The Ten Commandments for a Successful Startup – 2021 Retake
Back in 2000, Professor Shlomo Kalish, my mentor and a legendary startup investor, wrote the “Ten Commandments“ describing the most important directives to any startup entrepreneur. In 2015, 15 years after Shlomo’s article was published, I wrote an article lending my commentary to his list of ten commandments. Now, several years later, we seem to live in a very different world. I look back at his list and my initial thoughts and applications I shared and felt it not only fitting but also necessary to offer some adapted and evolved perspectives given the ever changing and rapidly growing tech landscape here in Israel and all over the world.
Israel has catapulted to a tech power house, with the highest percentage of unicorns and venture money being raised and invested to date, and no indication of slowing down. Technology and the entrepreneurs behind it are getting smarter with more and more founders eyeing their second, even third ventures.
And so, I’m sharing with you the original commandments with my 2021 take:
1. Love the customer → Love the right customer
- Loving your customer is obviously important but not all customers are born equal. To build and to scale your business you need to be laser focused. Building a great offering is about creating a focused value proposition and building a scalable business around that. Remember, you cannot please everyone. Rather it is an unwavering focus that will transcend into customer loyalty. Ask yourself, who is your primary customer? Secondary? And build around those who you really care about and who really care about you.
2. Love your people → Love your people
- This will always hold true in any venture, or any avenue of life for that matter. No one reaches the top alone. With that, I feel that this Commandment is even more critical today than in 2000. Today it is even harder to find the right people and even more so to hold on to them. As a CEO, the responsibility lies on his or her shoulders to make sure that good people stay and grow with you and the company. Get to know your people and what drives them and understand where your company sits within the landscape. In my mind, this commandment will always be a founding pillar to a successful business.
3. Focus, focus, focus → Focus, focus, focus!
- I think these three words say enough in and of themselves. Being focused is super critical to startups, 20 years ago and today. Even though startups have more funding now, this does not mean that focus is less important. With the strong competition and noise in the market, if you are not focused, it’s impossible to win, no matter how much you have raised. However, I would adjust this to be more specific and say, strategic focus. It is not always necessarily about working hard, but also about working smart.
4. Speed and efficiency → Velocity and unit economics
- Today’s market is abundant with opportunities and there is a lot of money on the table for the taking. Sure, being efficient still remains important, you can be more efficient in terms of your marketing expenses or R&D costs, but the core today lies more along the lines of velocity. You need to grow very fast in terms of Velocity. The focus is not on efficiency but on healthy unit economics. A healthy unit economics in the early days sends a very strong signal to potential investors that even with significant current losses, you will be able to build a very profitable business in the long run.
5. A dwarf on a giant’s shoulders → Think like a giant from day one
- I feel as though today’s mindset has completely shifted. It is no longer about building alongside giants, leveraging their successes and modeling your business model off theirs. With a mindset like that, you run the risk of falling down with any giant change of strategy. More importantly, in today’s market, good entrepreneurs are bold enough to aim higher and not shy away from very aggressive vision from day one. Avoid the slippery slope. Rather, inspire to be that big company, the Microsofts and Googles of the world, even if you are two founders working on a pipedream. I like to think of it from this perspective: you don’t have to be a giant to think like one.
6. Raise money when you can → Raising funds and interacting with VCs is an ongoing task. Always be prepared!
- This point is greatly indicative of the changing tech landscape. Today, good companies are always raising, and even more so they are always ready to be raising. There is tremendous value in the relationship building aspect of raising funds. Have continuous conversations with good funds and good investors, as it is truly an ongoing process. This leads directly into the next commandment, which shows the transition from the tangible to more intangible or abstract element of raising funds. At the same time, I believe that great companies today need to make sure not to raise too much and too often. As a CEO, you do need this 6-12 month gap between rounds when you can simply focus on building your business (as opposed to lunching with VCs).
7. Always raise more but keep an eye on the money → Raise funds from value add, long-term partners
- It is less about the sum of money and more about the partnership. Raising funds is always a two-way street, and I think it is important to be smart about who you bring along for the ride. Investors, much like a co-founder, can become a part of the family. Ask yourself, how will this fund propel me further in my journey? The investment and partnership that comes along with it goes far beyond the term sheet and check. Think through your ROI and remember, it is not a bad thing to be picky.
8. Maximize the value of exits, not your share of the pie → Maximize long term value of the company
- More and more, founders are looking to see their companies through the long haul. Now is the time to build big companies. Put aside the fast exit mindset and think about scalability and market domination. Today’s companies are looking to solve real problems and close gaps in the way we conduct business, treat medical issues, engineer food and build our cities as some examples.
9. Manage expectations → Manage your time and create a balance
- Be careful not to confuse sacrifices with burnout. Building a successful company does not come without the blood, sweat and tears, but that does not mean it should come at the cost of relationships and a healthy lifestyle. Specifically when building big companies, it takes time. With the full speed ahead culture, it is important to step back from the details of the day, analyze your big picture and keep building from there.
10. Personal investment → Smart investments
- I feel that less and less is the relevancy of investing personal funds. This last golden rule, which I would now characterize as smart investments ties into the points I made earlier about doing your due diligence on a potential investor. Remember, the investment goes far beyond the monetary.
And so, now 20 years after the original list created by Shlomo, I see how much has changed but also how much remains the same. As I mentioned in this blog’s first iteration, there is no one-size-fits all model for building a successful business, but rather ten strong foundational pillars that help elevate the ideas and business models that are shaping our modern technological world. My final words of advice: keep building, keep iterating and keep fostering strong relationships with everyone involved. Surely, you will make some mistakes, but if you keep your mind and heart open for input, you are bound to be successful.
Thanks Ctech, for sharing our 10 commandments!