14 Reasons Why You Need To Start A Startup

By Jason Baptiste on November 15, 2010

stay hungry stay foolish resized 600This post has been ruminating with me for a while. It's not a sudden "a-ha" moment that made it form, but a collective group of "a-has!" over the past few months. Consider this the uplifting post to counter last week's "The 11 Harsh Realities Of Entrepreneurship". Just because it's a harsh reality, doesn't mean you shouldn't be an entrepreneur. The best time to start a startup is not tomorrow, not next week, and certainly not next year. The time is right now, at this very second.  Here's why:

You Will Have The Time Of Your Life

I put this first, because it's the reason that will motivate you the most to start a startup. Doing this may be hell at times, but boy is it fun. It's an adventure that you will remember for the rest of your life whether things go very well or things go poorly. They used to say that everyone should try to be a rockstar at least once in their lifetime. I'm going to add to that and say that in-between being a rockstar and something else, you should be an entrepreneur at some point just for the adventure. Writing this article makes me realize how much I truly love doing this - the uncertainty, the victory, the failure, the connections with customers, the press,etc. I couldn't see myself doing anything else and if this is truly for you, you will eventually feel the same.

You Have The Power To Create Something From Nothing

Few professions have the power to create something from absolutely nothing whatsoever. Right now, you may have some crazy idea in your head to bring into the world. It exists on some napkins, photoshop files, etc. right now, but eventually it will become reality. There's a good chance it's something that will have an impact on a large number of people... millions of people around the world. That wasn't something many could achieve, even 20 years ago. Now, it's possible for anyone, anywhere. I rarely use absolutes, since I know what that means, but I truly believe the ability to start a startup can happen anywhere. It's certainly more difficult in poor countries, but it's still possible. Look at Kiva.org or posts like this on HN.

A World Of Knowledge Is Available

It used to be a very old boys club or dark art, when it came to entrepreneurship. It used to cost a ton of money to go to seminars and buy books full of snake oil. It still exists, but people are starting to learn better. The experiences of previously successful and/or failed entrepreneurs are everywhere. They are on this very site, they are posted hourly on hacker news, daily on Mixergy, and found through smart people on Twitter. The blueprint to go from zero to paying customers and all the knowledge in between to guide you is out there in the open... for free.

Cloud Computing And Web Apps Make It Cheap To Start

Ten years ago it used to cost a lot to get started in terms of software+hardware. If you planned on doing anything with scale, you needed what equated to a front loaded CapEX of 500k to buy the equipment YOU might need. Software for internal collaboration costed a lot, with very few choices available. Software for actual development was even more costly. Now we have mature open source frameworks/databases and cloud apps. Startup Weekends occur every weekend and are possible due to this advancement in software. I almost feel weird writing this because we've taken what's in front of us for granted. Amazon EC2 scales well, but now it's even free to test out initially for your project. Of course, your time isn't free, but even that is reduced with libraries+frameworks like JQuery and Ruby On Rails. Odds are, if there is something you need, it's out there and available for free. If it's not, there is probably someone to talk to.

Location Isn't Important At First

I still think certain geographical areas have their place once you reach certain scale along with what type of business you are building (lifestyle vs. venture backed). In today's day and age, you can START your company anywhere in the world and get great visibility. I'm seeing more and more companies come from random spots in the US along with international waters. Take a look at Balsamiq, WooThemes, or where Backupify originted (Kentucky!). The ability to access customers is available globally and you can run a distributed team due to the previous point listed above (cloud apps). Face to face time is always a good thing, but it's a whole lot easier to book a flight once every 8 weeks than to pick up and move to 94306 right out the gate. If location is a worry for you, then don't worry anymore. Don't be pressured to race to the valley right away. If another geography makes sense, you will know in due time. You can start getting the most important thing right now, where you are... NOT funding... CUSTOMERS.

You Can Get Press And Attention Overnight

Getting press used to require an overpriced PR firm to the tune of $10,000 a month when getting started. Now a great product with a well crafted story can blow up overnight and get the attention of mainstream media+the tech elite. Take a look at Chat Roulette. Though it's not a shining example of a great business, it is a shining example of the attention that a company can get press overnight.

