I wanted to give a few lessons and take-aways at this stage of the course. At this point in the OEP project, my students at Stanford (and most likely you all as well) typically have experienced many of the ups and downs of the startup roller-coaster experience.
Currently I can tell that consistent with the Stanford classes, there is a group of teams that are really energized and excited about the progress that their startup ventures have made. They may have come into the class with an idea already or they stumbled across a promising idea from the very start, or in many cases, they responded to feedback from the market and pivoted to an idea and business model that customers are really responding positively towards. These teams are usually pouring tons of energy, the team has really come together and enjoys spending time and doing a lot of work in their startups and it's tremendously fun to watch and be a part of them. Usually these teams are emailing me with all kinds of questions about things that are really good problems to have. How do we incorporate? We have an offer from an angel investor who wants to put in money, how do we negotiate? We have a large corporate partner who wants to meet about doing something together, how should we prepare for a meeting? Where do we find a good lawyer to help us get patents? These are all great problems to have and topics for future courses and class sessions one day!
There's usually another group of teams where it's been more downs than ups. There may have been some conflicts among the teammates. Some people aren't pulling their weight or have dropped out entirely as they lost faith in the vision or the rest of the team. Negative feedback from the customers usually exacerbates internal team conflicts that were brewing. The team may have tried to pivot their business model a few times, but when these pivots and new ideas are also met with negative feedback from the market then it's easy for the team to get discouraged and arguments to ensue. Not all startups are going to work out and this is perfectly natural. The team might try another pivot or just might wind up having to disband and try again with a new team. While these teams and students are often frustrated and discouraged, sometimes it takes a few months, but when I run into them again the following school year they often tell me that they still learned a lot from the class. I have been a part of startups like this and we often learn a lot more from the failures than from the successes.
The third and often largest group of teams are usually somewhere in the middle. They are neither complete successes nor complete failures. Maybe a teammate or two have dropped off and aren't putting much work into the project but the rest of the team still believes in it. The feedback on some aspects of the business model has been good, but in other areas there are still problems. Maybe a larger company has recently announced a very similar product. Or maybe the marketing is just really difficult for this customer segment or they want the product but just aren't willing to pay enough to cover the costs. Maybe the product is just too early or too late to the market and it's hard to figure out how to pivot it exactly but it seems like there must be a way. Or perhaps the team is realizing that the business is viable but the market just isn't that big and it may not be worth pursuing after all. The frustrations are numerous and it's difficult to name all the possibilities, but it feels like a tough slog. This is what a lot of startup life is like. This is precisely why it's so important to start out with a problem you're truly excited and passionate about solving and a team that you get along with well enough to make it through these times together and not split apart entirely. It helps you to push through this time period in the startup life.
Many of these projects are salvageable and can be made into successful businesses. It's not going to happen overnight and it's not going to work out for all of them. The trick of entrepreneurship in many ways is knowing which of these projects to continue being persistent about and continue iterating and which of them to just give up on and move on to something else.
Update: Some teammates in all three types of groups will naturally want to remove teammates or reduce the team size at this point. Look for an update from us on the ability to do this and how to go about it soon.
Currently I can tell that consistent with the Stanford classes, there is a group of teams that are really energized and excited about the progress that their startup ventures have made. They may have come into the class with an idea already or they stumbled across a promising idea from the very start, or in many cases, they responded to feedback from the market and pivoted to an idea and business model that customers are really responding positively towards. These teams are usually pouring tons of energy, the team has really come together and enjoys spending time and doing a lot of work in their startups and it's tremendously fun to watch and be a part of them. Usually these teams are emailing me with all kinds of questions about things that are really good problems to have. How do we incorporate? We have an offer from an angel investor who wants to put in money, how do we negotiate? We have a large corporate partner who wants to meet about doing something together, how should we prepare for a meeting? Where do we find a good lawyer to help us get patents? These are all great problems to have and topics for future courses and class sessions one day!
There's usually another group of teams where it's been more downs than ups. There may have been some conflicts among the teammates. Some people aren't pulling their weight or have dropped out entirely as they lost faith in the vision or the rest of the team. Negative feedback from the customers usually exacerbates internal team conflicts that were brewing. The team may have tried to pivot their business model a few times, but when these pivots and new ideas are also met with negative feedback from the market then it's easy for the team to get discouraged and arguments to ensue. Not all startups are going to work out and this is perfectly natural. The team might try another pivot or just might wind up having to disband and try again with a new team. While these teams and students are often frustrated and discouraged, sometimes it takes a few months, but when I run into them again the following school year they often tell me that they still learned a lot from the class. I have been a part of startups like this and we often learn a lot more from the failures than from the successes.
The third and often largest group of teams are usually somewhere in the middle. They are neither complete successes nor complete failures. Maybe a teammate or two have dropped off and aren't putting much work into the project but the rest of the team still believes in it. The feedback on some aspects of the business model has been good, but in other areas there are still problems. Maybe a larger company has recently announced a very similar product. Or maybe the marketing is just really difficult for this customer segment or they want the product but just aren't willing to pay enough to cover the costs. Maybe the product is just too early or too late to the market and it's hard to figure out how to pivot it exactly but it seems like there must be a way. Or perhaps the team is realizing that the business is viable but the market just isn't that big and it may not be worth pursuing after all. The frustrations are numerous and it's difficult to name all the possibilities, but it feels like a tough slog. This is what a lot of startup life is like. This is precisely why it's so important to start out with a problem you're truly excited and passionate about solving and a team that you get along with well enough to make it through these times together and not split apart entirely. It helps you to push through this time period in the startup life.
Many of these projects are salvageable and can be made into successful businesses. It's not going to happen overnight and it's not going to work out for all of them. The trick of entrepreneurship in many ways is knowing which of these projects to continue being persistent about and continue iterating and which of them to just give up on and move on to something else.
Update: Some teammates in all three types of groups will naturally want to remove teammates or reduce the team size at this point. Look for an update from us on the ability to do this and how to go about it soon.