Blog article
See all stories »

Why professionalising entrepreneurship and sales focus are key for startup success

I read a fascinating blog this morning by Slava Akhmechet, a founder of RethinkDB on why they failed (see here:

There are two critical insights for me in this blog. The first is that the team wanted to build an elegant product and believed that once they had done this the market would embrace it fully.

This meant that they started out picking a bad market (for revenue and margin) and then optimized the product for the wrong metrics. Why? It seems because it was in the DNA of the founder. According to Slava:

"When I was a little kid I wanted to build my own radio. I made a box out of plywood, threw some metal junk inside, and connected the box to a power cord. I had books on electronics at home, but didn’t think I needed them – I had unwavering faith that I could do it on my own. Eventually I did build a working receiver, but it took me years to finally realize I needed to learn basic electronics.

Early RethinkDB was quite a bit like that. We had no intuition for products or markets, so we’d go through the motions of building a company without actually understanding what we were doing. What’s more, we had enormous optimism bias. Just like physicians know that gifts from pharmaceutical companies have biasing effects for other physicians but believe they are immune from the effect, we believed we were immune from the laws of economics and the math of running a business. The math, of course, eventually caught up with us."

The leadership team were first time entrepreneurs without effective reference points as guidance and a roadmap. New data from the last five years shows that they are part of a scary picture. In the tech community 92% of startups fail completely within three years, according to the Startup Genome Project. 74% of high growth internet startups fail due to “premature scaling” or, in other words, trying to grow too quickly. There is a real need to address this huge waste of capital. This is something that The Disruption House are seeking to address with the FinTech scorecard.

There is another relevant statement that Slava makes with regards to sales focus.

"A few people pointed out that we would have done better if we had built an experienced go-to-market team. That’s 100% true, but the timing of our personal development didn’t line up with the needs of the company. Initially we didn’t know we needed go-to-market expertise, so we didn’t seek to include it on the founding team[2]. By the time we built up a mental model that maps well to reality, we found ourselves short on cash, in a difficult market filled with capable competitors, and a product that’s three years behind. By then, the best go-to-market team in the world couldn’t have saved us."

They now know this and are sharing it to provide others with the benefit of hindsight of foresight.

Too often sales and revenue are not thought about early enough. They need to be. I cannot evangelise this enough. Build it and they will come is not a strategy for success! If you want one - start selling early and get yourself a roadmap. The combination of the two will greatly increase the odds of you reaching your end destination successfully.




Comments: (0)

Now hiring