There Are More Customer Acquisition Channels Than Ever Before

Getting customers used to be a really hard thing. It used to take a lot of money to make money. At scale, it certainly takes a lot of money to optimize an efficient sales machine with CAC, LTV,etc., but to get started, you can use a variety of customer acquisition channels. Public relations, inbound marketing, search engine marketing, in person events, platform distribution, direct sales, affiliate programs, and a ton more currently exist. They can be strategically used with little capital. Why does this matter? It's like having more lives in a video game. Many of the channels won't work out, that's just life. If there are more channels, then you have more opportunities for success.

It's Possible To Make A Living From A Startup Fairly Fast

It used to be that businesses would take years and years of losses to get to the point of making enough money to pay for you to live. If you wanted to do one, you had to raise a significant amount of capital up front, usually in the form of credit cards + savings from your job. In today's day and age, it's just completely different. You can start charging for software, increase your customers with a certain level of profitable scale, and get to the point that your barebones living is paid for. We also live in a subscription economy, where revenues are recurring. With things like churn aside, customers are now that gift that keep on giving. It won't bring you riches right away, but it's fairly reasonable for a team to create software and make a living within a 6 months period. Building a venture backed company is usually different, but lifestyle ISVs can sometimes morph into one. 37 Signals chose to stay independent, but if they wanted to do the raise money + grow fast show, they could have quite a while ago.

The Capital To Grow Is Widely Available If You Need It

The capital raising world is going through an interesting transitionary period. Since entrepreneurs need less to get to certain milestones, a new class of investors have sprung up, leading smaller and smaller deals. It used to be do a larger angel round or Series A, after having a lot of traction to get started. Deals took a while and the terms varied a lot. Now the spectrum varies heavily. You can get funding from YCombinator or TechStars at a ~18k level for just the idea+being a smart team, a $250-500k seed round in multiple flavors, a traditional larger angel round of $1,000,000, or the full Series A. I actually haven't seen the full Series A as the first round of financing in a while, now that I come to think of it. A word of caution: many people think they should raise money, just because they see it in the press. That's the wrong way to go about. You should raise money for a specific reason. In the case of the small ~18k YC round, it usually entails getting the first working version of the product out to get initial customer validation. Anything above that should be strategic to hit certain customer + traction milestones. If you don't know what those are, don't raise money yet.

You Will Make Friends And Connections That Will Last A Lifetime

This is one of my top three reasons on the entire list on why to start a startup. The friends you will make, just stay with you forever. There is a certain bond that connects you. It takes an entrepreneur to understand what another entrepreneur goes through. We tend to all stick together and the bond that is formed is very very deep. I've been at this for about 5 years, since I was 19 going on 20. Many of the friends I have today were there with me when I first got started. It's also a very very small world when it comes to the tech entrepreneurship ecosystem. Everyone is at most 3 degrees of separation away, but it often seems to be something closer to 2 degrees. A lot of people will give up along the way and find out entrepreneurship isn't for them. If you stick around long enough, the pool shrinks, and the people who began their career around the same time as you have advanced far along too. For example, when I first met Noah, he had just started at Facebook. Now he's done great things through Facebook, Mint, started Get Gambit, and is killing it with AppSumo. I can point out the same for a dozen other people. It's great to see your friends that have stuck it out start to succeed.

The Amount Of New Platforms And Technologies Is Staggering

Most of the platforms that exist today weren't around 36-48 months ago. Mobile was owned by the carriers and MySpace was still fairly dominant. The tools now available to build new companies upon is truly remarkable. It's certainly very difficult to have a lack of problems to solve in unique ways. The more new technologies and platforms that become available, the more companies that can be built over time. Without Facebook we wouldn't have Zynga and without the iPhone we wouldn't have companies like Square. Without the advancements in SaaS/Cloud computing, we wouldn't have companies like HubSpot or ZenDesk.

Finding Out Whether You Are Right Takes Far Less Risk

It used to take many many months and lots of capital to find out whether you were on to something. That just isn't true anymore. You can find out if you're right in some time period that is under 60 days. If you're right keep peeling away more layers. If you're wrong, pivot a bit, and move on to the next thing. It's not a zero sum game. You shouldn't fear failure, but embrace the process that comes with it. Test your ideas via Amazon Mechanical Turk, talk to customers, buy some basic keyword tests on Amazon, and find out whether you are right. You can do this with close to no capital and get over one of the biggest humps a startup faces in its first 6 months: Knowing whether you are building something people want.

