4 Things To Keep In Mind While Building A Startup

I’ve been a VC at Accel Partners, India  for 4.5 years now, and have seen some 70+ companies funded by my team. There are certain axioms, which I have come to believe for a startup to be successful. (These are just my personal observations and my opinion)

Founders need to have a lot of ideas

Some of the best founders I have met are the ones buzzing with ideas. They simply can fill a room with hundreds of ideas in an hour. I think of this as an essential trait  –  companies pivot, ideals fail, things don’t go according to plan. A founder with a lot of ideas can at least generate options to try out.

It takes 3 years

Most startups take at least 3 years to figure out what they are really doing. First year to adjust to startup life  –  launch your MVP, hire your first team, learn how to fire people, learn how to manage investors’ expectations, the frustrating fundraise process, learn that the deal is not done till the money hits the bank (business or investment, or even until a hire actually shows up to your office). Another year for pivots, getting some processes in place, learning Series A fundraise is even harder, fighting off your competition, etc. Finally, the year where you find your rhythm, customers start pouring in, you find the magical product/market fit.

You can’t brute force a company with money

Lot of money breeds bad habits  –  over dependence on marketing, bad culture, overpaying on salaries, etc. Frugality makes you grounded and innovative. This is a very hard one to follow .  The moment your funding news comes out, media treats you like God, and employees want raises, etc. I’ve seen so many Indian startups raise obscene amounts of funding  and then just wither away. Too much money is bad  –  don’t let it go to your head.

If you don’t innovate, you are dead

And by innovation, I mean technology innovation , and not business innovation. It is technology innovation that really gives you the edge  – that too for, maybe, 6–7 months if you are under the radar. Business innovation is something I have never seen persist; it is just too easy to copy. And as far as I have seen, the hardest thing to break  or the best barrier to entry  is “network effects”. Especially in consumer companies ,  the only thing that makes the difference between a $100Mn company and a $1,000Mn company is “network effects” . Because I’ve never seen a consumer company that has technology so great that it can’t be beaten.  Any technology innovation you do is good enough for 3-6 months , and you hope enough for your user community to hit a critical inflection point to kickstart “network effects”.