What does it take to be a successful startup?
Creating a startup in today’s economy can be tough. The business world is in a constant state of evolution. From fledging startups to well-established corporations; to be successful, businesses of all sizes and stages must be prepared to pivot as unpredictable markets demand a shift in business models.
A recent report by Startup Genome, a California-based organization on a mission to increase the success rate of startups, has outlined some pointers to help startups succeed.
According to the report, “local connectedness” – defined as how connected you are to your local ecosystem – is strongly associated with higher startup performance.
This includes a startups ability to seek and receive help and introductions from other founders and investors; building relationships with local founders, investors, and experts; engagement with others in the community and attendance at events; and closely working with other startups, either in the same office or in a coworking space.
Tips for your startup
- From the very beginning of your startup journey, invest time and effort in developing your network and nurturing a variety of relationships.
- Offer help to other founders.
- Build relationships with other founders, investors, and experts. The benefits from such relationships will do wonders for your startups. They will function as conduits for knowledge, a source of introduction to investors, partners, customers, as well as potential future employees.
- Although this may feel time-consuming and distracting from spending time on working on your startup, the cost of not building valuable relationships will be more detrimental to your business.
Building a startup can be a rollercoaster-ride of emotions. Because of this, certain behaviors, attitudes, and preferences are helpful to have as a founder in order to succeed.
Based on years of prior research, the report analyzed five mindset metrics which correlate with different types of entrepreneurial success These metrics were:
- Initiation: A proclivity and energy level to start new things, to turn ideas into action.
- Reflection and patience: A high score on this portrays someone who pauses and waits before taking action.
- Breadth: This refers to “big picture” thinking. Research shows that a high score on this is positively correlated with startup success.
- Depth: This attribute indicates a preference for details, specification, and concrete thinking. A high score on this is found to be positively correlated with startup venture failure.
- Structure: A preference for planning and organizing before starting a task. Research shows that a high score of this is correlated with startup venture failure.
Based on thousands of survey responses of startup founders, Startup Genome analyzed where these founders fall in terms of performance zones. These included:
- Green zone: Founders here tend to have mindset attitudes that are correlated with startup success.
- Orange zone: Slightly higher (or lower) than the success range.
- Red zone: Far outside the success range.
The report also analyzed how individual variable scores in each category (such as depth and structure) correlated with startup success.
Upon analysis, it was found that most founders in the global sample scored highly on some of the individual mindset attitudes which correlated with startup success. For instance, almost two-thirds scored highly for initiation which was linked with success.
It should be noted that the “green zone” for each of the variables does not always correspond to a high score. For example, the green zone of “depth” shows that 51 percent of founders had a low preference for focusing on details. This is a preference that is negatively correlated with startup success.
The relationship between mindset and revenue
The report found that there was a positive relationship between the overall mindset of B2B founders and the revenue of their companies. Those founders who were categorized in the green and orange zones for startup success were shown to experience higher revenues than those in the red zone.
The report found that mindset could determine whether or not a startup receives funding.
It was discovered that founders who raised seed stage funding had 13 percent higher breadth scores than founders who had not yet raised money.
All founders with early-stage funding, including from friends, seed, and Series A+, scored in the green zone for “initiation” and “structure” (a low orientation toward structure i.e. planning and organization, is positively correlated with startup success).
Mindset differences across demographic groups
The report found some differences among male and female founders and mindset variables.
- Female founders have a higher orientation towards big-picture thinking (breadth).
- Male founders have a lower orientation towards structure, which puts them in the green zone for startup success, while female founders tend to favor this mindset, putting them in the red zone.
Tips for your startup
- Fully know yourself. You must understand and be honest about your preferences, attitudes, and inclination.
- Look for co-founders who complement your own preferences. According to the report, after judging your own preferences, you should look for the opposite attributes in co-founders (to a degree). A reason why many startups fail is due to unhealthy team dynamics.
- Set high goals and think big. According to the report, those founders who target large, global markets and who score in the startup success range tend to be big-picture thinkers who do not get lost in the details.
- The good news is mindset is not fixed- it can be changed just like any other behavior or attitude. With the help of a good coach, you can train yourself to think in a way that will allow your startup to thrive.