How to Execute a Startup:
A not-so “How to” on How to Kill Your Company or Keep it Alive
Many aspiring entrepreneurs ask the same thing: What is the most important thing for starting a company? The answer is quite simple. There are many ways a company can go wrong, and many reasons why a company went right. Sometimes, failure is inevitable, beyond the power of man to control. But the men and women who are asking this question already know that. They want to know how to be successful when the forces of nature aren’t against them. Timing? Team? Idea? Execution.
The debate can last for centuries over which of the four is right. However, out of the four, Entrepreneurship boot camps will tell you that execution is most important of them all. And for good reason. Every day, everyone is coming up with new and innovative ideas, that could very well end up becoming the “next best thing”. But not everyone can make these ideas come to fruition. The difference between a successful startup and a not-so-successful startup is the ability to make their ideas, their dreams, into reality. Throughout the course of a startup, the ability to pivot and keep up with changing demands is what will keep that startup alive. If they cannot adapt, they will fail. That’s the reality behind the startup scene.
So why not timing? I think it’s best to explain this with examples. Timing is the assumption that one’s success is based off when that person started their endeavors. However, Facebook is the world’s leading website for social media today. Facebook was introduced in a time where the world didn’t need any new social media platforms. The world had already rid Friendster of its needs, and had the satisfaction of Myspace at the time. But just like Friendster, Myspace is virtually dead. Why? Because Facebook’s execution was phenomenal. Facebook almost immediately took down its competitors and blew them out of the waters. Their timing? Several years a bit too late, but they still managed to become successful because of their execution.
What’s so bad about team? Actually, having a team is very important to a company’s success. Not having a good team can cause complications in the long run within companies, but an excellent team is not necessary. Without proper execution, having an extraordinary team will not matter at all. In class, we discussed about Red Sox’s pitcher Curt Schilling’s company. Remember how that turned out? 38 Studios went down the drain, and fast. Despite having among the best game developers in the country, 38 Studio’s lack of money management and proper projection caused them to crash and burn. An amazing team destined to develop outstanding games, reduced to debt and despair. Possibly having the best team to get the job done, but the worst execution known in the history of startups.
Ideas are what makes a startup in the first place! Yes, that may be so, however having the best idea in the world is not necessary to building a successful startup. In fact, many of the most well-known companies on the planet today were based on some of the worst ideas ever.
Who hasn’t heard of Amazon? Well, Amazon is one of the best examples of a bad idea gone right, because of amazing execution. Amazon started off as an online retail website for books. At the time people were a bit skeptical about using credit cards online. To make matters worse, most people preferred going to the bookstore and looking through tangible books that they wished to purchase. So, when people thought of the idea of purchasing their books online, it generally wasn’t so appealing. It wasn’t smarter, since people at the time did not trust online transactions as much as they today; it wasn’t cheaper, often times the amount that one saved from purchasing a book online would be cancelled out by shipping costs or fees; it wasn’t faster, shipping was very primordial and having the option to simply walk to a bookstore and purchase a book rather than waiting a week to receive it was much faster. So, what was so good about Amazon? It was convenient. Instead of having to leave the house and pick up a book, the book is shipped straight to your front door! This made people who had busy lives or people who did not live close to a bookstore be able to receive books easily and efficiently. Amazon knew they did not have the upper hand when it came to a general audience. But their execution was so amazing that they were able to harp their audience into their convenience, eventually leading to the decline of local bookstores. Today, Amazon is basically a household name. The company’s ability to pivot into selling not just books, but just about anything allowed them to become competitors with top companies like eBay. Especially with their decision to open up selling to users as well, peer-to-peer selling is often preferred to Amazon over eBay now. A terrible idea, with a fantastic execution, led Amazon to its success.
PayPal was just the same as Amazon. In class, we found out that PayPal started off as a PDA money beaming application. Two users would pull out their PDA’s and point their infrared beams at each other’s PDA’s and would send money to each other that way. Why not just pull out your wallet from your pocket and hand over the money? Just like Amazon, PayPal was being developed in a world where people were afraid of online transactions. There was just way too much space for fraud and malicious behavior on the Internet. But through PayPal’s advertising, many people began to get hyped up for this product. PayPal made reality seem so hi-tech and futuristic. The world has its eyes on PayPal. They received huge funding from all the hype and eventually came out with their product. They also developed a web version that gave them room to expand out. Eventually, they realized that most of their customers were using the Internet application instead and executed a full 180 and shifted their focus towards a fully online application. The CTO decided to focus on the right things like fraud and security, which ensured the company’s longevity. Although the timing lined up along eBay, the decision to collaborate with the company opened up a whole flock of new consumers for the company and allowed it to prosper more. PayPal’s execution allowed them to turn their terrible idea, in retrospect, to a booming and prosperous company today. Most people today use PayPal to conduct peer-to-peer transactions, as well as many new features like paying bills and even utilizing credit. Their ability to pivot and adapt to new user demands allowed them to continue being relevant, instead of dying along with the use of PDA’s.
Ability to pivot, advertise properly, and analyze user demands are key to a startup’s success. All of these actions fall under Execution. While Timing, Team, and Idea can all help contribute to a startup/company success, Execution is ultimately what keeps the company afloat. If a company cannot ensure their longevity, then why bother starting the company? Team, Timing, Idea, or Execution? The choice is pretty clear.