What’s the greatest mistake entrepreneurs make? Misunderstanding their market? Timing? Positioning? Investing in the wrong product features? Doing everything themselves? Failing to get funding?
After reading Rand Fishkin’s book “Lost And Founder,” I would argue it’s actually only one thing: self-awareness.
The greatest mistake an entrepreneur can make is not being self-aware.
Although Fishkin’s book focuses on his journey as the CEO of a burgeoning software company, you’ll find his transparency and practicality is applicable for many in business, especially those running small businesses or startups. Most helpful is the frank and direct account of how he himself raised capital in the Hollywood of tech: Silicon Valley.
The book “Lost and Founder: A Painfully Honest Field Guide to the Startup World” is exactly that. In his own words:
“Moz is neither an overnight, billion-dollar success story nor a tragic tale of failure. The technology and business press tend to cover companies on one side or the other of this pendulum, but it’s my belief that, for the majority of entrepreneurs and teams, there’s a great deal to be learned from the highs and lows of a more middle-of-the-road startup life cycle. Outliers like Facebook (on the wildly successful end of the spectrum) or Secret (on the opposite end) make for terrifically interesting shock pieces, but neither is willing to disclose enough, or, perhaps, be self-reflective enough to provide great insight into the subjects that bring value to those who’d follow in their footsteps (or who try to avoid doing so).”Rand Fishkin
Pretty profound stuff, right? A successful tech startup willing to lay out the cheat codes, roadmap and recommendations no one else is willing to tell you when you start a tech company. Fishkin’s generous account about the rarely-talked about truths of the startup world is highly informative and generous beyond measure. He doesn’t hold back.
If you haven’t already ordered it on Amazon, here’s the link. It’s money very well spent.
While you’re waiting two days for your next Prime box to arrive, you’ll find below that I’ve included all of the sections I found particularly helpful as an entrepreneur myself and second-time freelancer after enduring layoffs in the marketing tech space.
This is arguably the most practical advice for startups in years.
Cheat Codes For Next Time
The second time you do anything, you already have a leg up on everyone else. You’re faster. You’re better overall. You’re more informed. You know the pitfalls and what to watch out for.
In the same way, there is a lot of upside to starting a company the second time around. Especially if you’re Rand Fishkin where confidence in your own abilities and knowing the path ahead are the cornerstones of your roadmap.
“In the spirit of transparency,” he writes “here’s a handful [of cheat codes] I’m applying:”
Branding: Choose a brand name that has no obvious associations with a specific product or space, is easy to say and hard to confuse, and has the .com domain extension available.
Funding: Today, Venture Capital (VC) funding comes in more variety than ever (search: “micro-VC’s”). There are creative forms of debt from firms like Lighter Capital and Indie.vc. Funds like Backstage Capital (which Fishkin invested in) and Black & Brown Founders which can be tapped by underrepresented folks building a company. “Nearly every region of the planet has some form of startup accelerator (like Techstars and Y Combinator),” Angel investors can be found through platforms like AngelList and crowdfunding is available in equity and debt formats “(via platforms like Crowdfunder and Wefunder) as well as rewards based formats (like Kickstarter and IndieGoGo).”
Fishkin further elaborates on how each funding type compares. Get your copy of his book if you’re curious about this aspect of startup-dom 😉
Market Validation: This is so eloquently put: “One of the biggest causes of early-stage business failure is lack of real buyers hungry for your solution. Validating that the problem you’re trying to solve is real, the market exists, and customers are willing to take a chance on a new type of solution from a brand-new company is a huge weight lifted.”
Furthermore, for those of you looking for hard numbers, make sure you have a market sample of at least 20 interested prospects who are ready-to-pay customers. And at least that many on a monthly basis after that.
Document Core Beliefs and Biases: Don’t wait until years into your company to define what the core values will be, and what kinds of people will or won’t be a match for the organization. Fishkin is considering trying a remote-centric work environment (as opposed to a central office in a major metro). He writes, “I know transparency will always be crucial to my happiness at a job.”
