Earlier this week, one of the most well known tech associations in Philadelphia, Philly Startup Leaders, hosted its daylong Founders Factory conference dedicated to teaching founders how to scale their startup.
As an early-stage startup founder, figuring out how to scale has been heavy on my mind lately. That’s why PSL choosing to structure its event around lessons from DuckDuckGo founder Gabe Weinberg’s new book, Traction: A Startup Guide to Getting Customers, was especially heartening.
Just how can a startup like mine “move the needle from being ‘nice to have’ to business-critical” as Diane Ruth of Guru suggested? If you have little understanding of how and where to position your business, this will be damn near impossible.
How can we, early-stage startup founders, join the .00006 percent of startups that ultimately become billion-dollar companies? Listening to the stories of entrepreneurs who successfully led their startups to achieve many, many millions in sales is a good place to start.
Here are the three lessons I took away from Founders Factory that can help early-stage entrepreneurs successfully scale their startup and gain traction:
1. Cash is sovereign
For many entrepreneurs bootstrapping is a source of pride. The dream of most startup founders is that they can look back and think, “Wow, look what I built.” Unfortunately, there is no “I” in sales, money, revenue … you get the picture.
A recently-released study found that startup founders, no matter the industry, put in 12-hour workdays. That’s quite a lot of work being done with the hopes of achieving a grand payoff. Just as a startup founder eventually must hire people in order to capture more revenue, she may also need to seek outside funding to scale her business into one worth millions.
The most commonly cited regret of some of Philly’s most renowned tech startup leaders was that they didn’t raise capital sooner.
Darren Hill who cofounded Weblinc, an enterprise-grade e-commerce startup, learned after narrowly surviving business failure how beneficial a venture capital investment could have been in the company’s early stages.
Hill suspected that if he and his cofounder had gotten venture capital sooner, they would’ve surpassed their competition at a much faster rate. Weinberg, the DuckDuckGo founder, also realized that he should’ve raised funding sooner. What’s more, once he began the fundraising process, Weinberg realized it was more beneficial to raise 3+ years of capital funding as opposed to 18 months in order to scale DuckDuckGo to its full potential.
To put it simply, “It’s easy to start a company but scaling is brutal,” said Rudy Karsan, CEO and founder of Kenexa, which sold to IBM for $1.3 billion in August 2012. “It’s all about the cash.”
— Michael Riley (@itsatechworld) January 13, 2015
2. Follow your
The startup experience is filled with ups and downs. There are many key moments where the decision of a startup leader can set their company on totally divergent paths. These are usually the moments that an entrepreneur’s choice boils down to what they feel in their gut is in their business’ best interest. But for the really, really big moments, when fear is sky-high, an entrepreneur may feel more compelled to choose a safer choice that may not be in their best interest. Those are the moments when entrepreneurs should use data as a weapon to ward off decisions driven by fear.
Rudy Karsan, the Founders Factory keynote speaker, learned this the hard way after a critical decision to take his company, Kenexa, public: The move cost his startup 25 percent of its net worth. Karsan realized that without data it was all too easy to stifle Kenexa’s full potential. When IBM approached Karsan with a buy-out offer years later, he made sure not to make the same mistake twice. Two months prior, he’d already instructed his finance team to assess the firm’s finances should a large corporation approach them with a buy-out offer. Their data preparation paid off: Kenexa’s $1.3 billion acquisition is almost the largest in Philadelphia history.
3. Deliver a story of industry transformation
No matter how advanced their startup’s product or services were, it became clear throughout the conference that successful businesses only began to gain traction once a clear story had been developed.
For Karsan of Kenexa, “teaching a philosophy along with selling software” was key to gaining momentum in the market. There are many ways a startup leader can discover their unique narrative story. Customer- and industry-focused research are essential to ensuring your brand story touches a nerve with your customers. Once you’ve accomplished this, you can begin to refine your marketing strategy so that you’re creating content and building a web presence that reflects your customers’ challenges and needs.
This focus on intent paid off big for Robert Moore, cofounder and CEO of RJ Metrics, who used this customer-centric approach to guide the company’s SEO and content marketing strategy.
“Finding a way that what you do can become a part of a larger narrative is something any business can do,” Moore told the crowd.
— Michael Riley (@itsatechworld) January 13, 2015
Startup leaders must be intentional about delivering a clear story that reflects their product or service’s ability to positively impact their users and the greater community.
Of course, your efforts to create the perfect story for your startup won’t matter if you don’t test different channels for sharing it with the market. PR, content marketing, SEO marketing and sales were a few of the channels recommended at Founders Factory for achieving mass growth. And remember, just as you update your product to meet advanced specifications, you must frequently refine your company narrative to better address your customers’ needs. A good startup positions itself firmly against the status quo.
Let 2015 be the year that you start growing your startup 10x, 50x or even 100x. It starts with thinking about your startup’s purpose.
This post was originally featured in a guest post on Technical.ly Philly.