Lessons Every Entrepreneur Must Learn – I began my first independent job when I was 17 years old selling mobile phone covers in Dubai. During that time, I was studying at Dubai Aviation College (affiliated with Cambridge University). I needed to develop a creative idea to make money since I had lent all my savings to one of my friends. Two weeks had passed and there was no sign of him or my money. I was lucky that my parents had already paid for my school tuition and dorm fees a year in advance, but that meant I couldn’t ask them to send more money overseas. I felt extremely pressured and knew that I needed to find a way to survive without having a penny in my bank account and only $500 cash under my pillow!
I began to pace the streets and started repeating a quote that I had once read on the internet a few months earlier.
Tough times never last, but tough people do.
For one week, instead of attending my classes, I walked everywhere to find out how I could get a job without violating my student visa terms. Eventually, I found a mobile phone shop and talked to the owner about my situation. The owner offered me a job but told me to leave my passport with him as collateral.
While I worked there I was given $300 worth of mobile phone cases on a daily basis, along with a list of small mobile shops that I could go to to resell cases for a profit. At the end of each day, I went back to the store, paid for the phone cases I sold and took the rest as my profit. That story was my first working experience involving risk (my passport), handling pressure, multi-tasking, environmental stress, working in the worst weather condition (113F in summer), and of course, learning how to survive alone without having any backup.
There is a right answer to every single question.
Over the past 24 years, I have tried my best to continuously learn how to improve my skills from different perspectives and in different directions, while sitting on every single possible opportunity in my life. I believe there is a solution for every single problem we face in life, but we need to make the right decision in those moments. “I can’t,” “this is the end,” and “there is no other way” are just words to avoid problems we truly must face in our daily struggles. Whenever you say you can’t do something, you’re reinforcing that message in your mind. Instead, we need to learn from those moments and find a way to move on. You have probably watched many movies referring to the idea of Armageddon, and the only reason that still weighs on our minds is that humans are not advanced or mature enough to find the right answer to such a larger concern. This weakness drives people to look at Armageddon as an end for their race. Imagine 200 years from now when a word like Armageddon has no meaning, assuming that super technology leads the human to discover solutions like settling and colonizing other planets.
Indeed, we might have failed because we needed to learn more to make the right decisions or ignored the facts and failed to face reality. My goal is to share with you things that I have learned and experienced and walk you through my entrepreneurial journey to:
- Ensure you don’t make the same mistakes that most first-time entrepreneurs do.
- Save time on your end by helping you prevent making the same wrong decisions that I made in the past.
- Answer some of the most important questions that you may face daily with your new startup that no one asked you about before.
- Learn how to build and expand your team.
- Share the best solutions to increase your chances to raise the seed round.
- Produce a roadmap and how to launch MVP.
- And more…
1. Be honest with yourself before taking the first step
Each entrepreneur needs to ask one major question before deciding to found a new startup. Why do you want to start a startup? There are two different answers to this question. According to statistics, over 90% of new startups fail in the first three years, which puts a ton of pressure on you. Zero cash flow, potential lawsuits, losing your friends and family members by involving them in your startup, bankruptcy, and then ending up with nothing OR you make millions of dollars eventually and all that money goes to your grandchildren! Let’s be realistic and forget about exceptions like Facebook’s founder Mark Zuckerberg. Of course, not everyone can be like him — a young student who had a simple idea and now owns the world! Be honest with yourself and find your place before making any decisions to start a new business. Based on my experience and observation, the answer should be MOTIVATION and PASSION. Yes, you should start a new company if and only if you are truly passionate and have enough courage to continue to the end. Fight back against the challenges, be ready for the long journey and don’t lose hope. Play the survival game until your business is stable.
Your success formula is summarized into 5 factors: think smart, stay persistent, be consistent, work hard, and be confident. You can gain more confidence with practice. Go to the gym regularly – trust me it helps you a lot!
If you’ve made the decision to start, then continue and read the rest; otherwise, go to the top of your browser and close this page forever. Now let’s talk about the steps on how to create your startup with minimal headache.
2. How to form your new startup
You need to make your pitch deck and try to pitch your product to law firms. Most of them are ready to hear your pitch, and they will help you form your company officially and register all legal documents for you. Usually, they will give you a $15-$35k deferral fee for a year if they can see the potential on your product, and you can use those credits to spend on your legal fees, including your company’s registrations. In most cases, lawyers suggest registering your company as a C-corp because it is easy to issue shares in future rounds to raise money from different investors.
