Recently I realized that I launched my first startup when I was 17. Two friends of mine joined me to build the first tourism portal about Armenia. It was in 2007, and at that time we didn’t really knew the extent of what we were creating; after a few years I founded another web-based startup, then joined a tech startup as one of their first employees. Then, one year ago I joined an amazing team as a co-founder to build and launch Inapptics—a mobile analytics platform powered by AI.
Each time I’ve founded a new startup, I’ve learned a tremendous amount about entrepreneurship and Silicon Valley in the process. Here are some of the most useful lessons I can pass along:
Your product matters, but your team matters even more
No matter how good and innovative your product is, if your team sucks, there will be huge problems to deal with at some point in your journey. This is especially critical when it comes to co-founders and first key employees. That’s why early stage investors pay so much attention to the team behind the idea/product. Your product will change a dozen times over in those early days, and your team needs to be cohesive and functional so you can all work hard in dynamic times to make it a success.
Your life will not be the same again
Some say it’s challenging to be in the startup world, and I don’t necessarily disagree. But that dynamism is also something I deeply enjoy. It depends on if you’re built for the environment.
So if you are about to join a startup or found a new one, take into account that your life (both professional and personal) will not be the same again. You need to be ready to make that mental shift. You need to be ready to work 24/7. And you definitely need to love what you do.
It may sound super obvious, but you don’t just build a product for the sake of building it. You also build it to launch it and make a profit. You don’t need a fully polished product to start making some sales. What I suggest is the following: Build an MVP around one or two key features and launch it in beta version to test with early adopters. Get feedback, fix the bugs, and then repeat this a few more times. That way, you’ll have a polished product already tested with your target customers and ready for the public launch.
Fundraising, sales, partnerships… It’s all about relationships
Clients buy from people they know. Investors invest in people they know. Companies make partnerships with the people they know. Don’t waste time pitching your idea/product/company on every corner—instead, start building relationships from day one. The right relationships are long-term, and are win-win for both parties.
You better have some basic understanding of finance
Although I have a bachelor degree in finance and stock markets, I consider myself a marketing/biz-dev guy, since the vast majority of my experience is in that field and I enjoy it the most. But my financial background helped me understand some basics of startup finances (such as taxation, stocks, and accounting), and helped me save money and time on consulting with experts.
You will deal with a bunch of legal documents—don’t panic
There were days (and nights too) we spent reading tens of hundreds of pages of legal documents when we were incorporating our company in Delaware. It’s tough when you’re not a lawyer and are trying to do it on your own, but don’t panic. Do as much as you can and then consult with a professional lawyer who has experience working with startups. Don’t sign any document without talking to a lawyer, or at least to someone who gone through this same process before.
Offer to help, and people will be more willing to help you
This is probably one of the most common patterns I noticed in Silicon Valley. If you ask someone out for a coffee, then that person knows you’re going to ask for help. But if instead of going for coffee, you immediately offer to help out on their own project, you can quickly see how their attitude changes—they’ll be much more willing to help you, now.
Show them the revenue
This doesn’t mean that you cannot raise without having revenue. It’s just much easier to raise when you have proof that you know your market and can sell your product. This is even more critical if you are a startup based outside of Silicon Valley.
Finally, remember that investors are also businessmen
Investors invest to make money. They look for new opportunities. They are not charity funds.
It’s critical to understand the way the venture capital industry works. Usually, the life of the fund is about 10 years, and VCs spend three-to-five years investing and another five years managing their investments, making follow-on investments, and helping the founders scale their businesses before eventually exiting. Here is a great post on this topic by Samuel Gil, CFA from JME Venture Capital.
It’s important to note that VCs are usually looking to get 10 times, 20 times, or even more return on their investment to will cover all other unsuccessful and semi-successful investments of that current fund. With angel investors and seed funds, this is slightly different, as an angel investor can get involved just based on his personal interest or relationship with the founders. But still, all investors are there to make money.