Welcome to Day 9 of 12 Days of Experts! This month, we’re featuring 12 hand-picked articles by industry experts and thought leaders, offering a wider perspective on marketing, business, and leadership. We hope you enjoy these voices from outside the WordStream world. Dharmesh is a bold, ambitious entrepreneur whom I respect and admire greatly, and a good friend who has taught me so much about launching and running a successful startup. I’m honored to share Dharmesh’s excellent advice in today’s installment of WordStream’s #12experts series. – Larry
On October 9, 2014, my company HubSpot went public on the New York Stock Exchange [NYSE:HUBS]. It was a thrilling and intense ride. The photo shown above is of me showing my co-founder, Brian Halligan, the HubSpot stock price on my iPhone.
Now that life has gotten back to “normal” a bit (or at least, my version of normal), I’ve had a chance to reflect a bit on some of the early lessons.
I’m an avid student of the game.
I talk to entrepreneurs all the time. One of my favorite things to do is to have a conversation with a group of early-entrepreneurs that are thinking about starting a company — or have recently done so. I recently got to teach a class at MIT. The course is titled “Founders Journey” and consists of students across all of MIT who are interested in entrepreneurship. I’ve done a session with the students of Founders Journey for 11 straight semesters (spanning over 5 years).
Here are some of the most common questions I get from these aspiring entrepreneurs.
Warning: I have very strong, often controversial opinions.
Technically, you don’t have to have a co-founder, but I strongly advise you to find one. There are several reasons for this.
1. Startups are hard work. It’s nice to be have someone on your side, scaling the mountain with you. Now you could in theory just hire someone instead of making them a co-founder, but the relationship can be very different. You don’t just want someone you can delegate work to — you want someone you can debate. Someone who will push you to make better decisions. Someone who (hopefully) has the same incentives.
2. Startups can get very lonely. In most startups, you’re going to have ups and downs. The highs can get very high and the lows can get very low. Often these occur on the same day! It’s very nice to have a partner in the business who you can share the journey with. Not just in the bad times — but also in the good. Like life in general, the good times are made better by having someone to celebrate with.
3. Co-founders can help “fill in the gaps” on talents and skills you don’t have.
For example, at HubSpot, my co-founder Brian Halligan has a strong sales and finance bent. He’s very good at those things. I’m more passionate about technology and product. As such, we have very complementary skills. But, we also have overlapping values. We believe in the same kinds of things in terms of what kind of company we want and what kind of culture we want.
Think about all the skills required to start and run a company: technical, leadership, financial, sales, marketing, operations, etc. How many people are outstanding at all those disciplines? Almost none. By having one or more co-founders, you have a fuller set of skills and talents on the team.
Here’s an even better question. Can you really afford to spend all the time required to be even average at all those disciplines?
Find a co-founder whose skills complement yours and one plus one can equal three or more. Plus you’ll work even harder because you won’t want to let your partner down.
Eventually, maybe — but in the very early stages, no.
Raising venture capital (institutional funding) is exceptionally hard. Especially for first-time entrepreneurs. And, in the tech industry specifically, investors expect a fair degree of “traction” before they’ll put millions into the business.
Generally, you’re better off working on the business as much as you can: building a prototype or early-release of the product and validating the market (getting some users/customers) before you go out and try raising capital.
It’s also important to recognize how the VC industry works. Venture Capitalists make a very limited number of investments from the hundreds (or thousands) they see every year. So, it’s not just a matter of having an amazing idea — it has to be abetter investment opportunity than the other ones they’re looking at.
Too many entrepreneurs make the first thing they do to go out and start pitching investors. That’s sub-optimal. You want to have made some progress on your idea (and probably iterate on it and refine it a couple of times) before you try to get a VC to fund you.
No… but it sure helps — especially based on the type of business.
