The discourse is awash with advice for founders, from lifestyle (getting up at 4am, cold plunging, meditating, one meal a day) to the musts of making an enterprise viable (study your customers; focus on problems, not solutions; build a great team; mission beats ego).
In my experience, having been a founder, an early leader at Canva, the Australian startup now valued in the tens of billions, and a mentor to many startup founders, some of the best advice is quite contrarian. For globally focused startups, which are by definition aiming for a 5% growth rate week on week, this advice can outright contradict what is widely thought founders should be aiming for. Here are four points:
Don’t raise capital too early
It is a mistake to think there is no bad time in a startup journey to attract capital. In fact, you can go looking for money far too soon. It takes a long time to work out your ‘why’, ‘how’, and ‘for whom’ as a founder. There is no rushing this part.
I spoke recently to an amazing founder. She is a dentist, her husband is a co-founder, and she is working in an interesting problem space. Right now, the worst thing she could do is raise funds, while she is still figuring out what she’s doing.
Early on in their startup, a founder is just learning: learning the precise definition of the problem, the niche customer, how to access them, the global vision. This is a windy, painful road of mistakes and lessons. With raised capital in hand, those lessons can cost a lot of money - but they can be learned without raising at all. In itself, leanness leads to faster and more impactful lessons.
For any founder here in Aotearoa, it is not enough to say, ‘invest in us, we have an amazing idea!’ You must be ready to display deep clarity and evidence-backed conviction. Spending countless hours listening to and understanding your customers (US-based) and the market will help build a thesis.
You won’t feel like you are winning, but if you can get to a point where you know the right questions to ask, who your niche customer is, how to solve complex problems, and where you want to go - that is worth everything. One of the biggest reasons successful founders win is because they know their customer, problem, and market more than anyone else…in the world.
Not every founder should aim to create a unicorn
These points are especially pertinent to a startup as a tech business that aims to grow 5% weekly (as defined by Y Combinator’s Paul Graham). That acceleration of growth, customer retention, and global market coverage is what is venture-backable, and the risk threshold for a startup relates to the know-how on how to build something which scales at this pace. But many tech businesses are not startups.
I constructed a visual representation of the typical entrepreneur journey, which I talk founders through – it neatly describes the journey of first getting a grip on your anchor and your ‘why’ – this is the fuel and is the guide for all the subsequent decisions. Your ‘why’ dictates the high-level goal and subsequent size of the business you’re trying to build, because that circumscribes time and effort.
If you’re working to build a $1 million to $100 million business, that is five to seven years’ hard work. The next level, $100 million to $1 billion, is seven to 10 years’ hard graft. The corresponding exit scenarios could be an acquisition or an IPO on the appropriate public exchange.
For a venture capital firm to generate returns, it needs to invest in high-growth home runs. This is not the right fit for many entrepreneurs, and that is absolutely fine. Being a startup is not cool, but doing right by your ‘why’ is inherently cool - so spend time grappling with that first rather than setting the size of the business as your goal.
Do the unscalable things
In my opinion, the key to building a huge global business is being comfortable doing the unscalable. Paul Graham, the Y Combinator founder and the best thinker on startups, seeded this idea. He famously told the Airbnb founders to get out of San Francisco and live in New York, where their customers were. When the Airbnb founders pushed back (“But shouldn’t our system scale such that we don’t have to go to New York?”), Graham barked back that they would never understand their core customer and problems unless they were willing to do the groundwork face to face.
By doing the unscalable and ensuring that you deliver one loved customer at a time, you can test assumptions and understand the whole customer journey intimately. Hot tip to any founder thinking about a startup venture: instead of writing a deck, building tech, and so on, solve the problem for a customer in the United States as soon as possible. By doing that, you will make far more progress than most founders ever have. Show me a founder that obsesses about customers and their problems, and I’ll show you a home run.
Stay away from sugar hits
Back to the dentist-founder: I explained to her the first two years of work with a startup – everything you’d have to sacrifice, the level of focus required. One of the biggest things to walk away from is the sugar hit of awards. The accolades and awards are not the primary goal. They can be quite distracting and even derailing. A venture only wins based on customer, market results, and team engagement.
It is understandable to pursue accolades – as an entrepreneur, you are naturally seeking validation. It’s lonely, it’s rough. But for early-stage startups, chasing awards for their own sake incentivises suboptimal behaviour, creates energy-sapping distraction, and reinforces a kind of echo chamber that rarely delivers real value to their target customers.
Awards and recognition will come later once you have ‘cracked it’ with your startup and created a customer-loved product. Ultimately the primary metrics that matter are the customer, the market, and your team. These are won through an incredible level of focus and by, the vast majority of the time, saying no to all the sugar hits.
