This is James Courier with nfx where seed stage Venture Capital firms started by a group of entrepreneurs the nfx podcast aims to discover for the founder Community what it takes to build iconic
companies.
And this is the nine habits of world-class startups startups that grow into transformative companies do two things. Number one. They nail the basics and number two. They cultivate the right habits their core operating principles. The first is mandatory if you don't get the basics right in all probability.
Be your company won't succeed a list of things that we consider Basics number one fundraising. Don't run out of capital. Number two ship. Don't just talk about it ship it number three customer focus live and breathe the customer experience number for growth find an effective way to scale number five EQ emotional quotient higher well and get along number six ethics stay legal. These are the basics in addition to getting these write something that often goes unobserved is that
Class companies Embrace similar operating principles which helped make them revolutionary when we see these habits and companies. We take special notice below are nine. There are more but this is a good list to
start
number one have flexible curiosity be prepared to stretch what interests you Founders who only want to do one thing usually end up failing inevitably what ends up working is a little different than what they thought Founders must have flexible passion. They can't be tied down to a single immovable set of tactics.
Most startups have to learn and adapt you'll likely end up serving a different customer in a different geography in a different way than you thought learn to expand your curiosity and acquire new interests become interested in payments not collaboration software. For example. This is a mental leap. You'll likely have to take at some point as a
Founder number to
make it a network. It doesn't have to be a social network who are Marketplace. There are many types of networks. Whatever you choose. It's important to always be finding ways to switch your product from a single player mode.
To multiplayer mode as soon as you can if you do that instead of having to deliver all the value to the customer yourself, you can set up a flywheel and have your customers create value for each other single player products increase their value to the user at a linear rate multiplayer network products can become more valuable at an exponential rate. If it's not a multiplayer network of some kind always be asking yourself. How do I build Network effects if you can't build Network effects, how are you defensible and how
You create value examples of companies that move to multiplayer mode after starting off single player include Apple they added iOS which is a two-sided platform Network Amazon. They added a third party Marketplace as well as Data Network effects via reviews OpenTable. They started a SAS software for restaurants and then opened to a Marketplace hipstamatic was a single player app Instagram cloned it and made it a
network
number 3 find the white-hot center in every
you're targeting there's going to be an irregularity. If you look rapidly in smartly enough, you will typically be able to find some subsection of people who are much much hungrier for your product a small group within your potential customer base. That's highly engaged and motivated people who are burning white hot for your product. Sometimes those people aren't necessarily who you thought your Target customer was. In fact, there are often what we call non utilizers people who perhaps weren't using anything before but for whom your product enables something transformative.
Quickly a to get into business and start making money be to make more money than they were making before c to look good to others or D to accomplish some other goal that they couldn't if your product didn't exist. Once you find this white-hot Center of customers, you'll be surprised at how fast it can bleed into other segments from their Amazon narrowly targeted readers as the quote white-hot Center in the online retail market and expanded from there to the quote everything store Facebook started as a photo.
A sharing for college students who had 50 percent daily retention a magnificent signal of white-hot Engagement open doors started with Phoenix where there are only five types of homes cell phones started with business people the list goes on.
Number four of habits of world-class startups tell a compelling story as a CEO you are Storyteller and chief telling your story and compelling ways and adapting that story to the audience. And the moment is your most important job. It's what gets you all the resources to build your company your story is a narrative that everyone wants and needs to hear. It tells your customers what you can do for them. It tells your investors what they're investing in and what they can brag about. It tells your employees what they're getting involved with why they're turning down a whole
Other opportunities to join and stay with you in the end it even turns out that your story drives your own motivation your own speed your own Excellence. I've seen companies that were dying because the management teams were depressed then they heard something from a customer or an investor and they were able to change the story a new narrative transformed their energy and the company began to turn things around. It's incredible how much of a catalyst a well-told story can be for startups. It's great to have a lot of real stuff concrete accomplished.
Moments and numbers that you can point to but unless you can also tell the story. Well, it won't lead to anything. So as a Founder you have to do two things at once you have to do something that's real and you have to tell the story about what you're doing in a way that isn't boring. Keep in mind that a story is just an account a representation of what you're doing. It's not an exact detailed reporting of the step-by-step chronology of events. This is why there's an art to storytelling learn to leave out the boring details. I get that it's hard to do because the boring details are the reality you live every day.
And it's easier to just directly relay your experience. But you have to tell the story with the audience in mind. Not you in mind. Think about what's interesting to them use their words draw analogies to things. They already know putting in this effort will repay itself with interest storytelling should be your number one super power as CEO V habit of world-class startups the 11 of 13 rule. This is something I got from Dennis Hightower who at the time was head of Disney International. He asked me why I wasn't doing something and I responded by explaining
Earning the pros and cons of two different ways of doing it thoughtfully. He replied, you know, there are 13 ways of doing anything 11 of them will work. Just pick one and do it. The best Founders avoid overanalyzing as a start-up you don't have time and the result will most likely be marginal pick away and do it be consistently
decisive
number 6 Go full speed like an X-Wing Fighter and Star Wars your startup is small so speed is your number one advantage. It is both the number one and the number two indication of your
Success speed is a formula for Success because rapid product beats the competition rapid results builds team morale leading to even more results rapid results generate more interest from the Press customers perspective hires Etc rapid results increases your valuation. You could beat any grand master at chess. If you could move twice every time she or he moved once speed gives you the edge as a benchmark. You should be conducting twenty to a hundred experiments per month as a start-up number seven habit of world-class start.
Oops, start with language. Most people say We'll build a product and then put language on it to explain it to people. This is backwards. The question is what are you to your customer for them? What's the promise of what you're doing that is communicated with language. Our reality is structured by language. Even if you don't have a product yet. You can get a long way just with the right words language is at the center of your company. It's not something you add later language is at the core of your company even before your product the most high impact companies think about language first and features.
You can build a whole company on the power of a phrase find Old Friends became classmates.com free IQ test became tickle.com. It can also change how people think about your product including how you yourself think about. The
product
The 8th Habit of world-class tarps is to test an iterate a start-up is supposed to be a learning machine in order to learn. You have to love your data no data. No learning early stage CEOs should obsess about metrics. You must be committed to measuring and analyzing everything 20 to 40 percent of engineering time might be spent on
Measuring and Reporting systems we've written before on the importance of kpis and how to select them. Once you've identified the right metrics to focus on metrics that could change what you do use them to continually test and iterate and the 9th habit of world-class startups. Look for 10,000 percent changes in important metrics don't settle for incremental changes always be looking for the 10,000% changes that can take your business on a breakthrough growth trajectory. Most of us want to feel good at the end of each day. So we lie to ourselves and say that improving a metric by 5%
Or 20% was a good day, but for world-class Founders, that's not nearly good enough have the character and drive not to settle keep pushing for 10,000 percent every day.
This is James Courier for nfx. And that was nine habits of world-class startups.
