How Do You Start a Company?

It does not necessarily start with the idea since you can find a worthy idea.  So how does a founding CEO actually begin?

Last weekend, we had a chance to go out to eat with some friends who are not in the startup community.  One is a financial advisor. The other a nurse. As we were wandering around in our masks catching up for the evening, they both asked me a question that I regularly get: “How do you start a company?”

I don’t think their question was about the technical logistics of finding the right lawyer , forming a corporation, or how to handle founders’ equity. No, it was more fundamental than that. A common question that is rooted in the fact that deciding to start a company to solve a problem is not how most people tackle things. It seems quite mysterious. What does it take?  How do you actually do it?

Their genuine curiosity caused me to reflect on what motivates my decisions to start a new company from scratch rather than join an existing enterprise. I have done both in startups; however, for purposes of this post, I am only going to focus on deciding to found a company.

Most people think that to found a company, you must begin with a brilliant, transformational idea. That may possibly be true of an inventor. However, I am not and never have been the one who came up with the breakthrough solution to the unmet need. For me, at least, the genesis of a new company does not start with the idea because I can go find a worthy idea. I have never discovered there to be a shortage of good ideas. 

For me, the spark to start founding companies was rooted in my eight years of experience as a management consultant, where I completed 35 projects for 25 companies across a myriad of industries and functions. Coupled with my MBA, these experiences gave me a wealth of business patterns to leverage in thinking about how to build businesses to solve problems.  Following that, I spent 15 months working for a startup that gave me a wealth of experience in what NOT to do.  After that decade of working to realize someone else’s vision, I was tired of recommending solutions and following others’ decisions.  I wanted to drive the analysis, make the decisions, and bet on my ability to execute. Encouraging me to take the leap and start founding were three of my core personality elements:

• Ambition:   I want to make a difference, to be part of the creative problem-solving process.  Unlike buying an existing business, I want to do something no one has ever done before. I want to create something out of nothing. To be on the cutting edge of that innovative process that has the potential to make a significant difference in the world.   
  
• Control: I want to be in charge of making the decisions. That means being willing to take the responsibility that comes with that control.  As the founding CEO, even with co-founders, I still take the ultimate responsibility for the company, the way it is developed, the integrity of the foundation and the execution.  If it fails, it is on me. 
  
• Confidence:  Part of this is doing the self-analysis to determine if I have the minimum viable skillset to fill the role of a startup CEO for a particular venture.  When I first started founding, I had to evaluate if I had the leadership, business, sales, and management skills to form the startup.  Simultaneously, I had to be able to correctly identify the gaps that needed to be filled and be confident I could figure out how to fill them (usually by recruiting people who could do the work for and with me). Fundamentally, being a founder means finding a way to be confident in the face of overwhelming uncertainty.  You have got to believe that you CAN do it.

So with the foundation of who God made me to be, I knew that I wanted to realize my lifelong dream of company-building before I ever knew exactly what problem we were going to solve or what kind of company we were going to build.  I had a deep conviction that innovative startups could be more focused, more agile, and more creative than bigger institutions.  Those inherent startup advantages, and the lack of a deep sunk investment in an existing product and customer base, opens up opportunity that can be leveraged into something amazing. 

Three times I have started with the goal of forming a worthy company and nosed my way down the path of finding a critical unmet need and compelling innovation to solve it. Since I live in Ann Arbor, Michigan, in the shadow of one of the greatest research universities on the planet, I usually go hunting in technology transfer land for potentially great ideas with potentially great technological co-founders already involved.  As I identify possibilities, I vet the business viability of the idea (unmet need, market, competitive advantage, development timeline and complexities, fundability, etc.) and the team potential.   I am looking for a combination of factors that can become a high potential startup because that is the kind that I do. When the stars align, I commit and am off to the races founding a new business.  The actual formation of the corporate entity is the easy part because you just file the paperwork and pay the fees.