If you’ve been in the entrepreneurial world even for a bit, you probably know startups are fragile and volatile. Many startups pop the champagne for their second birthday and then a month after they’re already gone and forgotten. According to Startup Genome Report Extra on Premature Scaling, more than 90% of startups fail due to the self-destruction rather than competition. But, we’re not here to scare you away or make you seem your new baby business won’t stay up for long. We’re here to give you some advice on how to become a successful startup – i.e. how not to end up on a startup graveyard.
1. Do a thorough market research
Starting a new business is similar to buying a new apartment ; you need to do some research before taking the plunge. Is there a demand for your product or service? Who are your competitors and how big are they? Create a plan that will differentiate you from the rest.
Learn from their mistake: Lookey was a an advertising company providing demographic marketing services that enable social networks to distribute their data as targeting information. Shortly after their first birthday, they were closed and then sold to Adknowledge. There are several reasons why Lookey couldn’t live as a successful startup. Firstly, their functionality depended on the Facebook platform. Secondly, as soon as they realised they can’t make the platform successful, they stopped selling it. And last but definitely not least, Lookey build a platform the market wasn’t ready for. So let me repeat one more time – DO A THOROUGH MARKET RESEARCH.
2. Keep your employees motivated and loyal
Working in a startup can often feel uncertain. However, happy employees can keep the bowl rolling. Your employees are your greatest asset. Make them feel good about their job. Every successful startup knows how much of its success belongs to the people behind the curtains.
Learn from their mistake: Back in 2013, there was an online platform called Secret. Secret enabled users to share their personal secrets with other users anonymously. It all seemed like a great idea as this business was backed by 25 investors and raised $35 million in 3 rounds. However, something went south. Besides losing visitors due to mean comments people would receive after posting their secret, the founders made a wrong turn. Selling their shares led to talent retention issues. Employees felt the uncertainty in the air and therefore they stopped believing in the longevity of the company. Lack of long term vision for the company was clear. Sadly, Secret failed to retain both its employees and their users which has led them to a startup graveyard by 2015.
3. Pricing is magic
The most common pricing error in startups is pricing way too low. However, pricing is a tricky thing, even for established businesses. When it comes to pricing strategy, think about pricing as positioning. Your price speaks volumes about your quality and the value of the product. Besides that, take into consideration your competitors and their prices. Don’t rush.
Learn from their mistake: Rdio was a digital music service provider, killed by its pricing strategy. Since Rdio tried to reinvent the way people discover, share and listen to music, its biggest competitor was Spotify. However, Rdio required a paid subscription while competitors offered free services. Not even the differentiating features were good enough to keep the customer away from the free products elsewhere. Finally, Rdio turned into a free service by 2013 which was sadly just too late. After 7 years on the market, you would think this will be a successful startup story. Unfortunately by 2015, Rdio joined Secret and Lookey at the graveyard.
4. If you want a successful startup, try harder
Creating a successful startup isn’t easy, that’s for sure. There will be good times but there will be a lot of bad times, especially in the first few years. Being devoted, especially as the founder of the company is inevitable. When you fail once, try again. Surround yourself with the right people whose knowledge you can benefit from.
Learn from their mistake: Selltag was an online selling platform that managed to survive only 2 years. Founded in Spain and backed up by 7 investors with more than $404,770, you would think what a successful startup that was. Unfortunately, people behind the screen didn’t try hard enough. Not only they faced problem with user retention but the real problem was actually the founder of the company. When he saw traction and metrics weren’t good enough, one of the founders of the company decided to quit. The rest of the team tried working without him but it was too big of a steak for them. If the founder only tried harder…
5. Believe in the power of ideas
Ideas make word go round and startups stay successful. Very few startups have a potential to become a big business, because very few are chasing an innovative idea. When you get a good idea, grab it. But don’t hold it all for yourself. Share it with people around you because there can be someone who knows exactly the right way to take that idea a step further. Fortunately for you, we’ve created this really cool platform where your ideas will never again get lost. And we can promise you that. Being a startup that’s headed directly towards the stars, we know the importance of sharing our ideas with each other. So, believe in the power of ideas – everyone’s ideas. Invite people to rate, comment and engage with your idea. Only sky’s the limit.
We wrote more about this recently so make sure to check How to get structure in a brainstorm with idea management!