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If there is low technical risk and little risk of the startup idea being adopted you are in an unhealthy ‘no man’s land.’ (littlehenrabi/Getty Images/iStockphoto)
If there is low technical risk and little risk of the startup idea being adopted you are in an unhealthy ‘no man’s land.’ (littlehenrabi/Getty Images/iStockphoto)

MONDAY MORNING MANAGER

To ensure success of your startup, remember you aren’t Steve Jobs Add to ...

Steve Jobs was the worst thing to happen to startups and their chief executive officers.

That’s the considered opinion of Tom Hogan and Carol Broadbent, whose Silicon Valley consulting firm focuses on boosting startups. Too often, the problem with startups is a CEO who thinks he or she is the reincarnation of Steve Jobs. The result is boorish behaviour, zero work-life balance not only for the head honcho but also other employees, arrogant authoritarianism, and disdain for the notion of giving back when staff want meaning that transcends their product or service.

“We see it in first-time CEOs. They are brilliant. They are brave. They have convinced venture capitalists to support them. But they take on some of the worst aspects of his behaviour,” Ms. Broadbent says in an interview.

Sure, there is much about the late founder of Apple to admire. But there is also much to steer clear of or be wary of. If you want to be successful, they suggest finding co-leaders with strengths where you are weak. Also, repeat this mantra regularly: “I am not Steve Jobs.”

Of course, there are still other ways you can go wrong. “Failure assumes a variety of faces,” they write in their book, The Ultimate Start-Up Guide:

  • No market need: A recent study of 101 failed-ups found 42 per cent citing lack of market need as the cause. A group of engineers, fascinated by technology, come up with something marvellous. Only nobody particularly cares. When the two consultants come into flagging operations, often nobody knows what the market is for their fancy innovation.
  • Running out of money: Funding is hard to come by; startups can be parsimonious, taking as little as possible to reduce obligations; and the leaders assume everything will go swimmingly, when it rarely does. “You need to be lean and careful with money,” she says.
  • Camel design: The company, marketing, and website is developed by committee, with consensus leading to the proverbial camel. That doesn’t happen, interestingly, with the product, where the decision-making is usually sharper. But Mr. Hogan says “most of our audience are technologists who have never run sales or marketing. They are uncertain and hide behind consensus to save them. Quiet often the collegiality ends up in a half-assed company.”
  • Field of dreams marketing: The companies assume everyone they target will see the value of their innovation. “We build it and they will come” won’t happen without good marketing and customer connections, she says.
  • Chemistry and teamwork aren’t there: The CB Insights study found 36 per cent of the startups listing “not the right team” or “disharmony” as the source of failure. You need to get rid of the jerks on staff and inspire a sense of common effort and teamwork, looking for diversity that can build for the long term.
  • Underestimating the competition: They point to “natural hitters,” who often make a big splash in Major League Baseball initially but wind-up in the minors because the competition figures out their weaknesses. The truly successful hitters are patient and fix the problems with their swing, becoming a complete hitter. “Most of the startups we work with are ‘natural hitters.’ They are so enamoured of their technology and so sure that they are “The Next Big Thing” that they either ignore or deride the competition,” the duo write in the book. But that’s a mistake because the competition will adapt.

As those reasons for failure remind us, startups are risky. In their book, they share a helpful matrix used by venture capitalist Mike Speiser that shows adoption risk on one axis and technical risk on the other. Although we consider risk bad, the reality is that if there is low technical risk and little risk of the startup idea being adopted you are in an unhealthy “no man’s land” – fragmented industries with low margins and low barriers to entry, such as most service businesses and consulting.

Low technical risk but high adoption risk – we can build it, but will they come? – can be highly successful, as Uber, Facebook, Airbnb and salesforce.com show. Similarly, the reverse – if we build it, they will come – where the technical challenge is high, but chance of adoption is strong can be very successful. The toughest spot, but also very lucrative, is where both risks are high – if we build it, will they come? – which is where Amazon, Google, Apple and Tesla have staked their ground.

“Building a company is a high-risk act,” notes Ms. Broadbent. But finding yourself on that matrix and remembering the mistakes others have made can help you be successful. So can remembering you are not Steve Jobs.

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