Startup Success: Three Must-Have Traits
Vision, talent and capital are necessary for new businesses to thrive
Starting a new venture isn’t for everyone. Some research suggests that a whopping 90 percent of startups fail, but experienced startup founders know their odds for creating a successful venture are much better than one in 10. They understand that startup success, while difficult, can be satisfying and richly rewarding. What does it take to be a successful startup founder and CEO? What do these experienced founders have that improves their odds of succeeding?
In my 25 years of experience I’ve started and run nine ventures. Few have failed. A few have returned over $1 billion to investors. I have also been a mentor or advisor to hundreds of startup founders. For the last four years, a company I started – 10.10.10 – has worked with fifty successful serial entrepreneurs, 10 at a time, to help them explore their next big thing.
We’ve learned a few things at 10.10.10 about what it takes to be a great startup founder. For each program, we invite 10 successful serial entrepreneurs to spend 10 days together exploring 10 problems. Each prospective CEO works with a highly skilled volunteer startup team. Together they focus on turning these problems into extraordinary opportunities and new ventures.
We look for three things in the serial entrepreneurs we invite to 10.10.10 programs. These fundamentals increase the likelihood of success for founders and their companies. They lay the foundation for everything else. If one of these is missing, your venture is more likely to be among the companies that fail than among those companies that succeed.
If you’re hoping to start a new venture and be its founding CEO, you must have (and be able to articulate) a vision. If you don’t have this or can’t do this, you will fail. You’ll need to articulate this vision internally and externally. It must inspire and motivate your founding team members, senior executives and employees. If you can’t attract and engage co-founders and founding team members with a powerful vision for the venture you plan to create, you will fail.
Most ventures require capital. If you’re unable to articulate a compelling vision for prospective investors, you will fail to raise the necessary capital. Without capital, your company will fail. Articulating a compelling vision isn’t optional. It’s the foundation upon which you, your founding team and your employees will build everything else.
Unless your venture is a one-person operation, you will also need a team, which means you must have the ability to attract and retain great talent. You must be able to attract the people who can help make the business successful. Early team members typically share two characteristics: they can do things that you do not do well and they have embraced your vision of the venture, which means that in some very real sense they are not different from you. Your team shares some notion of the value you hope to create in the world as you build your new venture.
Your company needs capital to survive, thrive and grow. As founding CEO, you are responsible for securing capital as the company needs it. This doesn’t mean raising $20 million with your elevator pitch. It does mean you need to secure sufficient capital to allow the company to generate value, eliminate risks and prove the market opportunity is substantial.
At first, your need for capital may be negligible. You’ve identified a problem, a potential customer and one or more things you might provide or create that would address the customer’s problem. At this stage little upfront investment may be necessary. But growth requires capital. Bringing on a founding team, hiring employees, leasing office space, building a product or a service – these things take time and money. To raise this capital, you’ll need to persuade investors that customers badly want and need your solution.
Most ventures created by 10.10.10’s prospective CEOs have required substantial amounts of funding. Often this begins with as little as $100,000 from friends and family or “seed stage” investment. But if a company sees customer demand (traction) and rapid growth, entrepreneurs commonly seek funding from venture capital firms. These larger rounds of financing – Series A and beyond – may run into the millions, tens of millions (Service Metrics, StillSecure), or even hundreds of millions of dollars (Uber, Lyft).
Let me state the obvious: to raise capital successfully, you will need to articulate a vision and demonstrate that you have (or can readily secure) the top talent and team that will be needed to make this new venture successful. Successful founding CEOs of startups, need vision, talent and capital. These elements are critically important in a startup’s survival and growth.
Tom Higley is a Denver-based entrepreneur, mentor, and Founder and CEO of 1O.1O.1O and X Genesis. Tom has founded and run nine tech startups, raised more than $40 million in funding and served as an advisor to hundreds of founders, CEOs, entrepreneurs and startups. Reach him at firstname.lastname@example.org.