Illusions can trick us. But once you understand how it works, you can see right through it.
Here are three startup illusions, that you need to be aware of.
#1 Imitating Successful Startups = Success:
Can swanky offices, high investment valuations and millions of advertising dollars help you succeed? It can be easy to equate this with success. But, in reality, pursuing these goals can be distracting or even outright dangerous.
Yes, successful startups more often than not, enjoy these luxuries. But they don’t necessarily improve a startup’s chances of succeeding in any way. Think Segway, Webvan, Boo.com, Pets.com, and Theranos.
But you could also argue that hundreds of startups have had these advantages and succeeded. Maybe. All I am saying is that these outward signs alone don’t guarantee success. And popular media stories today can confuse correlation with causation.
I like to compare a successful startup to an iceberg. The outwardly visible part makes up only about 10% of the iceberg. While the deeper parts that actually help startups succeed, usually remain hidden.
A successful startup always solves a pressing problem. How to tell if you’re solving a pressing problem?
Short answer: You will just know. Because of the sheer demand.
A more useful answer: First, you will have a core group of extreme users who desperately need your solution. So professional gamers are better early adopters than casual gamers. And startups are better core users, who are more desperate for your solution, than large established businesses. And secondly, over time, more and more users want your solution.
Without solving a pressing problem, no matter how much investment you raise or ad dollars you spend, you are aboard a sinking ship.
You’ll sink eventually, irrespective of how fast you are moving now. At least until you begin to plug the leaks by solving a pressing problem.
#2 Assuming What Your Users Want:
You love your idea the most. Use that conviction to drive your hypothesis forward. But, beware of startup narcissism, especially when your users are telling you something different from what you want to hear.
Even the visionary Steve Jobs released the first iPhone, without third-party apps. But jailbreaking iPhone users taught him differently. And today, the Apple app store is a booming ecosystem, that facilitates more than 500 billion dollars worth of sales, across the world, every year.
In my view, building something that people want has two components to it:
- Creating a differentiated product
- That is 10X better than current alternatives
The first part is where you apply your ingenuity. This will help you separate yourself from others. And it comes naturally to all good entrepreneurs. However, this can also sometimes get in the way of the second part.
I am going to say something obvious here, but it’s worth saying. To know whether something works, you have to test whether it works. There is no other reliable way to build something that works. So, you need to pro-actively get user feedback and iteratively make your product 10X better.
How can you avoid a confirmation basis, based on what you believe? Look at what your users are telling you. Because your product adoption data and user engagement metrics won’t lie.
Most seasoned entrepreneurs know this already. And you too can learn this.
#3 Hollywood Endings:
I enjoyed watching the Steve Jobs movie, towards the end, he supposedly tells his former co-founder Wozniak, “I play the orchestra”.
But that’s in a movie.
Hollywood loves to glorify charismatic entrepreneurs, war generals and sports coaches, who deliver inspiring do or die speeches that create last-minute turnarounds. In reality, dramatizing events can create more pressure, and backfire.
Entrepreneurs as a breed, thrive in ambiguity and uncertainty. One way we do so is by creating hidden meanings for our actions. This can help us be resourceful in the face of adversity and constant challenges. But it can also create unnecessary pressure on us and our teams.
So it is useful to state the plain facts instead of going into what they mean.
For instance, that feature that needs to be more user-friendly; has nothing to do with saving the world. And not having this killer feature shipped this week, means just that, and can always be shipped in the next cycle.
Putting things into perspective can help us stay connected with ourselves, our team members and reality. This can, in turn, help us progress faster.
See-through these illusions, and you’ll be a better startup founder.
Most of this is something I would tell myself if I were starting again. Hey, I was once an entrepreneur too and have had my fair share of lessons.
On another note, if you are an early-stage technology startup and you’re looking to raise capital from seasoned entrepreneurs, let us know. We want to hear from you. You can learn more about us here.
Note: I ghostwrote this piece for Marat, an early-stage investor & Managing Partner at Good News Ventures. Originally this appeared here.