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Startup Lessons Learned (Jan. 24, 2015)

Entrepreneurship is all the rage today. When we think of it, most of us picture innovators like Steve Jobs, Jeff Bezos, Tony Hsieh, Sara Blakely, and Elon Musk. That is, we think of people who do novel things—what others never imagined or thought impossible. Although some successful entrepreneurs do far less glamorous, more mundane things, entrepreneurship connotes a certain novelty. In other words, entrepreneurs don’t just get things done; they get new things done.

Entrepreneurship is not easy. It’s hard to run a business and keep it afloat. It’s even harder if you’re trying to pull off something that’s never been done before—the seemingly unimaginable or impossible. I know. For years, I’ve been a lawyer by day, an entrepreneur by night. I’ve had a hand in several startups—some more successful than others—from the more technical to the more practical. Moonlighting as an entrepreneur has been not only thrilling but also eye-opening. It’s taught me some valuable lessons. Here are just a few:

You have resources

Entrepreneurs have more resources than ever before. To begin with, we have access to abundant open-sourced information on startups. Hacker News, for examples, has free articles with advice on how to pick a market, build a team, and develop a product. Startup Digest offers personalized newsletters on local startups. And incubators like Y-Combinator, Techstars, and 500Startups even provide seed funding, intensive mentoring, and vital networking opportunities.

Technology is also easier to access, learn, and use. Even I, as a lowly lawyer, could learn how to code my first website through Codecademy—a self-teaching tool for everything from basic HTML and CSS, to programming languages like JavaScript and Python. It’s free and easy to use. Not surprisingly, it’s never been easier to bootstrap a startup without outside funding.

Your market matters

Conventional wisdom is that great teams and products matter more than great markets. But a great market can make a not-so-great team and product look great. Consider Craigslist. It hasn’t innovated much in years, its mobile experience isn’t stellar, and people have been killed through it. But Craigslist is still successful. Why? Because the market for online classifieds is so vast that it more than makes up for any failings of the first team and product to capture that market.

Too often entrepreneurs miss this lesson. They focus on team and product at the expense of market. To be sure, a good team—with a great product—matters. All else equal, it’s easier to succeed with a good team that builds a great product. But the point is that the market matters more than you may think. You have to offer something that lots of people will want and genuinely appreciate. That’s your best bet for success. Even more telling, the most successful startups are in massive markets: Amazon (world’s largest store); Facebook (redefining social); Google (organizing/accessing world’s information); PayPal (reinventing money). So, it’s wise to focus on bigger markets.

Recruit a technical co-founder

For most startups, attracting a technical co-founder is more important than fundraising. Many venture capitalists won’t give you money unless you have one, and you typically can’t even build your product without one. But techies are in high demand and short supply, especially in Silicon Valley. So you need to sell them on being a co-founder. This requires enough technical knowledge to relate to them, and the ability to convince them that you are a credible and important partner who can handle everything beyond coding.

Split equity equally

The reason is that startups either go gangbusters or flounder. If everyone’s getting rich, no one seems to mind if someone is making a bit more. But most startups struggle before they succeed (if they succeed at all) and, when they struggle, all founders need to feel like they’re in the same boat. The last thing you want is a founder, especially a technical founder, to grow disillusioned because someone else has more equity. Equality among founders fosters morale, which sustains startups during the inevitable hard times.

Hang in there

A final word of advice: Expect to fail before you succeed. Most successful startups do. So if your startup flounders, fear not. Listen to people you trust, use what works for you, and don’t hesitate to change your approach. Work fast, get stuff done, and be economical about it. And don’t forget to have some fun along the way!

I have made this blog available for educational purposes only, not to provide specific legal advice. By using this blog, you understand that there is no attorney–client relationship between you and me. This blog should not be used as a substitute for independent legal advice from a licensed professional attorney in your state.