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Rules for success in startup tech businesses

Statistics show that nine out of ten tech startups don’t see the second year of operation. Most companies that fail do so because they ignore basic business fundamentals. This applies to all startup companies, both tech and non-tech. So what are some key success factors and what are some common pitfalls to avoid? Let’s take a closer look:

Ensuring Success and avoiding failure

It’s always about the team: The entrepreneur may have the idea, but he or she will need a capable team to execute the idea. Build diversity into your team by hiring people across ethnicity and backgrounds, and ensure that a significant percentage of women are on the team – It is an acknowledged fact, that women are better at multi-tasking than men. Hire people who can work together; you don’t need brilliant loners, yet.

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Focus on sustainability: Create a new product for an existing market and avoid creating products where you will also need to create the market. A prime example of this is GoDaddy, which leveraged an existing market need for a product, to efficiently and effectively create websites. It is prohibitively expensive to create both the product and market.

Repeated and thorough testing: The devil is indeed in the detail. Test that great app repeatedly and assume you will run into issues like customer validation, overhauling the UI, glitches on the monkey patch and so on. Plan for your launch date to slip at least twice, and plan issues like funding around this.

Discipline and focus: Stay focused and disciplined on delivering 90 percent of your vision. No startup has the resources (time, people or cash) to fuss over the last ten percent. Prioritize your resources on what matters, and what the customer will pay for.

Going back to GoDaddy, Bob Parsons lists his 10 rules for success and credits his stint with the Marines for inculcating a sense of focus, responsibility and discipline. While developing GoDaddy, work and allocation of resources was prioritized, and the product was launched when 85% of the initial objectives were met. Innovation and evolution of the product continues.

Learn to fire people: All startups will make mistakes in the initial rush to recruit. A brilliant recruit is not a team player, or someone is just a wrong fit. It doesn’t matter how they got in, what matters is how you’re going to fix it. It’s something you will have to do repeatedly, so get used to it and try to get good at it.

It’s all about growth: The ten percent of the startups that do succeed, experience exponential growth over the first few years. If you want to be a billion dollar company in four years, you’re looking at a compounded growth of 110 percent per year. Companies like Rocketfuel, AnchorFree and even GoDaddy clocked growth rates of 20-25 quarter on quarter.

Once you launch a company and product the only thing that matters is keeping your customers and investors happy, and growth is a metric that captures both. Plan ahead to ensure that you can sustain this growth as this also ensures you never run out of cash.

These are just some of the rules that a tech startup needs to look at to ensure sustainability and success. Above all else, keep your investors and customers smiling and you’ve discovered the path to glory.


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