By David S. Kidder
The Startup Playbook
Starting a company is a staggering journey into the unknown. It is simultaneously thrilling and terrifying. You are setting yourself up for a spectacular challenge and the likelihood of failure is high. It is essential to prepare, and to have a sober respect for the experience. In his book, “Outliers,” Malcolm Gladwell estimates that becoming an expert in any field takes more than 10,000 hours of dedicated training. This is the commitment you are making when you start a company: to become an expert startup founder.
Writing “The Startup Playbook” is the latest chapter in my own journey of becoming the best entrepreneur I am capable of being.
In building my last two companies, I created what I’ve come to define as a “startup playbook”: an evolving collection of the core ideologies, beliefs, tools, and methods that reveal a model of building companies, from concept to—hopefully—thriving reality.
I promise all my team members that they will have the chance to become complete startup executives; that they will know and experience the successes and failures of the entire startup journey; and that our startup playbook will remain the company’s operating system and the foundation that we will all build on year after year.
However, over the past few years, I realized that I needed to upgrade my playbook, largely because my most recent company was rapidly scaling in complexity, people, partners, products, culture, and many other dimensions.
The playbook I began with simply wasn’t robust enough to capture all the extremes of taking a company from its fledgling roots, when you are solving five to 10 challenges at a time, to a much larger company, where you are suddenly required to juggle hundreds of problems simultaneously, often instantaneously.
I decided to hit the reset button and pull in as much knowledge as quickly as I could. I reached out to entrepreneurs in varied sectors, in both the nonprofit and for-profit words. All of them are game-changers; many are billionaires, whether in the realm of ideas, publishing, media, or philanthropy.
I wanted their startup playbooks in order to rebuild mine. Now, I am sharing their playbooks with you.
When we spoke, I tried to get them to answer two central, burning questions:
1. What are your most vital theses for creating successful, scaling startups?
2. What are the key practices, behaviors, and ideas that power a startup’s growth in its first five years?
In each of the 40 interviews we conducted in person or via remote video, we followed a scripted set of questions devised to tease out the entrepreneur’s guiding theses. The result is the living ideas that their playbooks comprise, highlighting their best advice across a broad set of startup challenges and personal journeys, with an emphasis on “how it really is.”
Several remarkable ideas stood out. One in particular came from talented technology entrepreneur and blogger Chris Dixon, who observed: “Building a startup will be the homeownership of the next century.” He’s exactly right. The idea of the American Dream is rooted in our national ethos, in the belief that we have the freedom and self-directed power to create prosperity. But in the past, we have been led to believe that our single biggest asset is equity in our homes, when in fact, our best asset is ourselves: our gifts, our goals, our efforts. You are your best investment.
The new American Dream is creating and building your own startup. The equity is you.
Defining a Startup
What is a startup? Most define it as any company with a limited operating history, new, and usually in a phase of product and market discovery. During this phase, founders are typically roaming around in the darkness, looking for intellectual light switches to illuminate how their ideas stand up to customer needs and competitive offerings. The actual term “startup” became popular during the dot-com boom as a way of describing venture-backed technology companies.
I’ve expanded the definition to include any original new business initiative by a founding team that is focused on a high-growth, risk/reward profile, scalability, and market leadership. These startups often attract seed-stage, or angel, investor interest, then graduate to venture capital, though not all require or seek outside capital. The startup phase often ends when a company crosses certain growth milestones, most often when it hits profitability, is publicly traded, or is acquired.
While the failure rates are very high, the ones that survive and thrive often produce outsized economic returns. Startup founders need to select or refine their business ideas and strategies to capture the qualities and attributes of other high-growth companies. In many cases, it’s as important to choose what to focus on as what to quit, and when. If your startup idea does not have credible parallels to those offered in “The Startup Playbook,” you might consider retuning your business thesis, changing the direction of your goal, or even deciding to stop altogether, as the opportunity costs and risks may outweigh the commercial potential.
Determining if you are right for the startup experience can involve a complex personal evaluation. The good news is that entrepreneurship can be taught.
Cut to the Chase!
By now, I hope you are saying to yourself, “Just give me the answers!” And I will. But first, it’s important to point out that for some, the ideas provided here will seem obvious. In fact, they may already be part of your own company’s lexicon—the company you started that failed; the one that’s already succeeded, but for which you are seeking a refresher course; or the one you intend to start someday.
But they are actually very deeply rooted concepts. In most cases, the entire outcome of your ambitions rests on your ability to process the art and science of these ideas—that is, to execute a vision. These are not box-checking ideas; they are the ones that the market will value your company against, so it’s important to take time to test your business in a profoundly unbiased way against them.
I personally believe it’s fatal not to do so.
Here are the two biggest and most critical ideas from “The Startup Playbook”:
1. Know Thyself
One of the most fundamental conclusions I came to after spending time with the entrepreneurial royalty whose advice formulates my book is that nearly all of the founders know how to play to their own strengths—they rarely, if ever, chase market “whitespaces.” Few, if any, revealed a desire to work in an area where they did not hold an unfair advantage, from a giftedness or passion perspective. Moreover, their companies fully reflected these strengths.
A company’s market reputation is anchored in its founder’s reputation—often in a very public way. If you consider how difficult and improbable breakout success is in any given market, you can begin to understand why it is so critical to use a battering ram of proprietary assets—beginning with the heart and mind of the founder—to break through. Your startup company must be rooted and flow from the founder’s innate gifts.
2. Ruthlessly Focus on Your Biggest Ideas
People often underappreciate how effective great entrepreneurs are at timing a market play. Great entrepreneurs have a sixth sense about a broad range of trends and data. This active and passive knowledge collects in their minds in ways that inform the timing and arc of the execution plans.
And when they identify a real trend, often born out of a contrarian perspective on markets, they lock on the One Big Idea. You might think this is a natural part of an alpha entrepreneur’s mind, but it’s not. In fact, choosing a maniacally focused path and betting it all is one of the hardest parts of the job and it requires the most courage. But it is often what’s required to truly win a market.
Entrepreneurs love options. This has been my greatest area of weakness as an entrepreneur. While you might think keeping your options open creates added opportunity and paths to fortune, it actually does the reverse. Having too many options serves to dilute the attention, resources, focus, and discipline it takes to learn how to prosper in a market. The successful founder’s job is to get to the answer as quickly as possible.
It’s a widely held belief in the tech valleys that you must fail fast. Ultimately, you are trying to unlock your product-to-market fit equation as quickly as your talent and capitalization will allow. It is critical to select your problem well, focus intensely, and crack the code.
Excerpted from “The Startup Playbook: Secrets of the Fastest-Growing Startups from Their Founding Entrepreneurs,” by David S. Kidder, Chronicle Books (2013)
About David S. Kidder
An entrepreneur with a wide range of web-based application expertise focused on social-media, mobile, and digital advertising, David Kidder is the co-founder and CEO of Bionic, an enterprise social innovation platform. Prior to Bionic, he served as the co-founder and CEO of Clickable, an online advertising software as a service (acquired by Syncapse).
Prior to Clickable, Kidder co-founded SmartRay Network, a mobile advertising pioneer (acquired by LifeMinders), and Net-X, a web-authoring platform (acquired by Target Vision). A graduate of the Rochester Institute of Technology, he received ID Magazine’s International Design Award and Ernst and Young’s Entrepreneur of the Year Award in 2008.
Kidder is an active angel investor through his fund, Alt Option Return, and is a founding member of the The Acumen Fund One Percent Fund, and he serves on the National Board of the Smithsonian. He lives outside Manhattan with his wife and three sons.