In today’s dynamic business environment, building a successful business requires a unique blend of vision, agility, visibility of unit economics, strategic planning and flawless execution.
By nature, venture capitalists are constantly evaluating new ventures and identifying the key ingredients that lead to long-term success. Having grown and advised circa 100 businesses, I believe there are 10 core lessons for entrepreneurs at any stage of their journey.
1. Investors back the jockey, not the horse
They invest in people before ideas, products and services. At Conducive Capital myself and co-founder Mitchan Adams, we like to see an entrepreneur who has the ability to attract and hire A-team players, because it shows us that the founder has been able to sell the idea/product to highly talented people.
2. Don’t try and do it alone
There is no “I” in team. An individual’s power is raised exponentially with the help of a team, a network. Every business needs 3 types of skills– someone with technical skills, the hacker, someone with commercial skills, the hustler snd someone with product/UI skills the hipster. In addition, bringing in managers who can perform specific tasks better than the founder, will free you up to oversee other aspects of the business, knowing that operations are well in hand.
3. Apprentice under a mentor
Stand on the shoulders of the giants that have come before you. The most important capital for a start-up is mentorship capital. Apprentice under someone who is ahead of you on the entrepreneurial journey. Success leaves clues and surrounding yourself with the right advisors could help you compress years into months, days or even hours.
4. Do not fall in love with your product or idea and think you have the next killer idea
Rather fall in love with the value you add to your customers’ lives. It’s good to believe in your product but it’s really important to love the problem that your product solves. Your product is not your product – your solution is your product. To focus inward on the brilliance of the invention/idea while failing to focus outward on the appetite of the market has caused many broken entrepreneurial dreams.
5. Evidence trumps opinion
Work backwards from the customer to the product, not from the product forwards to the customer. Most businesses do not fail because of the lack of product development, but rather because of a lack of customer development.
6. Execution eats ideas for breakfast
Ideas are worth nothing – it’s all in the execution. Remember, traction speaks louder than words. The number one reason that we pass on entrepreneurs we’d otherwise like to back is that they’re focusing on product to the exclusion of everything else. Almost every failed start-up has a product. What failed start-ups don’t have, is enough customers.
7. Entrepreneurs’ network is their net worth
Relationships are everything, as people buy from people. Networking is a business leader’s social cement. Good networkers are great connectors – they connect at every opportunity. Your network is where you will find great employees, investors, clients, board members and advisors.
8. The 10x rule
The 10x rule dictates that your solution has to be at least 10 times better than current product options to overcome the position of the existing market leader. Being slightly better, faster, stronger, or cost-efficient is not enough.
9. Accounting is the language of business
Warren Buffet said it first, “Accounting is the language of business”. Know your numbers – you need to be able to read the dials on your financial dashboard. Remember, revenue is vanity, net profit is sanity, but cash flow is reality. Know the difference.
10. Customers validate your business model
Capital plays a critical role in the ability of a business to progress, but it’s not the only catalyst for success – a bad business with or without capital is still a bad business. Raising capital is extremely time-consuming and sometimes your resources could be better spent on getting customers and developing your market. Remember customer funding is non-dilutive.
Navigating the path to success requires a solid understanding of core business principles. Venture capitalists, positioned at the forefront of innovation, have a unique perspective on the factors that propel fledgling companies to long-term viability.
By implementing the principles behind these lessons, aspiring entrepreneurs can equip themselves for the demanding, but exciting, journey of building a thriving business.