A Traditional "Job" Isn't Much More Secure In The Long Run

Oh sure, you're a great engineer or marketer. You could get a high paying, possibly even six figure job right now. Add in some benefits and things sound great. Here's the truth: no job is safe in this world. Wall Street practically collapsed overnight and larger companies do "layoff roulette". At least doing a startup is some function of having survival that is within your control. When you're fired, that is usually it. When you go through the equivalent of "being fired" in the startup world, you can fight back. You can persevere and stay determined.

The Worst That Can Happen, Isn't Really That Bad

It seems a lot worse when you think about it now, but it really isn't that bad. If your startup fails you will hurt afterwards for a decent while physically, emotionally, and financially. People have been in far worse positions and triumphed. If things fail you either a) try something new startup wise b) join another company whose mission you believe in c) take a new direction in life. Failure at a startup, DOES NOT mean failure at life. I'm not trying to play down the horrible reality that comes with failure. I'm just trying to say this: "You will bounce back and you will live to fight another day".

Bottom line: If your gut tells you to go for it and there's something you really believe in, then go for it. We need more startups, as they are the change agents that can save the world. Why do you think now is the best time ever to start a startup? What made you take the entrepreneurial plunge?

I love meeting fellow entrepreneurs.  Follow me on Twitter: http://www.twitter.com/jasonlbaptiste, Friend me on Facebook: http://www.facebook.com/jasonlbaptiste, Email Me: jbaptiste@onstartups.com, or even call me: 772.801.1058

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Startup Wisdom From Babson Entrepreneurship Forum

By Dharmesh Shah on November 15, 2010

The following is a guest post from Andy Cook.  Andy is founder and chief geek at Rentabilities, a web startup that makes renting easy. -Dharmesh

On Saturday Babson College hosted a great event to get everyone ready for Global Entrepreneurship Week. Speakers and panels talked about what it takes to be an entrepreneur and shared stories from the startup trenches. Dharmesh Shah kindly helped this cash-strapped starter attend by bankrolling my ticket.

babson
We thought a blog recap would be useful for everyone who didn’t have the opportunity to go. I’m personally a sucker for a good startup story so I focused my day on that, but there were also many other interesting panels and speakers participating. Below are my takeaways from the event.

Ben Fischman (Rue La La) - Entrepreneurship is a Skill. Passion is an Emotion

Being a successful entrepreneur all comes down to passion. Entrepreneurship is not genetic, it’s a learned skill. You can learn everything you need to know to run a business. What is genetic is passion, because it’s an emotion. Passionate people get started doing something they love and do it quickly. They don’t plan and plan and wait and wait. They just jump in and see if it works. They go for the 50% solution and see how people like it to mitigate their risk.

If they fail, it doesn’t matter because passionate people find ideas everywhere. You can’t sit down with a nlank white piece of paper and figure out what business to be in. An entrepreneur is someone who can go work at Starbucks for five days and come up with a unique idea to start a business around. Entrepreneur types find ideas everywhere.

Mei Xu (Chesapeake Bay Candle) - Protect Your Finances to Protect Your Company

Not everything needs to be a brand new concept to have an impact. Candles have been around for millenia, but Chesapeake still managed to find a way to do it differently. Entrepreneurship is about reinventing the solution to a problem and solving a problem you are passionate about. As entrepreneurs, protecting your product is important, but protecting your finances is more important. If you protect your company by making smart financial decisions, you will be protecting your overall well being too.

Marshall Carter (NYSE Group) – When to Shoot for an IPO Exit

Marshall Carter gave a brief presentation on how entrepreneurs can use innovation to climb to the Big Board and then opened it up for questions from the audience. One of the best questions that was asked was, “when should a startup go for an IPO?” Marshall’s answer was brief, but very informative:

As long as you can expand without accessing the public markets for capital, you’re not going to need to hire 30 staff members to adhere to Sarbanes Oxley.

