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There are many myths and shadow places around the world of startups. Some of them are trying to play on our fear and are preventing many entrepreneurs from building their own startups and changing the world. If you have an idea for new product or service solving some real-world problem, no myth should stop you from pursuing it. Today, I want to tackle seven myths you might already believe are true. Are you ready to open the Pandora’s box and see what is inside?
What is a startup
Before hitting on the myths and starting to shatter them, let’s define what startup actually is. There are many definitions trying to capture the fundamental essence behind startups. Some of them will talk about the size of company, its culture, mindset of employees and so on. That’s all nice, but none of it is a proper definition. The best way to describe startup is, I think, by using definition provided by Eric Ries: “A startup is a human institution designed to deliver a new product or service under conditions of extreme uncertainty.”
First, startup is an entity created by people. Second, goal of these people is to bring new product or service to the market. Many times, it’s about finding specific problem and then coming up with viable solution. Third, you are constantly operating under extreme uncertainty and high pressure. You are in an environment where conditions are changing quickly and you cannot predict the outcomes. If your company meets these conditions, then you are building a startup. Size of your company doesn’t matter.
No.1: Startups Are Only In Tech
Let’s begin with one of the most obvious myths which is that startups exist only in technology sphere. This notion will probably be the result of influence Silicon Valley has and also of the success couple technology startups had. Spice it a bit with the right attention from media and the myth is ready to be served. Fortunately, not every startup have to focus on tech. In a fact, there are a lot of startups created every day in industries such as health, fitness, fashion and also finance.
Today it is more fashionable to build technology-based startup rather than anything else because the barriers to entry are incredibly low. Gaining technical skills became easier than ever before. With the help of great courses provided by sites such as Udacity, Coursera, Treehouse and Udemy, you can learn to code in less than month and follow up with brushing your business skills. The only thing you need to build a startup is determination to solve some problem and hunger for learning.
Even people who want to create internet startup will not need as broad technical knowledge as you might think. Sure, there are things that are very important, but you don’t have to be an expert in particular area in order to succeed. Take the founder of Foursquare, for example. Before Dennis Crowley started his first company, he wasn’t a technical guru or expert. In a fact, he taught himself the skills necessary to put together working prototype from books. Despite the lack of experience he was still able to hack things together somehow and make his prototype work.
What I want to suggest is that you should not worry so much about your skills or building startups just for the sake of it. Instead, switch your focus on searching for real-world problems and how you can solve them. This is, in the end, the real essence of startup. And, when you will read something about the next big tech company, remind yourself that there are dozens of smaller startups working in the shadows, serving their customers.
Fact: Startups are not limited to single area or industry nor defined by it. You can build your own startup anywhere in any area.
No.2: There Is Right Time
Next myth many of us believe is that there is some magic moment and if you spot it you are on sure path to success. Well, this is true into some degree. For example, it would be impossible to build Tesla before there was solar technology or build Twitter or Facebook on dial-up Internet access. However, if you think that you need to wait for the right market and economy conditions with building your startup, you are wrong. Think about Microsoft, Apple, Hewlett Packard, FedEx, CNN and many other companies that were started in tough times or even during crisis.
In other words, while you need the environment be ready in terms of technology, you are not dependent on economy or market. We often incline to excuses such as “it is not the right time” because we are scared. It is not rocket science but plain fear. The paradox is that there was probably not a better time in history to start a company. In the past, before the Internet, 3d printing and other inventions, you would need to do it the old way. You want to sell some product? Buy or build a store, sell it door-to-door. Today, you need five minutes and credit card.
Even if you need to raise some starting capital, it is much easier than before. There are platforms like Angellist where startups can reach angel capitalists to raise money. There re also crowdfunding platforms such as Kickstarter and Indiegogo where you can find people willing to invest in your idea instead of looking for VC money. And, if you don’t need millions you can ask your family or friends. If neither of these options are not available or interesting for you, you can still do it in “old school” style and try to get loan from a bank.
Fact: There is no “right” time to start a business when it comes to economy or market factors. Yes, you need the technology necessary to make your product or service reality. However, the only “right” time is when you find problem you are passionate about to solve.
No.3: Startups Need VC
If you want to enter the world of startups, and build your own business, you don’t usually need venture capital. As I mentioned above, today when crowdfunding platforms allow you to raise money and create a global community full of potential customers without spending a dime (not including bills for internet connection or library fee) on it. As with the previous myth about timing, raising venture capital is sometimes also used as a handy excuse to not to start.
I should also mention that you should never think that just because your business idea was not interested enough for investors, you should abandon it. Sometimes, the reason that your pitch failed can be hidden somewhere else. There are many factors why your idea might not break through. This is also a reason why you should at least think about including crowdfunding into your business strategy. In majority of cases, it will not be the investors who will buy your products.
If your idea will attract enough people to become foundation for sustainable business, I think you should not care about how many investors rejected you. In other words, no matter how many rejections will you get, validating the demand for your product through crowdfunding has much more importance. Going for crowdfunding will also allow you to gather feedback from your community and make your product even better without wasting your resources and time.
