The Most Important Thing

Successful startups focus on the most important thing: building a real and successful business.

Sometimes, startups’ mystique obscures the fundamental truth that success as a startup is really about building a successful business.  And successful businesses are built from fundamentals like real unmet customer needs, great solutions to those needs embodied in products that are designed, manufactured, priced, marketed, and sold effectively, and ongoing customer relationships that serve the customers well. One way to determine if these problems have been addressed successfully is to check out the classic financial measurements of revenue, growth, and profitability.

What is ancillary are the things that are tangential to the core elements listed above. While there is some relationship, these things are more like symptoms or consequences of the core. For example:

• The number of views of a marketing piece may or may not be related to getting views from the target customers who are ready to act and respond to the appeal. Many views by those who are not the right people or are not ready to buy are just that many views, with no tangible benefit to the business.
  
  
• Winning multiple business plan competitions may or may not be related to actually getting the funding needed to build a high-potential business. Often, elements that are attractive to business plan competition judges are related to how easy it is to comprehend the business concept in just a few minutes and the plausibility of the proposed solution. Often the really innovative and disruptive opportunities require more digging and investigation to understand and do not lend themselves to pitch competitions. While I am not saying that business plan competition winners cannot be successful, I am saying that winning pitch competitions is ancillary to the real goal of building real businesses.
  
  
• Startups that focus on building an “environment” that is “super fun” with ping pong tables, catered food, and bean bag chairs as recruitment tools are often focused on the wrong things in trying to attract and retain the talent they need. Solving a juicy, challenging problem that can change the world attracts those who want to work hard to make a difference in people’s lives. ‘A players’ are excited to collaborate with other ‘A players’ to do something truly innovative and impactful. Those who need the trappings of an over-the-top startup are not necessarily focused on the right things.
  
  
• Networking endlessly with potential VCs may or may not (emphasis on the not!) be the key to getting sufficiently funded to realize the startup’s dream. Often doing a superb job on the essentials will result in investors pursuing the startup, so make sure you put enough energy into building and executing a differentiated business strategy well. This is not to say that fundraising does not involve a tremendous amount of work and that you will talk to many potential investors along the way.  Just do not think that the goal is closing the big round.  The big round is a means to an end – and the end is building a fast-growing business that is tracking to make a significant impact in its corner of the world.   

Not surprisingly, the list of essentials at the beginning of this blog are often the things that smart investors are focused on, smart startup teams are relentless about, and smart advisors are highlighting. If you focus on the essentials, many of the tangential things will take care of themselves. If you focus on the ancillary stuff, you will likely drive your startup down the short road to failure.