Lots of entrepreneurs have great ideas–and their companies still fail. Five rules to turn your idea into a viable business.
When you’re starting your own company, it’s easy to forget that for every one successful entrepreneur, there are hundreds more who tried and failed. About three-quarters of venture-backed firms in the U.S. don’t return investors’ capital, according to recent research from Harvard Business School. So, how do you make sure that you’re one of the elusive winners? If you want to come out on top, take a look at the cream of the crop. There are a few rules that those companies all follow.
1. Master the art of timing.
A great entrepreneur must be patient. If you’re looking for the right moment to solve a problem in a hot market, you may have to pass on a few lukewarm opportunities. Maybe the market is too crowded or not crowded enough; maybe your solution isn’t distinct enough from your competitors’. The best entrepreneurs know that the first shot you can take may not be the right one, and that the right timing means everything when trying to hit your mark.
For example, people shared files on a variety of platforms before Drew Houston founded Dropbox, but there was no simple, intuitive, universal way to share online. Dropbox’s popularity skyrocketed while earlier, clunkier solutions saw their adoption numbers drop. On the flip side, TiVo was early to the market: While the founders had a great idea, the market wasn’t quite ready to adopt another set-top box en masse. Fast forward to today, and DVRs are offered by every cable provider, television content is available online on demand. The concept of TiVo has been commoditized.
2. Understand you only have a few shots.
You don’t have an infinite number of opportunities to make it. The best solutions in difficult markets are going to take at least four to five years to perfect, meaning that a fresh-faced entrepreneur just out of college probably has eight opportunities for different projects ahead of him at the most–in his entire life.
Trust me, the older you get, the less you’ll be inclined to meet with investors with only Red Bull in your system. Be mindful about the number of shots that you have, and make sure the projects that you take on are worthy of your time.
3. Practice, practice, practice.
It may go without saying, but do your research. You can’t be an innovator in the market if you don’t know the market inside and out. The best entrepreneurs know enough about what they’re tackling to be informed, but still aren’t afraid to bend the rules or take creative approaches. Make sure that you spend time with the experts, and get to know the variables that can contribute to your success.
The problem that many young entrepreneurs run into is that they’re late to the game. Analysts are historians. So if you’re reading about it in an analyst report, or hearing about the trend on the news, then you’re too late to the party. This means your best bet is to spend time with other entrepreneurs in your market. Find out what isn’t being done and ask the tough questions. Then, when the perfect opportunity for the next big thing arrives, you’ll know it.
4. Shut out the noise.
The start-up world can feel like it’s all about press, politics, and networking, networking, networking. But at the end of the day, you’re going to be judged on the businesses that you produce and the problems that you solve. Don’t spend more time than you have to on the Silicon Valley buzz machine. You’re building a product, not filming a reality show.
Don’t get distracted by hype, money or compliments. Just look at what happened to Color Labs. CEO Bill Nguyen focused on publicity over product–and while the company raised $43 million in 2011, Nguyen has left and the product is no longer available. Hype can carry you for a while, but only delivering value will make your company stand the test of time.
5. Pick your team with care.
Entrepreneurship can feel solitary, but to be successful, you have to have an incredible support system. Your co-founders, investors and employees can make or break you. Make sure that they value the company that you’re creating over the buzz, and that they’re similarly conserving their own bullets for the right opportunities. It is incredibly important to have a team on the same page as you are, with the right chemistry.
Look for a co-founder who balances you out. If you’re the shy technical type, look for someone with a big personality who can handle networking with investors and partners. If you’re vetting investors (and lucky enough to have your pick), make sure their portfolio and advisors suit your goals and balance out your weaknesses. Pick passion over (almost) everything else; the core of your team needs to be as excited as you are so they don’t abandon the ship in rough waters.