By Matt Miller of Embroker
In my first year running a startup, I raised the capital needed, assembled an incredible team, and together we built a great product. In that same period, I time and again also showed my inexperience as a manager; I avoided making hard decisions, only to have them come back and bite me later, and even carelessly gave away valuable company IP. Given all this, we’re very lucky to be where we are, and while it’s probably better to be lucky than good, I want to share some of what I’ve learned so that those of you embarking on “the struggle” can hit more of the highlights while avoiding some of the same pitfalls. Reflecting on the last 12 months, these are the four most important lessons I’ve taken away from the journey thus far.
1. There’s no free lunch is this world, so make sure you’re familiar with every single inch of the cafeteria.
When you’re thinking of an idea for a new company, you need to be prepared not only for how hard it will be, but for exactly which reasons. You need to be deeply, deeply familiar with all aspects and nuances of the ecosystem and the motivations of every player involved – not only customers and competitors, but potential influencers, industry-specific employees, vendors, and investors. Be prepared to encounter motivations that aren’t entirely rational (or at least aren’t rational to you).
Ultimately, you need to have a compelling theory for why your idea will succeed despite the overwhelming odds stacked against it. The more rooted this is in a deep, fundamental understanding of the problem you’re tackling and the incentives of everyone involved, the better.
2. It’s impossible to de-risk a startup — take the big risk up front and tackle a big, serious problem in a way that no one else is.
Although they would never admit it, many entrepreneurs aim for incremental improvement to, or even an imitation of, an existing solution. It’s certainly an easier way to start: it doesn’t require brand new thought nor do you need to take a chance on whether there’s a market for your product. But it’s risky in other ways. The largest risk of all, of course, is that you waste years of your life on something that never had the potential to be a breakthrough success to begin with or, even worse, something that deep down you don’t even believe needs to exist.
Moreover, when the really rough patches come – and they will – knowing you’re building something significant and unique is the only thing that will keep your team committed and potential investors from running. In our case, our vision for making a real improvement in a massive market, and our credibility for actually getting it done were the only reasons we were able to secure needed financing in the first quarter of this year, when we had relatively little traction to show, the public markets were tanking and nothing else was getting funded.
3. Don’t make it easy for copycats, but don’t be scared of them either.
Early in our product development, my team and I were so excited about what we were building that we put screenshots of our product online – even though we all knew it wouldn’t be publicly available for months to come. This was stupid, and avoidable. In hindsight, we should have known that the people checking out your landing page before you have a product out are more likely to be potential competitors than potential customers. Sure enough, a month later, someone pitched one of our investors on a shameless copycat idea and even referred to the exact screenshots on our site (being lazy, they hadn’t done much research on the portfolio of said investor). In this case, the imitators got kicked out of the room with harsh words about their integrity but they eventually succeeded in raising money anyway.
While it stills pains me when I hear them mentioned as an “innovative” company in the space, ultimately, the mistake was ours though and we own it. If this group hadn’t copied us, someone else would have, and holding grudges doesn’t help build product. Furthermore, I also would caution anyone about being too secretive about their startup. Using common sense is one thing but being too coy about what you’re working on shows a fundamental lack of confidence. If you have a good idea, someone will always try and copy it. Ultimately, you need to have enough confidence in your team’s ability to innovate and execute that what you’re pitching is not an initial idea at all but rather the organization that you will build around it. That said, don’t the give copycats a head start.
4. Always remember, warriors are not ballerinas.
Several months ago, I came home complaining about things that were going wrong, people behaving stupidly, counterparties not holding up their side of a deal. My wife listened, thought about the situation, agreed that things were probably tough for me at the moment, but remarked only, “Yes, well, warriors are not ballerinas.” As similes go, it’s imperfect (ballerinas probably suffer through more pain than almost anyone) but it gets the point across quite well. As an entrepreneur, more than anything else, you can’t be fragile. You can’t feel sorry for yourself – not even for a second. If you decide to go down this path, be prepared for constant, real, sacrifice of your free time, your relationships, and even your health. It changes you as a person. Anyone that tells you otherwise is either inexperienced or lying (or perhaps just much better at this than I am).
It’s only by embracing this fact, that suffering, sacrifice, and personal change are all an integral part of the journey, that you can have the necessary mindset to make it through the darkest moments, when everything is going wrong and no one else believes. Your single-minded dedication is your best weapon and your ability to persevere in the face of hardships, not once but time and again, is your only armor. You suit up for battle, and you keep going.
None of these concepts are new or unique to my journey. But their immediate primacy to me makes me motivated to share what I’ve learned from my own experience. Hopefully it’s helpful in some way, and hopefully I’ll be able to pick this theme back up 12 months from now and then again for many years down the road.
Matt Miller is the founder and chief executive officer of Embroker, the first modern way to buy and manage business insurance. Prior to founding Embroker, he was a principal at the private equity firm Hellman & Friedman, where he led investments in the insurance and software space. While at H&F, he served on the board of directors of Renaissance Learning, HUB International, and Applied Systems. Prior to joining Hellman & Friedman, Mr. Miller worked at Bain Capital in Boston and Hong Kong and at Bain & Company in New York.
The views, opinions and positions expressed within this guest post are those of the authors alone and do not represent those of CBS Small Business Pulse or the CBS Corporation. The accuracy, completeness and validity of any statements made within this article are verified solely by the authors.