Startups That Work - PCC - ebook

Citing a small percentage of startup companies that survive their first year, a guide based on new research with 350 companies and numerous business leaders and investors explains why most startups fail while identifying nine key factors that enable success. 30,000 first printing.

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After studying and analyzing 350 different startup companies over a five-year period, a research team from Price Waterhouse Coopers found there are ten rules of thumb that increase the chances of long-term success for a new company.

Key Thoughts

“Simply following these ten rules of thumb will not guarantee success. You need good ideas and you need good timing. You need money and you need the ability to generate enthusiasm. You need energy—and the capacity to work long hours and stay up late. Still, after years of research, we can say that if you follow these ten rules of thumb, your chances of success are certain to increase.”

Joel Kurtzman & Glenn Rifkin

Rule 1 Founders

The larger the group of founders you can put together, the better. This broadens your new company's skill sets and access to capital. To further enhance your chances of success, put together a team of people who have already worked together on other projects and share power broadly.

Start With a Group of at Least Three or Four Founders

In startup companies, nothing much happens at all unless you have great people involved in the management. Pure and simple, great companies are built by great teams. A strong management team can turn an average idea into a genuine winner but an average management team can kill even great ideas. This is why venture capitalists evaluate the quality of the management team first and foremost and walk away from the deal if the team isn't strong and first rate.

This means that the more experienced your management team is, the greater your chances become of succeeding. You need a balanced team of founders, each of whom will contribute something worthwhile to the running of the startup company. Venture capital providers always bet on fantastic teams rather than on fantastic products. A founding team that has a diverse set of skills will always be a more attractive proposition than a founder working alone. If the members of the team have worked together previously either at another corporation or on a different project, then investor confidence will increase.

There is one other key point that deserves attention. Smart business leaders know when it's time to bring in professional management. They know intuitively when it's time to go against conventional wisdom and when it's time to have in place the people who can add professionalism and systems expertise to the enterprise. If an investor can feel confident that the founders are willing to step aside when the time is right, they will see that as a very positive endorsement.

Key Thoughts

“In the world today, there’s plenty of technology, plenty of entrepreneurs, plenty of money, plenty of venture capital. Your biggest challenge will be building a great team. There’s enormous change under way in every facet of the world. Some is technology driven, some is market driven. All that change creates unprecedented opportunities. But to take full advantage of those opportunities, focus on the teams. Teams win.”

John Doerr, Venture Capitalist and Partner, Kleiner, Perkins, Caufield & Byers

“Most startups start with an entrepreneur’s dream, a passionate evocation of a solution dying to be born. But in a business environment where information flies around unencumbered by previous bounds of convention or technology, it is very likely that many people have approached a specific problem with solutions that, while they are not identical, are similar enough and plausible enough to complicate even the most vivid dream. Yet many startup entrepreneurs, jealous of their dream, refuse to part with it, and risk being the big fish in a shrinking pond instead of sharing their dream with a team who can shape and guide it into open water.”

Rohit Shukla, CEO, Los AngelesRegional Technology Alliance

Rule 2 Marketing Personnel

Technical people are obviously important, but you need someone who will have their eye fixed squarely on the marketplace. And don't worry if the technologists and the marketers argue—that's normal and should generate some creative ideas.

Get a Marketing Person on Your Founder s Team