3. Painkiller vs. Vitamin
Make sure to have a concrete plan and strong product concept before you begin. I say clear vision and concept, not actual product. You need to build a painkiller product, not a vitamin, if you want to increase your chance of getting into the finish line. Typically, investors do not invest their “smart money” if they feel your idea is another vitamin on the market. You will quickly lose your chance to raise funds and burn all the bridges you have made. Vitamins are good, but they are much harder to pitch to investors. Most likely they will ask you for tons of KPIs and user engagement levels — this is great to have, but it is not a MUST. I have seen so many first-time entrepreneurs who start a new business, assuming that they will figure out the product later on. They start without any plan, and in many cases, they spent their time and money trying to build a perfect (incorrect) product!
4. Startup environment changed for B2C products
The game has changed for new players in the B2C sector, and the startup environment has dramatically shifted in the past decade. I would highly recommend you not to start a B2C startup if you are not a college student or have millions of dollars in your bank account to make it possible for you to compete in the market. There always can be an exception, however! Nowadays, new B2C companies like Uber spends millions of dollars for user acquisition ($50 to $100 per user) because the competition is high, and at the same time, user attention span has shortened to a few seconds due to digital technology. Try to read the stories behind successful B2C startups, and you will find the same pattern. They are either young folks in schools (which gives them leverage to understand their generation) or millionaires/serial entrepreneurs who can buy B2C products from others to own the entire operation and grow the business (like Flipagram). By the way, in some cases, we find a rich daddy who invests a couple of million dollars into his kid’s startup, which again you should put out of your calculations and consider as an exception.
Lastly, a group of entrepreneurs might not belong to the above categories but still build a very successful business (like product hunt.) Their intention was not to start a company in the first place, and their motivation was different. They built something for their own interests to either have fun, stay creative or solve their own daily pains. Later down the road, they realized that other people have the same desire or pain, and they were smart enough to build successful businesses on top of the original idea.
5. Socialize with others; today is late!
Try to build and expand your social network every single minute. You need to be active in different communities. Join different parties, startup gatherings, follow the blogs and consistently work to grow your network! You never know, every single person you meet might help you in the future in some way that you never expected. All this good news, media coverage, raising new financing rounds, or even acquisitions comes from having the right network and relationships. Learn how to socialize to lead your company, and DO NOT spend time in the office alone if you are the CEO. You will learn much faster when you are outside the office! Gaining more social skills and having more of a chance to succeed are two factors that are highly tied up with each other. There is magic when you drink and talk about your company with other people during different events, and it’s worth 10,000 cold emails! One night, I was at a networking event waiting in line to get a drink. I began talking to a lady that I later found out was a tech reporter. Eight months later, our product launched on the market and she covered our company’s product in an article! She introduced us to a few investors which led to an investment in our business, allowing us to close our seed round!
Last but not least, always make sure to do your homework before joining any events; many of these occasions are not useful for you to expand your network in the right way. It will just waste your time. The guest list is available for many events where you can see who is attending and their positions. Having some background information about the guests is very helpful before you attend an event. Don’t forget that you’re going to these events for work and having fun is your secondary goal!
6. Chicken and egg problem, make your call
Starting a new company is like the chicken and egg problem. There is a tough decision to be made. I had a lot of challenges with myself when I was deciding to start my own startup. Especially when you are employed. You tell yourself that you will quit your day job if money or investors show up, but money doesn’t come until you quit. You might be able to work on your idea part-time for a few months and remain at your job, but in order to create a proper roadmap, you need to dedicate all your time to your startup if you truly want to start this journey as an entrepreneur. I have seen many people talk about starting a new company for years, but never do actually do it because of that final decision to quit their job. Many successful entrepreneurs quit their full-time jobs and accept the risks to start their new startup. Here are some examples of how individuals try and cover their daily expenses:
- Take side projects and do consulting work for a short time
- Max-out their own credit cards to cover their daily expenses
- Ask either for a loan or investments from their friends and family
- Try to fill applications for different incubators.
There are a dozen competitions and incubator programs that you can easily get funds and resources from to start your new company. This option is your best choice on the table to get access to “smart money” and many more resources down the road. You will hear more and more about this “smart money” concept as you start your new venture. I remember back in 2012 when we submitted our pitch deck and demoed our product to an incubator in San Francisco, they offered us $50k cash, free office space, legal packages, media coverage, access to their network (including investors), and probably the most important of all — daily sessions with experienced people and weekly mentorship. Most of these incubators are partnering with other tech companies like Rackspace, Amazon, and Google, and you could receive up to $100k free credits to use for your servers in one year, which is tremendously helpful if you are a tech company and have to deal with lots of data.
