Startup: Early Stage Success Indicators

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I hope all is well. I was recently reading “How to tell if an early stage company will succeed in 1 meeting” and I thought it was an interesting assessment provided by Liron Petrushka. The points are spot on target and are logical indicators as leading success factors to whether or not to seriously consider investments within certain startups. As a young entrepreneur who created specialty backpacks with a business partner and developed websites, I believe the most imperative point is regarding strategic product decisions. I implore you to understand your role in the startup, and if you consider yourself the CEO/Co-founder, then it should be communicated and agreed upon that you have final decision. Conversely, if you are there to support the CEO, then present solutions and when strategic direction is agreed upon, follow the plan and add as much value to the team as humanly possible. Here are the great points made regarding early startup success.

1. Does the founder want to be right rather than rich? It’s important to see how founders lead discussions. Being open during a product meeting and actively evaluating other solutions, ideas, or ways of thinking is a show of strength. Alternatively, stubbornness at all costs is a show of weakness and is unsustainable over the long term.

It’s true that some of the CEOs we look up to, such as Steve Jobs and Jeff Bezos, are known for having been particularly stubborn, but they are also likely the exception to the rule and should not be mimicked. The road to failure is lined with people who thought they were Steve Jobs. It is okay — even fundamental — to be passionate about an idea and market direction. However, if you fall in love with the wrong idea and do not listen and evaluate information from your product people (customers) or engineers, then your stubbornness can sting.

2. Strategic Product Decisions: If strategic product decisions are being made by the non-founding engineering team, this can be a big red flag. Founders, product marketers, and those who are actively analyzing the market and customer needs should be the ones to make such decisions. Alternatively, it can be a problem if you notice a technical CEO micromanaging all aspects of product, or if a non-technical CEO seems completely separated from the product development process.

At the very early stages of a company, the CEO should be very close to the market and customers. They should be ready to make a move or pivot, without hesitation, based on customer feedback. Often, this early feedback is tied closely to company vision and mission.

3. Team Discussion Dynamics: Does the team come to an agreement and then respect that agreement? Does the team get along, or is there tension, frustration, one-upmanship or brinkmanship? For example, the vision of a product manager should be aligned with that of company leadership. The team should move on after a major product decision is made rather than holding on to their earlier ideas and not letting the issue go. It’s important to constantly move forward, to execute, and if old ideas are constantly rehashed on a daily basis that is a recipe for disaster.

4. Respect for Leadership: Is the CEO the final decision maker? This is an especially salient question when there are multiple founders in a startup and they are equal cofounders. In fact, I encourage very early stage companies with multiple founders to have this discussion early and agree that the CEO founder is the one who makes final decisions. The vision of the company emanates from the CEO and must flow down to the rest of the company — and that includes the other cofounders. Otherwise, it is extremely easy for a company to change course from one day to the next. Strong leadership is tied to building a clear and rock solid company mission that informs daily decisions.

Rather than predicting long-term success, the process of watching a company product meeting and evaluating the discussion based on this rubric will reveal any red flags and will highlight the possibility of short-term failure. Knowing that something is not working is the first step towards rectifying it and marching towards success.