Fact: Even if your business plan require raising bigger amount of money, there are many ways to do it. You don’t have to rely only on venture capital to pursue your goals. What’s important is to find what works best for you and get your product or service on the market as soon as possible.
No.4: Startups Need a Business Plan
Many entrepreneurs with potentially great business idea spend weeks or months hidden from the world, creating the perfect business plan including every single step and detailed financial projections. It looks good as an idea and on the paper. Unfortunately, markets change so quickly that you never really know how customers will react to your product, or what new technologies will emerge that may significantly change the business environment. Steve Blank said it the best: “No Plan survives first contact with customers”.
Does it mean you should forget about creating business plan at all? No. Building startup without any business plan at all is like betting your future on single lottery ticket or playing Russian roulette. Don’t do such a stupid mistake. Instead, create an MVP, or napkin, version of business plan. Don’t get caught up in the details so much and focus on execution.
Fact: You don’t need 20-page long business plan with everything perfectly outlined for next five years. Instead, focus on getting your product on the market to the hands of your potential customers. Gather their feedback, analyze it and iterate quickly.
No.5: It’s All About the Idea
This is something I believed for a long time. In order to build multiple successful startups you need to find the right idea. In reality, it’s less about finding some kind of right idea and more about execution, listening to your customers, evaluating their feedback and iterating upon it. Even if your idea is great, if you aren’t able to recognize and adapt to new trends and meet the ever-changing demand of your customers, your business will not exist for very long.
Don’t get too attached to your business idea. Many of the companies you read about started with different ideas than they operate on right now. Their success is, therefore, based more on their ability to pivot and change direction. You should accept that even though being right is nice, more important is whether your idea is attractive to customers. The only way to find it out is by constantly listening to them, monitoring the market trends and changes and adapt as needed.
Fact: Yes, you need to have some idea to build a business upon it. However, there are much more important factors that will decide whether your startup will make it or not. These factors are willingness to listen, flexibility and adaptability.
No.6: Products Will Sell Themselves
When you release new product or service, the concept of growth is similar for any business. You will need to reach out to your networks and audience on the market and get them enthusiastic about your goal and mission. It doesn’t matter what business you are in, thinking that just bringing your product service on the market is sure way to death of your business. You have to understand that products will not sell themselves. You can invent a better phone than Apple, but if nobody knows about it, it will not sell.
If a tree falls in a forest and no one is around to hear it, does it make a sound? The answer is … Who cares? If you release your product without marketing support, it will end up just like that tree–lying in the dust waiting to be revealed. When I give (or force) any advice to other people, I usually go for the extremes. I think it is always better to go for the edges and test the limits. Why am I talking about this right now? Promoting your product should follow the same philosophy.
Many people and some companies, not just startups, as well are doing the same mistake over and over again. What’s this mistake? They start to promote and sell their product after they create it. This approach is wrong for two reasons. First, you are putting yourself at risk of developing something nobody will want to buy–you are wasting your time. Second, you are putting yourself at worse position because you need to make money to cover expenses used for development. This means that even if you reach break-even point, you have to make more to get cash-flow positive.
Lessons for you are these. First, when you create your product, it is only beginning. Your company has to promote it on as many channels as possible and get it in front of people. Otherwise, your product as well as your business will disappear in dust. Second, you should start building audience and recognition for your product or service before you have the final version ready for release. Meaning, reach out and spread the world to test your idea and create demand for your product.
Convince your potential customers and make them fall in love with your business idea, product, service or whatever so they will force you to sell it to them. And, once your product or service is out there, you must continually work to get the word out keep the dialog going. Keep marketing your product, and always make sure your customers are updated on your progress.
Fact: No product will sell itself. You have to go and take care about the talking part as well as the developing. Without promoting your business and spreading the word, it will disappear in dust.
No.7: You Need An Exit Strategy
Nowadays, it is common for startups to have an exit strategy. Sometimes even before there is anything to sell. It is sad, but having exit strategy became almost a regular part of a pitch for investors. The problem with this myth is that when you’re focused on the exit strategy rather than your business, you’re focused on a short-term goal of having some big company buy you. Let me tell you right from the start that this is not the best motivation for building a startup.
If you have an exit strategy as a goal, it should be secondary. Your primary goal should always be building a high quality products and services and creating successful company that brings enormous value to your customers. This is what you should focus on, not how fast can you make it through and cash out. Remember that when you and your team are focused on long-term success, your company will continue to thrive and grow. Exiting may just come as a byproduct.
Closing Thoughts on Startups, Myths, Lies, Fairy Tales and Facts
World of startups is full of myths and fairy tales many of us either believe or want to. I hope these seven myths we discussed in this article will no longer hold you back from pursuing your business idea. In the end, you should remember that building a startup is more about solving an existing problem (or inventing one) rather than anything else. Whether your company meets the “conditions” to be startup is not important. What matters is the value you bring to your customers.
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