7. Time Commitment
Never try to raise money from savvy investors if you are not fully committed to your own company. They will not tell you this, but I will. They hate people who come to their office and ask for easy money when the founders are not entirely committed to their endeavor.
The team is one of the most important pieces when starting a new company or raising money. You need a responsible and committed team to help you grow. Managing a stable team is one of the most important tasks that you as a founder need to be involved in daily, recruit new people, and convince them to join your company and dedicate their lives to it for the next few years. You need to spend a lot of time on this task to find the right people. You must be very careful with how you pick your future team. It will be more effective if you start with your old friends, ex-colleagues, ex-classmates, or family members who you can easily put your trust in. Also, it would be much easier to have back and forth conversations with people you know from the past and convince them to join you.
In the beginning, it’s so hard to sell something that is not tangible, especially when you can’t afford their salary as well. They need to be motivated to join you, and you need to build trust and give them the full picture. You need to sell the future, not today! In most cases, equity is the best option to give to people because it gives them enough incentive to join you early in the game.
I still think prophets were the best entrepreneurs in human history!
9. Co-founders and their relationships
Most first-time entrepreneurs prefer to split the risk and responsibilities by finding a co-founder. You need to be very careful when you are picking your co-founder. This is like a marriage, and you might end up working with them ten or more hours a day — more time than you probably spend with your family members or close friends. It is critical to find someone that you can trust and have a mutual understanding. In many cases, you might find a very tech-savvy partner who can handle your entire development operation. However, it goes nowhere if you guys cannot understand each other. Arguments that end up being a bigger fight between the co-founders are one of the main reasons startups fail in less than a few months. Do not forget that investors are smart, and they can easily find out about your relationship with other co-founders without you saying anything. They are investors, and it’s part of their job to monitor these behaviors and sense turbulence!
10. Trust and social proof
Building trust in the community is very critical for your venture. Your survival through rainy days depends on how you gain the confidence of the people you meet. Be honest and never lie if you want to grow your company. Stop thinking that you are the smartest and that other people are dumb and that you can get away with giving them wrong or misleading answers. You will burn to the ground if you keep lying and using shortcuts.
Location, location, and location. You cannot become a famous movie actor and live in the middle of a desert. You would need to stay close to where movies are being produced, Hollywood. As an entrepreneur, you might need to sacrifice your comfort by relocating from your hometown to the right location and environment. The latest statistics show that over 60% of investments in tech companies go to the bay area, with the rest split between New York, Seattle, Los Angeles, and a few other cities. I had a tech startup, and we decided to stay in Los Angeles back in 2012. It hurt us a lot since most investors down here were looking to invest their money in cute mobile apps or media & entertainment-related products. Just a few firms were participating in big tech investments, so again, their list is long, and your chances are low, especially as a first-time entrepreneur. I do know however that the tech and investment arenas have changed a lot since 2012 and more funds are established in other regions including Los Angeles, but going where your startups fits best is still the most ideal option.
12. Checklist and raising investment
There is a checklist to raise money from savvy investors. If you want to take this route and follow that checklist, you can most likely increase your chances to raise up to $100k in less than a few months. I will discuss this as well later on.
Are you still in the game?
In the end, I have to express that running a startup is very difficult, and it will not be an easy job. I have seen many people lose their smiles when I tell them that I have a startup. Many young first-time entrepreneurs expect to make millions of dollars in a few months by either selling their company or making it an IPO! Dreams and motivations are good, but these people just heard about those successful companies, and I bet they don’t know how many bloody bodies are in this playground! Raising money is not easy, especially when you are so new in the space with nothing to sell. Investors need confidence and a clear plan! Again, you will need to sell the future to investors and potential team members, not TODAY. Most investors are willing to give you a little money at the beginning, see how far you can go, while monitoring your progress. They need to see that you have a precious idea, a solid team, and a clear roadmap. Investors will take the risk to invest in your company’s future (they know that you might be forced to pivot a few times), however, those who can survive have a vision, patience, a strong team, and quality leadership.
This was a brief overview of my tips for entrepreneurs. I will focus on and address each section separately in my future posts and look forward to sharing my experiences with you all!
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