SkillShare is a distributed learning platform that pairs people who are passionate about topics with those eager to learn. Its run by my good friend Mike Karnjanaprakorn and recently launched to allow more learning to happen.
I recently asked the crowd on Quora the question as well – things to ask yourself before launching a startup and got some smart answers and below are a few. There are many great threads about this topic as well.
- Is this something you want to do for the next 5+ years?
- Is this something you want to do to the detriment of other things in your life?
- Do you have the mindset to do/be in a startup for the foreseeable future?
- Is there a large enough target market for my product/service?
- What type of skills are you bringing to the table?
- How far will the skills you have bring you and the business?
- Who else do you need on your team?
- Do you have customers lined up?
A startup is a labor of love. Its something that you will do for quite a long period of time and involve many ups and downs that can sometimes be difficult to deal with. Chances are, the lessons you learn and trials you go through will stick with you for the rest of your life. The upside of embarking on this journey is that you will be able to take these business lessons with you on to your next project whether you are successful or fail.
What are my metrics of success? (or, define success for your business)
One of the most common things I see when people ” do a startup” is not defining what success metrics are. By doing this you can measure your performance, show milestones, and define for yourself and your team whether or not you are on the right track.
Going through an exercise of creating milestones associated with a timeline can put you in a realistic position of measuring success. Perhaps its X users in a week, a month, or a quarter. Perhaps its 500 downloads in a year. Perhaps its selling Y units in a quarter. The goal is to see if you can achieve these goals in the time you set out for yourself.
Startups can operate in such a lean way these days that its actually hard to tell when you are failing vs. succeeding. Let me explain. In the case of a small web app that costs $20-$30 per month to maintain, which provides a service to people, you may be in a situation where the app is on autopilot. It might be getting used by a few people, and new signups each day or week, but it may not truly be getting “traction” in the market you want to enter. Its hard to know when this is going to occur, and harder to know when to shut things down.
Can I be committed to this endeavor and for how long?
One of the more interesting questions that people forget to ask is what will they be doing 3 years from now. If the answer is “not this project” then you should consider the longterm implications of the commitment. A startup is a labor of love because there are a ton of highs and lows associated with it. Its easy to be distracted, easy to get down on yourself and your team, and easy to lose focus. Thinking about things in the longterm can help you narrow down if this path is right for you.
The other side of this coin is whether or not you are the right person to be running a startup in 3-5 years. Many people are great at getting things off the ground, but have no longterm management experience or interest in running a 100 person company.
Is this going to be a small business or a big business?
Sometimes people refer to small businesses as “lifestyle businesses” which sounds negative, but its really not. There is nothing wrong with a small-er business that perhaps does not have the same debt responsibilities to investors as a large business, that is profitable. There are many more “success” stories out there that do not get written up in the so called tech press and are thriving for the founders and employees. Going after a problem, providing a solution, and having a positive cash flow business because of it is a successful business (if you are going after that lifestyle).
A big business, in my definition, is one that you have to borrow (or give up a piece of your Company for) to grow the business while you wait for the product, revenue, service to be ready for customers. There could be any number of reasons why you want to go out and get money from an outside source such as a venture firm or angel investor – but they should all be vetted against your plan and how you hope to achieve it. I will not get into the nuances of raising outside capital here as that is enough for another day.
Do I have a large enough target market? (or, who’s interested in my business?)
When thinking about starting a Company, its always good to think about whos pain you are going to ease. The simple ideas and products sometimes start out from people who are so fed up with how something works (or doesn’t!) that they decide to create a solution. I love these types of businesses because it shows that the person has a vested and personal interest in seeing the problem solved. A great example of this is Instapaper which is a read it later service that lets you bookmark things to read in the future. The total addressable market here is any article that has a permalink online (in other words a lot!). Another is a recent TechStars company called Nestio.com which lets you quickly compare real estate listings together and collaborate with roomates on which is the best (Disclosure; I mentor this company). The addressable market here is anyone that is looking for an apartment, and those that are looking with a roomate.
Doing some quick math on the examples above, you can see that the audience for these services is immediately within the millions. That is a good sign for products that are solving problems in a simple and elegant way.
Who else do you need for your team?
Building your team is arguably the most important part of a startup. These are the people you will be in the trenches with for the foreseeable future and you need to choose them carefully. More importantly you need to figure what roles you will need. At first, many of the people will be jack of all trades. As your team grows and you need to start giving out responsibility you need to ask yourself about your management style and how you are prepared to handle this situation.
The most important people that join your team are going to be the first 10-20 people. Typically this is a make or break team for a business. I personally have not seen a full regime change of core team members that have led to a successful business but I am sure there is an edge case out there.
How are you going to split the ownership of the Company?
This is one of the things that is most obvious in hindsight. I have personally been a part of “bad breakup” situations and been in the middle of settling ownership disputes. You should setup the equity split as soon as possible. For the sake of clarity let me repeat that last sentence; you should figure out the ownership of the company immediately. Use this post as your crutch, and lean on it to tell your partner(s) that you must figure it out. There is a ton written on whether or not a fair split makes sense (50/50 or 33/33/33) but I will leave that to your own research.
The benefit of figuring this out immediately clarifies any “unknowns” for people involved and helps you determine how the work will be split.
Do you have the discipline to set your own goals, and reach them?
One of the hardest things about being an entrepreneur is getting and staying motivated. In the beginning things can get pretty hectic, but there are certainly low points. One of the things I have seen first time entrepreneurs struggle with is the ability to stay on track, keep working, and skip all the distractions. You can use many different tactics to help combat these distractions and things that can derail your progress and below are a few of my favorites.
Board Meetings – yup, even this early
This sounds very official and perhaps like overkill for a small startup. Forcing yourself into a monthly meeting where you are accountable for things from the month before provides a great structure to get yourself organized (stay organized) as well as present exactly what you have done in the past 30, 60, or 90 days. For many entrepreneurs there is no formal board in place, but I have found most groups have a “kitchen” cabinet of advisors. This can help solidify those relationships and also hold you accountable to a meeting that you setup on a regular basis.
You can see my thoughts on milestones above but they are very important to set. Doing this provides a clear roadmap for you and your partners. You would be amazed at how coming up with milestones separately provides transparency into how different you and your partner(s) view the business.
When are you going to start?
This may seem like a strange question to ask yourself, but let me explain what I mean. Many people are “going to quite and start something” or “looking for the right partner before starting” or my favorite “just adding one more feature before we launch”. You can see my thoughts on never launching and only iterating here. The act of “starting” vs. “saying you are going to start” is a huge psychological hurdle you should consider getting over before too long. You will feel different, act different, and speak differently about your business. Its the difference between saying “I am thinking about starting something” vs. “I started something”.
For some this can be finding a partner. For others its about incorporation. Still others its about launching a beta product that even 1 person uses. Different hurdles for different people – but in the end its about getting out there and “doing” vs. talking about it.
I am sure there are many more questions that could be added to this list and I look forward to the discussion!Entrepreneur, Small business, Startup