5 Essential Attributes of Successful Startups

There is no foolproof formula for guaranteed success in the startup world, but there are attributes that all successful startups share. These attributes, when nurtured and leveraged effectively, greatly increase the chances of your startup not only surviving, but thriving.

Here are five essential qualities that successful startups have:

1. Vision

As a startup entrepreneur, it’s your job to build something that people want in a large enough market that can sustain significant revenue. If you’re aiming for unicorn status, that’s $1 billion plus. 

To stand any chance of achieving this, your offer must be compelling to both customers and investors. For customers, it’s an elegant solution to a big problem, offered at an attractive price point. Investors will find your solution compelling because it grabs market share fast, generates excellent returns, and is defensible against threats. Create a product that has enough complexity to allow you to build a moat around it, so that someone can't just come along and do it at half the price and destroy all your margin.

2. Money

To get your startup moving, you're probably going to need to raise outside investment. Whether it's equity funding or debt, ask yourself, what is the minimum viable proof you need to show to investors for them to give you the cash, and what is the fastest route to that? For Hofy, it was a customer; for Tesla, a car. It’s the proof that unlocks the funds.

Startups often get into working capital dips, where you don't have enough money in your bank to grow at the rate you want to grow at. Say it costs US$3,000 to make a product, and it takes a month to sink that cash. And then, you sell the product to a customer for US$5,000, but they take a month to pay. What do you do if you’ve paid out US$3000 and you’re waiting on US$5000? Times that by all the customers you want to onboard: you're going to run out of money. 

Whatever stage your startup is at, you must have a clear understanding of your financial position, cash flow, and budgeting. Always anticipate your future working capital requirements and work to secure those vital funds today. 

3. Agility

No one gets the right idea the first time around. What separates those who succeed, from those who don't, is their ability to adapt and change really fast. Tesla’s goal was to be a mass manufacturer of everyday electric vehicles, but their first electric car cost $150,000. People won’t pay that for a family sedan, so they went to the sports car segment, where that equation made sense. Having proved they could deliver on the product, they were able to unlock the funds to invest in production lines which could deliver family sedans at a price customers would pay.

Successful startups change really fast. That's true for the whole of the startup's life. Even when you’re series B, you've got to change quickly. You've got to find new routes to market. You've got to release new products to get more revenue. You've got to defend against competitors coming in or incumbents building your product. You’ve just got to change, change, change, so get used to feeling extremely uncomfortable; you have to do crazy things to stay alive and keep growing; that’s just how it is.

4. Margins

Leaders of successful startups make a conscious decision on the gross margin they want their company to make; they look at other companies in their industry and see the sort of multiples they command. If you’re selling hardware of any kind, you've got to be a lot more sophisticated in your thinking earlier on because your marginal costs are far higher, and you'll spend a much higher proportion of your development resources on infrastructure.

This is why software has been so successful for startups over the last 20 years – because, other than really computationally expensive stuff, it has a marginal cost of zero. It scales easily. Startups whose products have a physical component have to be extremely conscious of their gross margins. Start thinking: my costs are going to be X, our customers are willing to pay Y, and our margin is Z. Then consider whether you could make a slightly cheaper version that people like 10% less but costs 50% less to make. 

5. Hires

Successful startups hire their C-Suites earlier than they think they’ll need them and use that extra power to punch above their weight. Remember, leadership roles usually take between three and six months to hire, and if your startup is only a year old, six months is half the life of your company. Much will change in that time, so when you hire, hire for the startup of 18 months time. 

Co-founders at winning startups add up what they're good at, add up what they're bad at, and hire to plug the holes. If you’re not an experienced entrepreneur, you may decide to delay hiring or else end up hiring someone too junior. Remember, attracting talented senior executives to come and work for you is not based on the company you have today, but on what the company will become in one or two years. 

Talented Cs know when you're lying. So don’t lie about your numbers today, but do paint a picture of where you're going and how you'll get there. To do that, you've got to really work on your vision and yourself. 

There is no way to guarantee startup success, but take care of your money and your margins, be sure to hire the right team to back your vision, and you might just make it. And above all – be prepared to change, change, and change at lightning speed, forever.