Written by Tom Gillis, Forbes Contributor
You want to start a startup. Welcome to the club—me, too.
Many articles will tell you the things you need—education, money, grit—but what it comes down to is that you have to be the catalyst. It’s not going to come to you; you’ve got to go to it. That means you have to be proactive, methodical, and strategic. You need to come up with a personal five-year plan that outlines what you’re going to do and what steps you’ll take to get there. You’ll have to make sure that every step you’re taking today is directionally in line with that five-year plan. Here are some of the components you need to consider in building the right plan:
- Patience is an undervalued virtue. Don’t rush. Sure, you want to start your own company. But you still have a lot of learning to do. And learning by making mistakes is not the most efficient method of learning. It’s way better to learn from people who have actually started their own company and who can teach you things (including some things that you might never discover on your own, even after making a thousand mistakes).
I didn’t join my first startup until I was 33. Before that, I spent a lot of time investing in my own experience and education by working for world-class organizations that did things really, really well at scale. That experience proved to be incredibly valuable.
I also learned from the mistakes I saw others make. I worked at my first startup—iBeam—during the go-go Internet dot-com era. We raised $250 million in capital. That’s a gigantic sum of money, and we managed to spend it month by month. We were going at a crazy speed, but our competitors were going faster. So the discussion was always, “How fast can we go?” No one took a step back and said, “Wait a minute, does it even make sense to spend this much money in a market that’s so nascent?” If we had been a little more conservative, and a little more intelligent about understanding market readiness, we could have preserved those resources and let our competitors blow up. Then we would’ve been there to pick up the pieces.
That lesson is easy to see in hindsight, but very smart people were looking at us and saying, “Go!” Knowing the result of that strategy totally shaped the way I think about spending money at Bracket, my current company.
Be patient. Give yourself every opportunity to succeed by being smart, experienced, and connected before you jump.
- Pick geography wisely (or, to be more direct, move to the Bay Area). Entrepreneurial opportunities are everywhere, but there’s an order of magnitude more of them—literally an order of magnitude—in the Bay Area. Look at the amount of venture capital deployed here, the number of new jobs created by startups, and the amount of networking opportunities. You’ll have friends working for startups and venture capitalists and you’ll build a network that will result in opportunities. Ultimately, startups are about people. Having a network of people you know and trust is often the birthplace of good ideas. That, plus a web of relationships, is what ultimately becomes a company.
- Go to an established company that knows what it’s doing. Look for the sweet spot—a pre- or just post-IPO company that’s big enough to train you and big enough to have proven excellence in its functions, but small enough to still be fun and hip and cool. That’s exactly where you want to be.
- Consumer or enterprise—that is the question. Many people are drawn to the consumer space because they get it, but one thing to consider is that some of these consumer companies are more about marketing than about technology. Most enterprise companies, on the other hand, are more about technology than about marketing. Of course there are exceptions to this rule, but think about your strengths and what you want to do. Then go to the company that does that best.
Also to consider: What kind of company do you ultimately want to start? The barriers to entry are generally lower for consumer companies. Technology is becoming modularized—open source options are making the amount of capital required to start a consumer company relatively small. But conversely, distribution on the consumer side is largely out of your control. Nobody is going to give you $100 million to run Super Bowl ads. Either your company will take off or not. If it takes off, it might do so spectacularly, but that win is more like a good spin at the roulette wheel. You can’t let the ball go in the green, but it’s out of your control. That adds risk.
In enterprise companies, you can build a sales force and leverage relationships you already have with customers. That takes some of the distribution risk out of the mix. The flip side is that the enterprise space generally demands a longer, harder journey.
Whatever you decide, go to an established company, work a few years, and learn everything you can. You will put it all into play soon enough.
Congrats and good luck!