Nick Parsons is a Senior Developer at GetStream.io and a LaunchX Clubs mentor.
Thinker. Tinkerer. Doer. Tech Entrepreneur. Engineer. Developer Evangelism @ https://getstream.io. Co-Founder @Surrrge. Lover of all things outdoors. All thoughts on Twitter @nickparsons. Fan of Node.js, React / React Native, APIs (REST & GraphQL) and more!
The below article originally appeared on Medium.
First Things First
Nearly every week, I hear a new business idea that has legs. These novel, innovative, society-changing concepts have me wishing I could jump aboard with their enthusiastic, pioneering creator(s). I get fired up by new ideas; they make me excited, elated… it’s euphoric — true entrepreneurs, with real ideas, taking on the world and bettering society for their fellow humans and generations to come.
Sadly, having an idea, even an incredible one, is not the only thing that you need to survive the vicious, soul-sucking, unimaginable (and yet invigorating and, sometimes, quite rewarding) entrepreneurial world.
According to a recent Forbes study, an astonishing ~90% of startups fail, leaving only ~10% to survive in the startup fishbowl. With those statistics, you’d be more “successful” getting a job and churning away day to day to make someone else rich. That statistic is only a negative one if you’re not one of the 10% who put it all on the line, played the game well and solved a problem, building a thriving business along the way.
Disclaimer: For some people, working a 9-to-5 is the most fulfilling use of their time, and companies do need employees, who relish in being given direction and performing their given tasks well. Some people, however, are born to be entrepreneurs, and we need them to step up and create value in the community, by sharing their ideas and creating meaningful jobs that allow others to be a part of something bigger than themselves and allow them to impact their peers in a way that was never before possible.
I want to keep this post short, as it’s the first of many, and will be focusing on my opinion instead of hardcore “facts” that have little backing. With that said, rather than focusing on the ~10%, let’s focus on the ~90% that fail (I personally feel that 90% is a generous number and should be much higher). Let’s chat about why the founders of the ~90% failed to keep their company afloat.
What’s On The Inside
What most people individuals don’t understand about starting a company is that it takes serious grit. It sucks. It takes A LOT out of you and, in most cases, you need to devote your entire life to it. The perseverance and effort, combined with a passion for solving a real-world problem, requires something that you can’t measure. Plenty of people will tell you why it won’t work (and it can actually help if you take what they say to heart, especially if they are a part of your target market, as being able to iterate on your idea and not cling for dear life to your original concept can help you actually get to market). You need to be able to hear that over and over and over and over and still push through. Not everyone will understand (often times, it is the people to whom you are closest who just. don’t. get. it.), but you’ve got to have grit.
What’s On The Outside
The other half of the equation in initially launching your concept is capital — not in the sense of raising capital such as a Seed or Series A round, but the personal capital required to stay afloat during the hard times that occur when building a company. You need to be able to stick it out when things get tough financially, too. You’ll likely not have much, if any, income during this time, but you will have money going to all your normal expenses, as well as toward your proof of concept and your marketing and, at some point, your team. The outside money from investors and such doesn’t always come when you need it to, so you have to be willing to take on that burden. If you have a family, or a cofounder, or a cofounder’s family that you need to support, you’ll need to account for those finances as well. And, in many cases, you’ll need a pretty long runway.
To be fit to be a founder, you need to be a good fit for the entrepreneurial market and be able to talk the talk to get through to people. As an individual who is ready to enter a market with a solution to a real-world problem, someone who has the tenacity to take on anything that is thrown at them, an individual who can persevere, regardless of how many times they are told that magical word, no, you still need to make sure you are preaching to the choir. Above, I mentioned your “target market” and listening to them; you also need to know how to reach them. You need to advertise to them. You need their input on building a product they actually want. Do your homework before you quit your day job and start throwing money at your idea.
What It All Boils Down To
Be truthful with yourself. If you’re thinking about starting a company, ask yourself the four following personal questions:
- Do I have 12 to 24 months of funds to personally stay afloat while getting my business off the ground?
- Are my co-founders capable of keeping up financially or am I going to have to float them? If not, am I prepared to float them and, potentially, never get that money back?
- Am I mentally prepared to put 110% of my life into starting a company? Can I handle failure? Can I handle success without it blinding me and making me complacent OR allowing it to cause me to lose sight of why I started in the first place? Can I handle the ups and downs of starting a company?
- How will my family members/spouse/partner be affected by the stress induced by building my company? What relationships will I burn? Will I regret it?
Can’t check them all off? It’s okay. Don’t sweat it. Start by pinpointing how you can address one issue at a time until you’re comfortable making the leap into the entrepreneurial world. In all honesty, some of it is just a matter of accepting the demons (but make sure you truly accept them and don’t just write them off). Building a company is like having a child; there is never a “right” time, you just have to prepare yourself the best you can. When you’re able to say that absolutely none of the above points are an “issue”, you are ready to move ahead. And, most importantly, you’ll be happy that you took a step back to evaluate whether or not you are “Founder-Market Fit”.
It’s Okay If You’re Not Ready, Yet
As always, and regardless of your Founder-Market Fit status, be sure to question your ability to succeed in solving a problem as an entrepreneur. If you’re not ready, it’s okay. If you have a true problem and a solution to that problem, chances are you’re going to be the best to the finish line because you’re passionate about solving that problem. Don’t get hung up on being first to market — let others fail first by being smart about your approach.
In my future posts and guest posts, I’ll chat a bit about finding the right co-founder without burning relationships, tactics for raising capital, staying mentally fit, and more. If you feel that I’ve left anything out, have an idea for a future blog post, or simply have questions, please drop a note in the comments below. I reply to every message. Guaranteed.