Stories about the founding of any company begin with motivation. Whatever it was — an idea, an epiphany or the aftermath of a mistake — every business founder has a story about how and why they created a company, and that story inevitably includes the tribulations, milestones, pivots and hopefully successes that they faced along the way.
The question of how to ensure the success of a new company is one that we deal with daily in the tech world, and it is that knowledge that we try to glean from founders’ stories. Although the story behind every company is unique, the businesses that make it by reaching goal milestones such as landing a big customer, becoming profitable or filing for an IPO all tend to have taken some similar pivotal steps.
For the best chances of successfully building a technology company, entrepreneurs and founders should consider the following:
1. Build a product. It sounds obvious. When starting a technology company, focus on building the product — full stop. Product is 30 percent of the total work required long term, but often other priorities take early focus away from a product. Once the product is solid, companies can shift their focus to the other 70 percent, which is sales, marketing, service and support.
2. Hire sales staff and engineers. New companies need to hire salespeople for where they see their business in 12 to 18 months, not to meet their needs today, no matter what other pressures they may feel. Many companies stump their own growth potential because they hire for current needs, instead of hiring to the vision of the company they want to be.
3. Focus. Every company has dual identities — services and product. Successful companies clearly choose just one for their vision. That clear choice will define every decision you make moving forward.
4. Just start. Tactics dictate strategy. Whether it’s product, sales, hiring, where to make headquarters, etc. — too many times, companies are held back by continually seeking better information. Companies should always gather the best information they can, but they need to value execution more than perfect information.
5. Fail. After companies begin to start and execute, it’s important to allow for fast failures. With failure comes the opportunity to make changes, and then (hopefully) win. In my experience, it’s been very difficult to succeed in the cloud ecosystem when a company’s culture doesn’t recognize quick failure as its path to its eventual success.
6. Don’t compromise for one customer. Early in the development of many companies, they often attract one marquee customer and collapse under the weight of trying to customize an offering to fit that customer’s specific needs. Newer companies will fall in love with the idea of a certain customer and deviate from their focus and vision. It starts slow, but can grow into an issue that will eventually undermine overall success.
7. Hire customer-success people. After the first or second year of success, many companies fall short because they have underinvested in customer success. Sales and customer success headcount should be hired and matched at aone-to-one ratio. Great companies have hit big lows after a year or two because they continue to invest in sales without building a corresponding customer-success team.
8. Utilize technology partners. There is a huge ecosystem of successful technology companies willing to create partnerships. If new companies don’t partner with established companies, they are missing out on opportunities to scale.
The vision for a company is probably amazing alone, but there are other companies out there ahead of them, doing something tangential to them, that can provide scale and attract customers that will help newer companies punch well above their weight class far sooner than they should or could on their own.
Passion and vision can provide the foundation for a great company, but it’s that passion and desire that can also lead companies down the wrong road. A successful business is built with careful investment in the future as well as a keen eye towards the failures and lessons that were learned in the past.