Matt Lauzon (Gemvara) - Give me Data, or Give me Death

Think about two things when starting a company:

#1 – Who’s your customer and are they willing to pay. If no one is willing to pay for what you’re offering, there’s not a viable business opportunity.

#2 – How do you test your business opportunity with the least amount of resources.  Be data driven. Instead of signing on 50 jewelers, we could have signed on five. And if I could do it again, that’s what I would have done.

Being data driven starts with making sure you have all the tools to measure, and then figuring out what it is you want to actually measure. From the beginning you need to decide what is success and what is failure. Customers vote on everything Gemvara does. They vote on merchandise is offered, how it is priced, and everything else the company does. Every decision should be based on data provided by your customers.

Another important thing to do at your company is to give data access to anyone, even your interns.  The employees at Gemvara (known as gemvarians) are allowed to talk to Matt or Dan Marques (the gemvarian in charge of analytics) anytime they want about data. When you empower people, they start to feel more comfortable making decisions and feeling like they can run their own tests.

Johnny Earle (Johnny Cupcakes) - Create a Cult of Customers

The driving force of your business is passion and reinventing yourself. Everything in the world has been done before, which means we all have a good chance of failing, and it’s about how you reinvent it. Doing something you’re passionate about and going with that gut feeling makes work not even feel like work. Johnny Cupcakes’ mission is to deliver an experience to its customers rather than just sell them a t-shirt. Here are some examples of how they do it:

  • Went on a a 31 day cross country tour selling shirts out of a van. This was so they could get to know some of their loyal e-commerce customers in person
  • Include random stuff in online orders like stickers, personalized notes, $20 bills, and even Barbie doll heads
  • When the newest store opened, Johnny hired firebreathers and sword swallowers to entertain his customers
  • Instead of the generic postal packaging, they get custom packaging and tissue paper made up

To this day the company has spent little to no money on advertising. It’s been all world of mouth because they’ve created a cult following of loyal customers. We’re all going to die someday so it’s nice to be happy everyday doing something you love. For Johnny Cupcakes, it’s giving their customers a memorable experience every time.

Matt Graham (BRND MGMT) - Do Yourself a Favor and Find a Mentor

As an entreprenuer, especially a first time one, you should look to people who have more experience than you in whatever it is you are doing. It’s important to know that as a first timer, you just haven’t gone through the types of experiences needed to succeed. What makes a good entrepreneur is the ability to synthesize input from a lot of different sources, and then use your best judgement to make an informed decision.

Most entrepreneurs have an epiphany and can see it all their idea all the way to completion. Be a dreamer and have a vision, but be realistic of how you are going to get there. You have to look at your life and see if you can actually make it happen. As you start break it down and have a better picture of whether it’s reasonable or not, you should ask for advice from people who have done it before to help you succeed faster.

Bob Caspe (Leaf Systems, Sound Vision) - It’s All About the Bottom Line

Business is not about the number of employees or users you have. Business is only about the earnings and your bottom line. Unless you have a rich uncle to fund your business, watch your cash flow carefully. In small businesses especially, it’s wonderful to think about what you’ll be in 10-20 years, but you need to preserve your ability to survive long enough for a good thing to happen to you.

Roger Berkowitz (Legal Sea Foods) - What Business are You in?

While in business school, Roger was asked by his professor what business he was in, to which he responded, “I’m in the restaurant business.” After hearing the answer, the professor decided to assign him (and only him) an environmental impact analysis of his restaurants. One semester and 42 pages later, Roger passed his paper into his professor who didn’t even look at it. Instead, the professor asked Roger what business he was in again, and hesaid “I’m in the fish business.” Roger passed the course.

The point of Roger’s story is that you need to focus on your core business, and only your core business. They’re are really only two metrics in business. You’re either better, or cheaper. For Legals, everything is about quality assurance and consistency. Legal Sea Foods also once tried to open a vineyard in France, and after three disasters decided to close it down and stick to fish again.  If you spread yourself out too thin and are worrying about things that take you away from your focal point, you will hurt yourself.

