There are times in a startup when you have to deal with big companies (investments, alliances, buying outs).
In the novel Moby-Dick, Captain Ahab goes in search of the great white whale Moby Dick. Captain Ahab is the startup, and the big company is Moby Dick - unpredictable and hard to catch.
The behavior of big companies is largely inexplicable when viewed from the outside
Its complex system consisting of thousands of people
You can't identify all the factors that will come to bear on a decision, so it’s difficult to understand, predict, or influence their decisions
What to do?
Don’t do startups that require deals with big companies to make them successful.
Never assume that a deal with a big company is closed papers are signed and/money is given.
Beware of bad deals.
Never assume a big company will do the obvious thing.
Be aware that big companies care a lot more about what other big companies are doing than what any startup is doing.
If doing deals with big companies is going to be a key part of your strategy, be sure to hire a real pro who has done it before.
Talk to big companies about all kinds of things but be ready to have the conversation just drop and to return to your core business.
The most common way to create a good startup is to start with a product idea, and then learn the exact market, buyer, and business model.
This process is often ignored but allows for growth as the startup develops.
How to create a startup “Product First”
Create the product hook
In simple terms, what is the value your product creates.
Discover the market insight.
Discover who uses the product and why.
Operationalize the insight.
Create data based on insight and plan growth accordingly.
The phenomenon of startup scaling-and-breaking under one main principle: “humans grow linearly, companies grow exponentially.”
While humans cannot be reengineered to grow faster, companies may grow from serving a hundred clientele to a million within the span of a year.
Humans formulate a vision for a startup along with an exciting story and organize an effort to produce the end result.
Companies will outgrow its people
Growth outpaces the ability of executives to manage the startup.
1. A company will turn its team over three times on its rise to scale, not because the lack of growth in the people, but rather because the speed in which their growing stalls progression.
2. As a result, a company has two options:
- Fire the executive - when ego acts as a barrier to success
- Hire above the executive
Based on employment data, one may expect to stay with the company between 18 months and three years.
Founders should make a pledge
Sets expectations for an objective of growth
Provides career definition
The founder is an exception to this law
The founder is responsible for exponential thought, fueling the company’s vision.
Peak positive emotions through interactions with the outside world leads to peak performance.
By making a pledge to “get out of the building,” the founder…
- Sets an example that promotes the performance of the organization as a whole
- Increases his or her personal performance
- Stimulates creativity and problem solving
The idea of starting a company is romanticized for the benefits it brings, including control of your own destiny, creating something new, having an impact on the world, building your ideal culture, and lots of money. Although these benefits can become reality, there are even more potential drawbacks to doing a startup.
Reasons not to do a startup.
You have to do everything.
Unlike in an established company, if you don’t do it, it won’t get done.
People say no.
Potential employees, customers and investors will all say no often.
It’s hard to hire.
It’s difficult to find people that will thrive in the unstable environment. Also, it’s tough to get talented people to actually leave their secure jobs
The inherent stresses combined with the boom or bust nature of startups create dramatic ups and downs.
With the huge responsibility, startups takeover your life, destroying work/life balance.
It’s hard to establish culture.
The stress, uncertainty and workload in a startup make it difficult for a thoughtful culture to take hold.