If you think you want to start a company, questions ought to be buzzing through your mind: How do I know I’m ready to start a company? Which of my ideas is worth betting on? How do I get a risk-averse customer to try my product? If I get customers, how do I scale the business? How do I build my start-up’s team?
Mobiquity founder and CEO, Bill Seibel – a serial entrepreneur — offered his take. Briefly, Seibel’s answers are: Because you’re passionate about something you’re good at doing – not just to get rich; pick a simple idea that solves a big problem; show how your product beats the competition and build the best team; pick customers that need your product the most; and build a team of people with the best skills who work well with others.
1. Am I ready to start a company?
Seibel argues there are plenty of reasons not to start a company. “If it’s for the money or if you are doing it because it makes you feel important – don’t do it,” said Seibel.
You should start a company if it helps you pursue an obsession that you love — tempered by an exit strategy. Seibel argues, “If you believe in it and are passionate about it, don’t let other people convince you otherwise. You need to continue to believe that you can do it. Your team needs to depend on you for that.”
Why is passion so important? “If you love what you are doing, you’ll spend every possible moment thinking about it. True passion is infectious. It will keep you and your team going when others give up,” exhorts Seibel.
2. Which idea should I bet on?
Seibel believes that you should pick a simple idea. As he explained, “When I evaluate the idea, I look for innovation, not invention. My favorite definition is: ‘invention is the conversion of cash into ideas; while innovation is the conversion of ideas into cash. To me, that means that the most successful ideas are often simple and perhaps even a little boring. It doesn’t have to be a big idea. Big ideas are often complicated, and therefore difficult to successfully execute.”
A colleague — Seibel named him Ian — started a company and sold it a few years later for a small fortune. Jealous friends asked him: “How can someone as dumb as Ian be so successful?” When he got business pitches, Seibel would ask the entrepreneur, “‘Could Ian be CEO of you start-up idea?’ If he answered ‘no – Ian’s not nearly smart enough,’ I’d advise the entrepreneur to make his business model less complicated.”
3. How can I get a risk-averse customer to try my product?
Seibel suggests that entrepreneurs should try to build a product that satisfies three tests: it’s innovative, the customer has a budget for it, and it’s easy to explain why your product solves the customer’s problem better than competing products do.
When buying a start-up’s product, the customer is placing a bet on its team. According to Seibel, ”At Mobiquity, after we won our first deal, the customer told us that we won because ‘You are in a people-centered business. And you have assembled the best group of people that I have ever met in a people-centered business. And if you can work with the best people in a people oriented business – why would you select anyone else?’”
4. If I get customers, how do I scale the business?
Seibel suggested that scaling a business depends on carefully selecting prospective customers. He told the story of a wealthy, 30-something sales vice president from a computer aided design/manufacturing firm who had developed a simple algorithm for scaling a start-up.
The source of the young retiree’s wealth was a simple five-step algorithm that he described to his sales people. He told his sales people to “Be driving on a highway at 8am every morning. You can select the highway, and you select the direction – just be driving on it by 8am.”
The other five steps guaranteed that his sales people would only get out of their cars and walk into the lobby of companies that had three billowing smokestacks, parking lots jammed with cars, and offices filled with employees.
Only then, did the wealthy young retiree tell his sales people to “walk to the front door, ask for the Director of Engineering, and explain to him how we can help with drafting productivity.”
Seibel said of his approach, “It was brilliant! It takes longer to find a qualified customer. But when you do, the sales cycle increases in probability of success and decreases in time. The key to scaling a company is to find the niche that you can successfully compete in, and perhaps dominate. And then find a way to enter the sales funnel as close to the bottom as possible.”
5. How do I build my start-up’s team?
The basics of identifying the skills you need are straightforward. An enterprise technology start-up needs a sales person, a technologist who can communicate, and an analytically oriented operations person. “And you need to fill the rest of the team with the skill sets required by the specific venture,” explained Seibel.
He finds the best people by networking with the top people he knows. Seibel argues, “After I get one or two of the most highly regarded people to join my team, it becomes so much easier to attract other exceptional people. It works the same way as throwing a great party: Invite a few people that everyone wants to hang-out with, and everyone wants to come.”
Niceness counts. “As you’re building your team, make certain that you only hire nice people. If anyone flunks the Jerk Test, pass on them regardless of how talented they are. Only hire people that you believe would love to work at your company, and that other people would love to work with,” says Seibel.
adapted from forbes.