
Lots of startups fail before product/market fit ever happens.”
This is in fact what Geoffrey Moore’s landmark Chasm concept. A startup must cross the “product/market fit” chasm in order to reach the scale up stage. It is only achieveable via fits and starts, market testing and realigning. Understanding how to position your product in the marketplace is critical and so does pay attention to what market is telling you, which means moving from an instinct strategy to a driven strategy in order to cross the chasm. It is fair to say that startups with the right team (doesn’t have to be perfect) with the right product (doesn’t have to be perfect) at the right time will have the best chance to succeed.
As ancient proverb says it best: “A smooth sea never develops a skillful sailor!” Team, product and customer require time to develop and cultivate, but they are ultimately the sucessful factors for startups.
