Effective Startup Managment


In my years, I have helped launch several startups and even a couple of non-profits.  Some went on to be sold, others fizzled away.  I learned a thing or two about what makes a startup work.  Later today, I will apply what I learned when I Interview Paul Orfalea for the MIT Central Coast Forum.

Check out a commercial for the event here:

 

Some of the tenets I have learned along the way are as follows:

  1. Entrepreneurs should surround themselves with people that know more and care.   Startups that have helpful mentors, track metrics effectively, and learn from startup thought leaders raise significantly more money and have better adoption rates.
  2. Startups that adapt raise more money.  If you remain flexible in your business model, you have statistics on your side with 3-4x more money raising and 5-6x more user adoption.
  3. Investors over-invest.  Startups over-spend.   This is one of my pet peeves.  I really find it ridiculous how fast a startup spends money and how deliberate they can be with investor capital.  A good startup should be frugal in all respects.
  4. Investors rarely have a positive effect on the company’s operational performance. However, mentors are very effective in both operations and progress.
  5. Founders on their own take  longer to reach scale stage compared to a founding team of 2 and they are much less likely to pivot.
  6. Balanced teams with one engineer founder and one business founder raise 30% more money, have 2.9x more user growth and are 19% less likely to scale prematurely than technical or business-heavy founding teams.
  7. Most successful founders are driven by marketplace or lifestyle impact rather than experience or money.
  8. Founders overestimate the value of IP before product market fit by 255%.
  9. Startups need 2-3 times longer to validate their market than most founders expect. This underestimation creates the pressure to scale prematurely.  Improper market validation is a major factor for a startup not working out.
  10. Startups that have not raised money over-estimate their market size by 100x and often misinterpret their market as new.

Those are a few nuggets I’ve collected along the way.  I am honored to have the opportunity to ask Paul Orfalea questions about his organic startup, commonly known as Kinkos, and how he built it into a $1Billion enterprise in 10 countries.  He started with 1 copy machine on a sidewalk:

I’m also very delighted to learn from a fellow Lebanese entrepreneur – I’m interested to see how much of our culture went into his business savvy.



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