How start-ups succeed…

This is a question that I have had for years. I actually take it on step farther and wonder how some companies succeed and some fail. There are plenty of reasons a start-up will fail, from lack of funding, poor fiscal management, leadership, politics, lack of vision, crappy technology, etc… You could write a book, or many books, on why start-ups fail.

But what I am interested in is why some start-ups succeed. I realize there is a lot of luck involved and there is a lot of hard work, great technology, etc… But I think one of the main reasons a start-up succeeds (all other things equal) is because of the founder and their ability to drive the company to their vision.

Start-ups are not like most other businesses; the vision is a liquid thing and is constantly shifting with the market. Many times the start-up is actually inventing a market and requires the ability to see the vision and then the tactical abilities to translate this to reality. The leader, founder, CEO or whatever you want to call him/her, is the main point of success. In order for a start-up to consider success, it is critical that this one leader plays the key role in moving things forward, making decisions, and translating the vision into reality.

I have been in a few start-ups and people complain that the businesses are run in a hub and spoke model. Many groups having to interact and move forward based on interactions with the founder or visionary. People look at this model and say ‘it is not scaleable’ or ‘we need to rely on others’, and all of these statements are true. But the most important point is missed when someone makes these statements. The most important point is that the start-up is a moving and evolving being and the people that are a part of the start-up have been brought in to execute on a vision. These are not the visionaries; if they were they would be starting their own businesses. These are the people/teams that are here to build and formalize the business.

The only way to make this work is to have the founder/visionary in the hub and have that person driving the organization through the spokes. It has to happen this way because the key to success for any start-up is the ability to build out the vision in a rapid manner that does not require a lot of frivolous debate. Without the hub in the middle, the start-up is almost doomed to failure, the people running the business will not be able to translate the vision into a plan and move quickly.

Don’t look at this as a hub and spoke, look at it as a star in a galaxy and all the planets are taking their energy from the star in the middle. The galaxy is expanding and growing and the middle star is powering the universe.

Now, at some point in the company life stage it will become important to move away form the hub and spoke model and allow for scaling of the business. This will happen over time and will be something that occurs naturally. It is not something you can force and for that matter forcing it can cause even more problems.

So, if you are in a start-up, embrace the hub and spoke model. Encourage it to move quickly and allow for rapid deployment to the market. Leverage the asset of the visionary in the middle, it is what will help to ensure your success.

I am now at a new start-up called Dynamic Signal, and we are building a scalable platform for word of mouth and conversational marketing.   One of the reasons I decided to co-found this company was the two other executives at the company are two of the most competent leaders and visionaries I have ever worked with.   I realize every time I do a new start-up it is a risk, but each time we do it the risks seem to be as big, but not as difficult to overcome.   I am not sure at some point if the risks become so familiar that you lose your edge, but I don't see that coming anytime soon.