Plenty of great companies, even companies that are technology-based, have been started in non-ecosystem locations. There are very successful companies built in Georgia, Illinois, Texas, Utah, Colorado — all over the place. Amazon was started in Bellevue, Washington – a great town but at the time hardly known as a technology ecosystem.
So you can succeed outside the established ecosystems – but some things will be harder. If your company requires venture capital to grow, your odds of raising the needed capital if you are located where there’s a cluster of venture capitalists. Yes, VCs do sometimes invest in regions outside where they are based — but there are fewer, making the odds lower.
Also, think of it like starting a restaurant. Having a great location means you’ll benefit from some amount of natural customer traffic. Having a poor location means your restaurant needs to become a destination — it needs to be a place people will go out of their way to patronize. Becoming a destination restaurant — or a destination employer – is really hard.
Would HubSpot have been as successful if we weren’t located in Boston? I’m glad we didn’t have to find out. We’re surrounded by world-class educational institutions, a vibrant tech community, and an active investor community. All of these things have helped. Many ask us if might have done even better if we had been in San Francisco. The honest answer is: I don’t know for sure. But, my gut tells me — probably not. My co-founder and I have lived here for a long time, went to grad school here (where we met) and have networks here. All of that has helped.
There are enough challenges involved in building a business without intentionally creating more. If moving to a certain area will reduce some barriers and increase your chances of success, by all means strongly consider doing so, if you have the option.
A friend likes to say that the first sign of an inexperienced entrepreneur is an excessive focus on secrecy.
Why? Ideas are important but execution is everything. Take GrubHub; do you really think they were the first people to think of aggregating take-out deliveries for local restaurants? Of course not — the difference is that GrubHub executed.
The same is true for many businesses. It’s not just the idea; it’s the team and their ability to execute. (That’s why when I make angel investments I focus much more on the team than the idea. I know ideas will change and evolve, so I bet on people.)
Trying to keep your idea a secret only slows down the process: you get less input, you get less advice, you get less collaboration, you get fewer opportunities to think critically and draw in partners, you miss out on the opportunity to find potential – even enabling – customers… everything is much, much harder.
So while it’s natural to be paranoid, don’t worry about someone stealing your idea. In practice that almost never happens.
And never ask an investor for an NDA (Non-Disclosure Agreement). Not only will they not sign it, they’ll likely think you’re naive for even asking.
No. Stay in school. Finish your degree. Time is on your side; you have 30 or 40 years ahead of you to build a company. Your idea will wait; being first is nice, but being best is what makes companies great. You can build your network and even find your future co-founders and team members while you’re in school.
And you might actually learn something useful too.
Ultimately business is just one part of life. See college as a way to establish a foundation not just for starting a company but also for building your life. Knowledge, insight, and skills; partners, friends, and coworkers; passions, ideas, and personal growth — in short, all the things that will make you a better entrepreneur and a better person.
Yes. You don’t have to spend hundreds of hours on it, but you should spend some time thinking about the kind of company you want to build.
Every company — every group of people — develops a culture. So you can either try to create the culture for a company you love… or you can let a culture develop on its own and hope it’s what you want. (Here’s a tip: it won’t be.)
One of the common characteristics of successful companies is the fact that each has a distinct culture. Incredibly successful companies tend to have a uniqueculture. The best companies are deliberate about culture, designing and then defending that culture.
So what kind of culture should you support and foster? In some ways the answer doesn’t matter. You can choose to be incredibly transparent. You can choose to be heavily command-and-control. You can focus on design. You can focus on whatever you like… no, scratch that — whatever you love.
Why? Your goal should be to build a company that you and your team love. And that starts with culture and the genuine, authentic, deeply held belief that what you are doing, and more importantly how you are doing it, is right.
So start thinking about culture right away – and make you sure create the culture you want, not the one you think you should have. For more on culture, check out the HubSpot Culture Code deck (included below). It’s our take on culture and might provide some inspiration to how to think about culture at your company.
Dharmesh Shah originally published this article on LinkedIn. It is republished here with the permission of the author.
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