6.14.11 by Dov
John and I had the opportunity to attend the kickoff event for Ohio’s 10x competition yesterday in Columbus. 10 great teams of entrepreneurs will spend the next 80 days working to advance their businesses, with the help of a collection of entrepreneur and investor mentors.
The event was started with a keynote by Mark Kvamme, a partner at Sequoia Capital and the “Director of Job Creation” for the State of Ohio. In it, Mark highlighted eight key attributes of successful startups. Not that every successful startup has all eight, but the more the better. You’ll see the list isn’t too different from what many others have said and written, but we thought it was succinctly put and worth reprinting (along with my commentary on what each one means):
He also said Sequoia believes that having a really big market is absolutely critical – and that lack of a great market is a non-starter. I think the implication was that it wasn’t on the list because it’s in a category all its own.
There’s two of these I’d like to expand on here: frugality and data.
If you, as an entrepreneur, want to make a lot of money at the end of the day, frugality is the key. Your goal should be to raise as little capital as possible (and thus suffer as little dilution as possible) while still having enough to reach the next value-creating milestone that will let you raise more capital at a (hopefully significantly) higher price. That means you need a complete focus on what those milestones are and developing and executing the Minimum Viable Plan to reach each one.
What’s a “Minimum Viable Plan”? Well, I just made it up, so I’m not completely sure. And maybe it should be called the Minimum Viability Plan, because it’s that, too – see what you think after you hear what it is.
In any case, similar to the reasons Eric Ries advocates for the creation of minimum viable products as part of the “lean startup” philosophy, the Minimum Viable Plan is the the plan that allows you to reach the next milestone (or – nearly as valuable – determine that you can’t reach it) for the least amount of time and capital possible. And that’s the essence of Kvamme’s “frugality”. Frugality for your company might mean spending $100 in the next month or it might mean spending $1 million. But in every case, it’s about only spending on things that are on the critical path of the Minimum Viable Plan. That’s probably worth another blog post at some point. Stay tuned.
So now you probably see why data is so important. Data is what lets you know if you’ve hit your milestone or, at least, are trending in the right direction. You need to be able to quantify the attributes that will make your business successful and then measure until it hurts. Darmesh Shah has a great post of a talk he gave at the Business of Software conference last fall. In it, you’ll see a some great examples of using data to manage your business and your path to success. You’ll also see a lot of discussion of making happy customers and thinking about the outcomes for your customers of using your products. If you think about it, what he’s really talking about is being a painkiller – understanding your customer’s pain and then solving it.
What do you think? Which of Mark’s 8 points do you think is the most important? What did he forget that you’d add to your own list?