Your mental outlook could be sabotaging your hopes for startup success. Over the last seven years, I’ve interviewed hundreds of founders and dozens of investors and I’ve come to a simple conclusion: one change in a founder’s mindset can make a huge difference in their potential for startup success.
It’s an idea I thought was brilliantly described in Yuval Harari’s book, Sapiens, which I read earlier this year. Harari’s point was that one simple change in mindset unlocked most of humanity’s greatest accomplishments.
The change? Instead of taking the answers supplied by religious institutions as the undisputable source of truth, people started admitting when they didn’t know something and did experiments to try to discover the answers.
What I find interesting is that plenty of CEOs act as though they are the sole source of all knowledge and truth. That mindset is like a straitjacket constraining a startup’s full potential. That’s because such a CEO also feels crushing pressure to always appear to be in control and is unwilling to delegate important tasks to others.
Changing this mindset to one of intellectual humility is the one easy-to articulate but hard-to-accomplish change in mindset that can unlock a founder’s full potential for success. That change enables six principles of startup scaling.
1. Blue oceans have the best growth potential.
I’ve noticed that startups that struggle to grow quickly have picked the wrong markets. Such markets either do not resolve important customer pain or are crowded with competitors.
A founder with the right mindset will come up with hundreds of potential ideas and analyze them rigorously — focusing on problems that pass four tests:
- They are very big sources of customer pain,
- There are no available products that solve the problem well,
- the founder has the skills to build an excellent solution that the customer values; and
- The market potential is well over $ 1 billion
2. Keep betting on new growth trajectories.
It is very satisfying for a founder to enjoy growth by meeting the needs of the startup’s initial market. But companies that succeed initially can only sustain their success if they realize that such growth opportunities eventually mature.
To sustain growth, successful founders must always be anticipating that their existing markets will mature and bet on new growth opportunities with enough vigor to make the transition from a declining product to a growing one.
3. Create and scale a growth culture.
Some company cultures scale better than others. And since culture comes from the founder’s values, success or failure can be a very personal thing.
The key point for a growth culture is to create an environment that attracts innovators who dedicate themselves to solving customer problems so well that the company has a great reputation. This reputation will help the company bring in new customers and keep existing ones.
Yet such reputations are difficult to sustain. Founders must encourage people to keep close tabs on how well customers are using the product, fix problems, and identify unmet needs that can be the basis for new products.
4. Hire functional experts to scale your processes.
Founders will not make the journey from idea to public company unless they reinvent the company’s organization. The most important thing they must do is to hire heads of key functions — like sales, engineering, marketing, and human resources — who have previously built successful companies.
Such leaders will know how to design and run their departments in ways that get more efficient as the company grows. Such scalable processes are essential as a company sprints to an initial public offering.
5. Be efficient at winning new customers.
The most impressive founders I’ve spoken with have developed the right match between their product’s benefits and the needs of customers.
And that’s not all, they also know how to get their product to market in a way that does not involve sales people. Instead such founders let potential customers try their product for free. Once they get value from the product, such users become the most effective internal evangelists for the product.
And that makes selling far more efficient.
6. Retain your current customers and sell them more.
Finally, the most successful entrepreneurs are great at keeping existing customers. The key to doing that successfully is making sure that customers are using your product after they buy it.
To do that, companies must assign people to work with their customers to find out what parts of the product they’re using, which they are not, and what bugs they are encountering.
Such interaction fixes problems, makes customers eager to renew, and helps identify unmet needs that can become new products that customers will want to buy.
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