Joanna Meiseles (Snip-its) - You Don’t Have to Know What You’re Doing

Joanna’s story was hands down the funniest of the day. Before starting Snip-its, the only things she had were a vision, a name, and experience running a hair salon or franchise. Here’s what she did:

  • Got a business plan from a friend for an Italian restaurant in Seattle
  • Changed every instance of the restaurant’s name to Snip-its
  • Changed every instance of pasta to haircuts
  • Looked for $300,000 in investment money because that’s what the restaurant’s plan needed to start

With her business plan in hand, Joanna went to an investment meeting with her mom’s friend in New York, who asked her about EBITA. She had no idea what he was talking, botched the meeting, and ended up crying afterwards. A few weeks later, she got her business plan back in the mail with a check for $10,000 and a note that said “good luck.”
Throughout the history of Snip-its, Joanna basically had no idea what she was doing, but had the chutzpah just to try it out anyways. Her first employees even had to help her buy all the hairdressing supplies for Snip-its because she had never been a hairdresser before. You don’t have to know what you’re doing. You just have to work hard and be willing to take a risk. After opening her fifth store, she decided it was time to franchise because that’s what the restaurant’s business plan said to do. She stole not on the entire plan, but the execution as well as the plan. The saving grace was she learned quickly and leaned on other entrepreneurs for help.

Karen Fabbri (Moxie) - Trust your Instincts

If you have a little voice in the back of your head nagging you, something’s wrong and you need to fix it. If you’re having problems with an employee, take care of the problem by addressing it head on instead of ignoring your gut. Don’t fear the “what if’s.” What if I can’t run the business without them? What if he starts a rival store down the street? You need to listen to the little voice in your head and go with your gut, which probably means firing that person.

And if you’re thinking about starting a business in the first place and your gut is telling you to go for it, then go for it. You have to decide what’s the worst that could happen if you start a business and it fails. If you’re comfortable with the worst case scenario, then why not try it out? You need to always trust your instincts and follow your gut.

Brian Halligan (HubSpot) - Get a Great Mattress and Do What you Love

Don’t go work for a big bank or consulting firm, especially if you’re just getting out of college because you won’t be happy. Start a company or work at a startup instead. You spend 90% either working or sleeping, so get a great mattress and do what you love.

If you’re ever going to start a company, do it now while you’re young. Don’t go to some big firm. It’s a brutal way to live your life. Find a great cofounder who compliments your skill set. If you’re a finance guy, don’t start a company with another finance guy. Find someone who can build stuff instead.

Brian Cusack (Google) – You Can Talk the Talk, but Can You Carol the Carol?

Brian helped TJX launch a user generated Christmas Carol campaign around YouTube that was extremely successful for the company. And who was the first person to sing a carol for the campaign? Brian Cusack, of course.

You need to believe in the products you are working on, so much that you’re willing to use them yourself enthusiastically. If you can’t advocate and believe in your own product wholeheartedly, then how do you expect your customers to sing the praises of your company?

If you’re energetic and passionate about your product, you’ll be able to take advantage or your size and move swiftly. Find other people who are doing the same things as you and join them on the web. There’s a lot of opportunity for sharing that doesn’t have to be competitive.

Laura Fitton (oneforty)  - Listen. Learn. Care. Serve

Listen – Tune into social media. Look at the space you want to compete in. Listen for mentions of your company’s name through alert notifications. Follow blogs that are relevant to your industry.

Learn – If you launch an initiative and no one clicks through, don’t decide to just keep going and do the same thing. Learn from your mistakes and iterate. Think critically and strategically.

Care – Care about your customers and what you are doing for them through social media. Don’t be afraid to do it wrong and mess it up at first. Just try it out. Dell and most of the other companies who started using Twitter early on screwed it up. They learned from their mistakes, and now they are killing it online.

Serve – Do the stuff your company says it’s going to do and follow through. Solve your customers problems through social media because it’s easy, cheap, and they’ll love you for it.

You don’t need to run around and find the next big innovative thing to work on.  The interesting thing to watch for as an entrepreneur is what happens when the masses catch up. When it hits truly mainstream, they are huge business opportunities among the laggards.

That’s all folks! Hopefully this summary of the day’s events was useful to aspiring entrepreneurs or anyone currently working on a startup. I’d also like to thank everyone at Babson who helped make the event possible and all the speakers (even the ones I missed) for coming out and sharing their hard earned wisdom.

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