How Do You Know Your Startup Is Going To Win?
“If I can just find a great CTO or VP Engineering to be my co-founder I know my startup is going to work,” I said to myself before I started building my company. In fact, I knew even before Jeroen, who would become my co-founder and VP Engineering, joined the company that my startup was going to work because I’d been building businesses like this for years.
However, having Jeroen join was key. The precious resource in my world of Analog ICs was design talent. If I could find a great VP Engineering/CTO to manage and help recruit the engineering team, we would win.
I just knew our startup was going to win when Jeroen joined.
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#2: You know your startup is going to win when you get funding.
So, we were on our way. I just knew it was going to work. After all, we’d solved the key problem to building our company.
Now, all we needed to do was close our funding and we were on our way. I just knew that investors would be fighting over the opportunity to invest in our company, or so I thought:
- We had a great team, and…
- We had a great and experienced VP Engineering, and…
- We had a big and growing multi billion dollar market we were attacking, and…
- We had a massive advantage versus the competition, so
- There was no reason our company couldn’t be worth billions.
However, it didn’t work that way. The fundraising was much more challenging than it should have been.
We had two things going against us that proved to be huge obstacles. The first was we didn’t fit nicely into any box that most investors had previously seen.
Most investors "pattern match." In other words, if you fit something they've seen before, then your chances of receiving an investment go up. The problem was we had a different business model than most investors were used to, so we didn't fit nicely into their pattern.
The second problem was the investing climate was horrible. Raising money during the Great Recession was challenging, to say the least. Investors had no money to invest in new companies, having spent most of their capital on protecting their existing portfolio companies.
Eventually, after 63 investors passed on investing, we found maybe the only two investors in the Silicon Valley that I had seen our business model. That’s when we closed our funding.
We just knew our startup was going to win after we got funding.
#3. You just know your startup is going to win when you’re able to get your products to market.
We were on our way and nothing could stop us. Quite honestly, I wasn’t worried at all that we could develop the products we needed.
After all, we truly had a world-class team that was capable of producing ground breaking, disruptive products. With Jeroen as our VP Engineering managing the team, I knew we would execute.
And, we did execute quite well. Our products did exactly what we we expected them to do.
We just knew our startup was going to win when our technical team was executing well.
#4. You just know your startup is going to win when customers are buying your products.
Our first product launch was a soft launch to test our sales systems in anticipation of our next launch. There would be no marketing. All we did was put the product on our webpage.
Within two hours of putting our first product on our webpage, we had our first paying customer. Within a week of launching, we had three more customers. Within one month, we had thirteen customers.
We just knew our startup was going to win when customers started buying our products.
#5. You just know your startup is going to win when your business is in “turn the crank” mode.
It was great that we had customers. In fact, I didn’t realize what a big deal it was until one of my investors, "Raul", gave me a bottle of wine when I told him.
Then, the question became could we scale customers and revenue? Sure enough, we could.
Thirteen customers quickly became 100 customers. And 100 customers quickly became 1000 customers. It felt like we had the code to keep scaling our business forever.
We just knew our startup was going to win when our business was in turn the crank mode.
Here’s the reality: There’s always another hurdle for your startup to see if it really works.
The best CEOs I’ve worked with are never satisfied. When they get to $10 million ARR, they’re thinking about how they can get their company to $100 million ARR. When they get to $100 million ARR, they’re thinking about how they can get their company to $1 billion ARR.
The point is there’s always another hill to climb when you’re running a company.