Editor’s Note: This post was originally published on Seattle 2.0, and imported to GeekWire as part of our acquisition of Seattle 2.0 and its archival content. For more background, see this post.
By Jennifer Cabala
Speaking to a packed room of TechStar hopefuls Madrona Venture Group VC Greg Gottesman shared what he looks for as the keys to success in new companies and where many startups fall short.
The team is the most important
It’s about finding the right people with the right skill set, not just the right idea.
A great product is like porn I know it when I see it
Just pick up the iPad and you know you’re holding something special.
Pick a large market, where even if you make mistakes you can still succeed
This comes from the now famous speech made by Glenn Kelman, CEO of Redfin, at the first Seattle 2.0 awards. If you have a small market you have to get every customer to be a success. If it’s a giant market you have a chance to make mistakes and still succeed. Don’t force yourself to be perfect.
An actual business model means creating and capturing value
If it costs you $14.00 to deliver a product that a customer pays $.79 cents for you have a problem. (Kozmo.com found that out too late.) Make sure you are capturing some of the value you are providing for your customers.
Bottom line: Is the lifetime value of a customer worth more than the cost of acquiring them? According to Gottesman 90% of companies fail that test.
Timing is everything
Gottesman says that even if you take a c-level team with a mediocre idea, if the timing is right you have a hit. But if the timing is wrong it doesn’t matter if it’s the genius offspring of Bill Gates and Steve Jobs, it will still fail.
TechStars also had a great list of entrepreneurs talking about their successes, here are a few highlights: From the UrbanSpoon Founders:
- Just because your target market is huge doesn’t mean they have money to spend. UrbanSpoon had to scale quickly since restaurants operate on razor-thin margins.
- Don’t get attached to your idea, it’s not that great. Ideas are fluid, they will mutate. Get comfortable with it.
- Anything that’s not priority one is BS. Go through your list, be ruthless. Nice-to-haves go in the trash.
From TechStars Grads Everlater.com:
- (On teaching yourself to code or learning anything else) Treat it not like a task but something you want to know out of intellectual curosity.
- Raising money doesn’t mean success. You’re here to build a business, not raise money.
From Feedburner Founder, Matt Shobe:
- Celebrate milestones, even little ones, they’re important.
Techstars is already planning some celebrations. Andy Sack announced that the official TechStars cocktail will be “Long Island Ice Tea”. A play on the the “Seattle’s Brewin'” slogan, and because when it’s made non-alcoholic you can have it all day. I don’t think the Long Island part will stick. What should we rename the tea?