To sum up, startups should not try to be all things to all people. They should provide real value and work to improve the awareness and demand for the problem they’re solving.
Businesses that want to grow in today’s digital age desperately need perspective and should ask themselves: are you serving an existing market? Or, are you trying to create demand for your product/service?
Sustainable Marketing Flywheels
Generally speaking, a flywheel is an ongoing marketing process that gets attention from the right audience and brings them to the (virtual or physical) doorstep of the company.
The Moz flywheel, as an example, Fishkin remarks, “is powered by content that audiences in SEO find through a variety of channels: search engines, social media, word of mouth, conferences and events, email subscriptions, referring links and other websites etc.”
Many a growth marketer will tell you it’s imperative to turn as many site visitors as possible into paying customers. But, overly promoting products too fast and too heavily can be counter productive. Here again, Fishkin says, patience is key; “We need to wait for our audience to be ready and engaged with us before we nudge them toward our subscription.”
Pro Tip: If you have any type of subscription or recurring revenue, make sure you measure LTV (Lifetime Value – the total revenue customers spend during their relationship with your firm) by referral source(s) and by the number of visits prior to conversion. If your stats look like Moz’s, you’ll probably want to adopt a similar, slow-burn conversion process.
Food For Thought: Great Products Are Rarely “Minimally Viable”
Here’s an interesting concept. I say “test it,” go find an audience and prove it. And you do. That, therefore makes your startup a successful venture to pursue?
Nope. Here’s why.
The fundamental concept of a MVP, Fishkin says, “is a vision of your product (and company) that requires the least amount of time and effort to validate whether the problem you’re solving is an important one that real customers will pay for or use.”
Creating this will help you learn faster, iterate and potentially waste less money on your road to startup glory.
Be careful though; there is an inherent consumer issue with launching something vs, launching nothing depending upon the different stages of your startup. “If you launch to a large scale customer base of a broad community, you build brand association with that first vision.”
“For an early-stage company with little risk of brand damage and a relatively small following and low expectations, the MVP model can work wonderfully.”
Fishkin continues, “Conversely, if you have a big following with high expectations, publicly launching a traditional MVP (one that leans more to the “minimum” side of the acronym than the “viable” side) can be disastrous. If you’ve reached a certain scale…perception and reputation are huge parts of your current and future success.”
The only alternative, then, is an EVP: an Exceptional Viable Product. Once you procure your copy, flip to page 185 to read more about Fishkin’s point here.
That was the wisdom, here’s the hustle.
The Internet will put you out of business if you don’t understand This:
The internet is the great equalizer. It will expose all of us for who and what we really are. Because attention is the new currency.
When individuals control the media (via their smartphone) control on the Internet becomes a lot harder.
How to grow your startup
We live in a mobile first world. Users turn to their mobile device FIRST to look for EVERYTHING: driving directions, calling family, how to clean sneakers, where to get food, even drink delivery.
“The transition to a mobile first world (with Facebook and Instagram), is the biggest switch since we switched from radio to television.” Gary Vaynerchuck.
Here are the most practical tips from Gary V for jumpstarting your business.
- Self-awareness is a superpower. know what you can do and outsource or partner with or acquire the rest.
- Focus on the white space: where are your competitors not playing?
- Provide value. Stop pushing the: check me out, buy my book, download my podcast… Give value first. Then ask.
At the time in 2018, big companies were losing; Toys-R-Us and Aaron Brothers closed.
“ABC, NBC, and CBS are finished. Remember when, four years ago, you had one show on Netflix that you liked but then you watched cable? Now you have Netflix and there’s one show on cable.” Gary Vaynerchuck.
You need to understand what search engines are.
Be obsessed with practicality.
Be a practitioner not solely an opinion giver.
What’s crazy about the internet is that your online store is always open. You can work your 9-5 AND put in work on your startup or small business from 8-10PM or 9PM-2AM.
If you’re an entrepreneur living now, there’s nothing (except you) stopping you.
“Everybody used to want their 15 minutes of fame. Now, everyone is famous to 15 people. Got it? Or 1,500. Or 15,000.” said Vaynerchuck