After spending 20 hours at airports and on flights, the weariness made me less excited when I first landed at JFK. However, I switched back to positive mood immediately since the first Monday of our study trip. In just five days, my opinion on entrepreneurship changed significantly after I have been immersed in NYC’s innovation atmosphere. In this week 1’s blog, I would like to discuss the following 5 themes that I have learnt: business, management practices, career path, talent shortage, and culture.
First, entrepreneurs can learn a lot of business lessons from both failures and successes of himself and other people. According to Ziv (CEO of Paragraph), we should explore several business ideas at the same time to see what work best before concentrating our resources to any particular idea. Ideas do not have to be totally new, e.g. many startups are built around API of Facebook, Google. Another thing entrepreneur should do is to test your product before full-scale launch as a lesson from the “Rent the Runaway” case. To increase probability of success, startups can seek guidance from incubators such as that of NYU. NYU Incubators channels startups’ business into sales-focus rather than product-development focus, provides talent from NYU’s undergraduate students, and advises on fatal startups’ mistakes. Another valuable lesson from Antonio of Social Draft is that startups should avoid the high maintenance cost of trying to directly (i.e. dedicate staff) serving mass customers because your company does not have abundant resources. CRM should be as automatic, web-based or app-based, as possible. You should also cut off illogical clients who make irrelevant requests to what you are offering. To create a unique product, Andres from Caliber suggested startups to invent/create new customer behavior and not reverting to existing/popular behavior. Since your resources are limited, startups cannot work on many ideas at the same time. You should also engage customers in R&D by releasing a new version of your product more often, e.g. once every 3 months. Monetization in early stage is also important to avoid the risk of running out of cash in future. And the more you are engaged in a product and market, the better you understand your target customers, which will give you advantage over competitors.
Second, entrepreneurs can learn a lot of best management practices that have been applied in big corporations. Although operating more as a research center, CUSP has put in place an Intellectual Property Management (IPM) process and have an in-house Chief Data Officer taking care of IPM issues. This helps CUSP address the IPM conflicts among its many external partners. CUSP is also applying an open-ended innovation model, i.e. combining both internal and external expertise. In addition, NYU Incubators and NYU eLab also offered several valuable lessons such as building differentiating factors for your product (i.e. attractive value proposition) and researching on whether there is market need for your product. The frequency of customers using your product is also important, e.g. at least twice a day for a mobile/web-based product. And most successful startups scaled up to giant corporations by succeeding step by step, e.g. Facebook succeeded within Harvard, then moved to Ivy League schools, etc. before spreading out to the mass market. Startups should also reverse the natural sequence of Funding, Building, and Customers by being customer-focused since the first day. Funding can come later because without customers, you do not have a promising business. After small successes (e.g. a growing customer base), startups can seek funding more easily. Antonio also has several advices in management practices. As CEO of any startup, you must go through the pain of firing employees if your company and they cannot fit each other. In terms of hiring, you should look at track records of how the potential employees has achieved in the past (not only academic) and give them a small test to see whether they have problem-solving skills. Regarding R&D, you should think of yourselves as end users and give practical feedbacks to you engineering team on how to improve the product. You should also beware of contract deadlines if you rely on external parties for development of your product. If you do not, you run the risk of lagging behind competitors if they launch product earlier. Systematic processes for IT, sales, operations, etc. should be in place so that the whole company functions smoothly.
Third, entrepreneurs who decide to choose to start their own business must seriously think about their career path. Ziv of Paragraph stressed that founders should be 100% committed to his startups and cannot split his time between a full-time job and a startup. Entrepreneurs should also be very patient because your business is unlikely to pick up very soon, e.g. Airbnb ran out of cash from 2007-2011 before gaining success recently. When entrepreneurs seek funding from investors, you should already have at least a beta version of your product and better is to demonstrate that you have a growing customer base or is able to acquire few large clients. Then you will have a higher chance of convincing investors putting money into your business because your initial achievements demonstrate your execution capabilities, which differentiate you from those entrepreneurs who only have ideas on paper. Antonio also reminded us that to succeed, startups must be prepared to fail at the beginning. Andres of Caliber also gave advices on when you should abandon your startup: 1) when you do not believe into your own idea anymore; 2) when you run out of cash because you technically cannot sustain your business.
Another thing that I learn is that NYC has addressed the talent shortage issues very well in recent years through importing foreign talents and offering undergraduate students part-time jobs in startups. Ziv also organized his virtual team whose team members come from different countries and whom he has never met in person. To make NYC a major innovation center, universities’ syllabus with focus on entrepreneurship is also essential. Students who are passionate about entrepreneurship are also given early coaching through many programs such as boot camp, business competition, etc.
Finally, a true culture which supports and values entrepreneurship is prevalent everywhere in NYC. Incubators such as NYU Incubators Centre, NYU eLab, investors are very keen to listen to entrepreneurs’ ideas and provide adequate support such as affordable office space. Failures are also respected, not treated as something to discourage entrepreneurs. Communities are built so that different stakeholders can share their ideas openly: e.g. among partners of the CUSP program, among entrepreneurs within NYU Incubators (even though they might be potential competitors), etc. In order to build such culture, there are 3 important things that any city should consider: 1) hire consultant to design and help implement such plan; 2) have a clear mission, framework, and strategic decision form the top (city leaders, university boards); 3) hire experts such as Steve or Frank who can do the real work and share many practical experiences.
To conclude, the first week has now officially closed with many lessons and much excitement for me. I am more eager now to see what other things that I can learn in the next 2 weeks.