Today I'll begin a series on what is new in managing startups.
My topic for you to ponder today is "What is the Number 1 goal for your startup?" It might be rephrased, "What do you think success is for your startup?"
To get somewhere, you have to know where you are going.
Startup CEOs and their core teams need to agree on the Number One Goal for their startups so they all work to get to the same goal at the same time. That is often missing in startups lead by first-time entrepreneurs.
When speaking in my class last week, A.C. (founder, Chief Technology Officer of a fresh world-class venture backed startup) was asked about what he thought success meant for his startup. He replied "To get to IPO within the next five years." He is doing his first startup, yet most serial entrepreneurs would agree with him.
While it is also commendable to desire to build a great company that lasts for a half century, or that lifts millions out of poverty, or solves one of the world's most pressing problems (e.g. aging populations, health care costs, energy supplies), I find wise entrepreneurs focus on how to get their companies to IPO within half a decade.
Five years continues to be the norm for information science companies, including Internet service businesses. The teams leading life science companies expect an additional five years to get through government approval and related trials before sales begin.
To put this into perspective, I will quote from an interview in Investors Business Daily of July 24, 2007. A corporate lawyer, James Chapman , of the law firm Nixon Peabody was discussing the impact of new regulations on companies. Here is what I found most helpful:
IBD: You work in Silicon Valley, and there have been a lot of tech IPOs coming out lately and doing well. Compared with the last big tech IPO boom in the late '90s, are you seeing many differences now that there's a different environment?
Chapman: The quality of the companies is a lot better. The companies that are going public are more ready to do so. That means they tend -- generally speaking -- to be profitable or on their way to profitability, have better infrastructure, they've been around longer, (have) more seasoned management, better business plans. Those are the differences between now and eight, nine years ago.
Note there are some clear measures of what Chapman means by "a lot better." I will discuss those measures in the next days. For now, ponder on his paragraph to see if you are aiming for what he is talking about.
BOTTOM LINE: Times have changed since the boom to bust Internet era. Emerging are different expectations of investors, employees, the media, and the general venture community supporting new enterprises. I find this also applies increasingly to startup markets outside the U.S. Even in fresh startup regions such as China and India and Eastern Europe, the same expectations are being set. When you can do so, you will add a significant element to building your competitive unfair advantage.