The next wave of entrepreneurship is going to bring a whole new playbook for running companies. Are you ready?
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By 2021, half of our predicted global GDP will come from tech-enabled and digitally enhanced business models, according to IDC. More and more new companies in all industries will look and feel like high-growth tech companies rather than traditional businesses. Even the oldest of the old school will become tech-ified to some extent.
Accompanying this change will be the likelihood that the next wave of entrepreneurship will bring a whole new playbook for running companies. But the good news is that that playbook will become more and more accessible to entrepreneurs of all types, especially those who know the rules of the game.
Of course, even someonewho isn’t tech-savvy can still run a high-growth tech company — and do it well. Traditional business founders already bring much to the table, starting with their experience running a business. They bring a wealth of strong relationships with employees, clients and suppliers — and experience in sales, mergers and acquisitions, management and leadership.
Related: What It Takes to Build a Tech Company When You Have No Technical Background
But if they’re adding “tech savvy” to the list, they first need to understand the five stages of a tech startup, whether any of them be a mere entrepreneurial concept — or a rapidly scaling growth venture. Learning how to play the tech game and align your resources puts you in a position to win.
Want to win? Here are five actions to take to ensure success as you move from traditional business leadership to tech entrepreneurship:
1. Clear your head, and adopt a new management mindset.
Take a deep breath. Clear your head. Wipe the whiteboard. Shake that Etch A Sketch.
Moving from an old company to a high-growth startup becomes easier when leaders stay disciplined and formulate the right business model. Yes, it can be jarring to go from leading a traditional business where you’ve made a reputation and have people working for you to being the new kid on the block. The mindset shift involved requires moving faster, doing more with less and taking more action.
CEOs in this position should take time to talk to customers, do lots of experimenting and be agile. Try new things and see what sticks.
While these things may feel unnatural for those coming from traditional businesses, they’ll make a huge difference in a startup’s success.
2. Create a fund-raising plan that includes an option for outside capital.
Startups rarely transform into $100 million ventures without using outside capital at some point. You might be able to get away with not raising money to fund a lifestyle tech company if you’re creative and finance through customers, debt and grants, but these methods aren’t typical for high-growth tech companies.
Venture capital can be a great tool if it’s used wisely, and making it an option is prudent. In the United States, almost $100 billion was invested in venture capital in 2018. So, don’t take this option off the table — it’s out there and can dump gas on a growth fire. However, you need to build with this in mind from the start, or you’ll encounter unnecessary struggles when it comes time to raise your first/next round.
3. Set a quick deadline to finish a prototype.
LinkedIn founder Reid Hoffman has said, “If you are not embarrassed by the first version of your product, you’ve launched too late.” You don’t need to deliver a perfect product that can meet every customer need in the first year of operation. In fact, you likely won’t. Few startups have the ability to hit the nail on the head right away.
A great example of a startup that tried to start too big and had to scale back its efforts to propel itself toward success is Airbnb. The company was initially too ambitious and tried to take off in multiple cities all at once. However, when this failed, the founders realized they needed to refine and perfect their strategy and ideas in one market. By doing this, they were able to apply what worked in other places and become the wild success story they are today.
Instead of trying to hit a grand slam, then, how about aiming to start where you are and going from there? Set a deadline of a few weeks, build something simple, identify what to improve and validate your solution and your business model. Launch early, and scale the learning curve.
Related: Stop Obsessing Over Your Prototype and Just Let Customers See It
4. Develop your go-to-market strategy.
“If you build it, they will come” should be reserved only for re-viewings of Field of Dreams. Even if you’ve got a great product, you can’t expect people to seek you out without marketing and sales work on your part. You have to sell your product.
In the beginning stages, marketing and sales is a really painful (and often manual) process of calling on past clients and conducting dozens of quick experiments to see what sticks. Get ready to roll up your sleeves, knock on doors, work your network and try dozens of little “experiments” to see which strategies succeed. (For a more detailed look at this approach, read Hacking Growth by Sean Ellis and Morgan Brown.)
Many of the biggest companies today got off the ground by using manual go-to-market and sales strategies. In fact, Uber got its start with good old-fashioned cold-calling. So don’t try to skip over the hard work — everybody has to start somewhere.
Related: 9 Tech Entrepreneurs Share Their Secrets to Success
5. Keep evolving your business model.
Twitter as we know it has been around for 13 years, but did you know it started as a podcasting app? Or that YouTube began life as an online dating service? The lesson there is that we should never assume we know exactly what our customers want.
With a startup, you are going to get many things wrong at first. There is no stage at which your startup will have more risk than the early stage. That’s why you have to be ready to get some things wrong and pivot quickly — about 7 percent of failed startups don’t pivot quickly enough. While you too might make many mistakes as you look for the right structure, it’s critical that you be willing to adapt as you go.
Wildly successful tech startups, after all, aren’t mythical unicorns. They’re companies that have worked hard, learned to pivot quickly, kept an eye on cash and listened to their customers. That’s why now is the time to use the industry chops you’ve developed over the years and apply your advantages in the tech startup world.