5 Truths About Starting a Startup

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Number 3 will make your head spin

I’m Scott Annan and I’ve started three companies since 2009 and have hired over 10 NYU students, both part-time and full-time, for my ventures. I love working with NYU students – both current and alumni – because you possess qualities that are important to early business success, namely determination and adaptability. And because you have a real zest for life that a place like New York City attracts.

The latest company I co-founded is an on-demand technical talent marketplace called LiquidTalent. Our platform matches up developers and designers with fast-growing companies that are looking to make immediate hiring decisions.

Startups are gaining a lot of attention as of late and for good reason: when you build something from the ground up that the market values, there is no better feeling. But starting a company is also challenging and it’s crucial to understand some of the ins and outs of entrepreneurship before taking the plunge. College is one of the greatest times to test out some of your ideas and see which ones are viable and worth pursuing, and which ones you should leave behind with that old mattress in your dorm room. Here is a personal list of some important truths that I’ve discovered about starting companies that I think you’ll find insightful and may even save you some time and money along the way.

1. If your vision doesn’t make you think that you’re crazy as hell, think bigger. Startups are your chance to invent something that perhaps the world has never seen, or is a variation of something that is in the market but that you could do way better than what exists. Surely there’s merit in starting another coffee house, or a t-shirt company. But people value boldness, and the world wants to believe in crazy ideas that will improve lots of lives, today especially. When starting a business, don’t be afraid of thinking really big and taking on a challenge that if you were to succeed would positively impact millions of people. That’s not to say that you shouldn’t start small to get some early experience, but ultimately, starting a company is your chance to put your vision out there and tell the world why they should care. If you play it too safe, there might not be enough people who will pay attention to it in the first place. It’s just like what Elon Musk is doing with Space X. He’s not talking about the Moon. Boring! He wants to go to Mars. Where do you want to go?

2. Sell first, build later. This truth is one of the most important ones that I see so many young entrepreneurs get wrong over and over again. So many people think they need to create the perfect product and get it exactly right before they sell it. They spend years of time and oodles of money before ever telling anyone about the product. Some of the best entrepreneurs I know will never even think about developing a product until they’ve already sold it. This may seem counterintuitive, but for people that understand entrepreneurship, they know that the key to staying alive is to mitigate risk. One way to mitigate risk is to identify your target market and get them to “pay” for something before you build it. In order to sell something, all you need is a simple mockup or a brochure that describes what the product or service does. Create that, try to find 100 customers, and then see how the response is before investing any further in product development. Sell first, build later.

3. Only start a business if there’s nothing else in the world you would rather do. Seriously! Don’t start a business because you think it’s cool, or because you’re trying to impress someone, or because you think everyone else is doing it. Start a business because you simply know that if you did anything else that would take you away from your core purpose, your soul would shrivel up like a dried plum. And here’s why: starting a business is going to require lots of time. Lots. I’m not talking 40-50 hours a week. I mean you wake up at 630am thinking about your business and you go to bed at 130am thinking about your business. You’re most likely going to have to raise money and be accountable to investors, and you’re going to hire people that will rely on you for their livelihood. And remember this too, most people start businesses because they dream of selling them. Always think about an exit strategy. A startup without an exit strategy just becomes a job. It might be a job that you started. But the point is that you want to create something with real value that other people want, and the best way to do that is by being deeply passionate about something and knowing that there’s literally nothing else on the planet that you would rather wake up and go do every day.

4. Never underestimate the power of your network. We often think about our network as our peers we go to school with, or the people we work with. But when I talk about network, I mean everyone that you know or have ever met, or have ever seen your friends or your parents talking to. When you start a business, the best early customers are the people that are close to you and that know you. Remember that executive your mom was talking to on the phone that one time you were on your way to soccer practice? Yeah, her. Call her. Remember the guy you met at the beach that said he knew a girl who started a company? Go find out her email and phone number and get in touch. The best way to get introductions to early partners, customers, and suppliers is to dive deep into your network and think of all the people that you’ve come in contact with who might be able to help. Starting a business takes a village and you’ve been building a village your entire life so you should view everyone as a potential partner who might be able to help.

5. Don’t be afraid to ask. When I started my first company that I raised money for, it took me many months before I gained the courage to ask investors for money. After all, I had created a cute product that enjoyed some moderate sales that allowed me to feel safe and not have to worry about things like rejection and being accountable to investors. But I knew that if I wanted to take the company to the next level, I would need capital and would need to invest further in inventory. I started by putting together a business plan with some investor materials and I called the people that I knew who I thought might be interested in investing. I got 20 no’s before I got a yes. But what started the process was when I decided to ask. A recent study in Harvard Business Review stated that we are all far more persuasive than we give ourselves credit for. We convince people all the time for numerous things like which restaurant to go to, what movie to see, and what school project to work on. Never be afraid to ask and be direct with people about what you are looking for. The clearer you are about what you’re asking for, the less room there is for any confusion.

A wise person once said, “The harder you work, the luckier you become.” This truth, along with the ones above will prepare you well for success as an entrepreneur and great fulfillment as someone who wants to shape the world yourself, rather than have others shape it for you.

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