It's July 2003 and you're a sophomore at Harvard named Mark Zuckerberg. You played with a pet project. You have no commercial aspiration for this. It's just fun to code. This is a “hot or not” photo comparison site. You call it FaceMash and your friends love it. Then it finds its way onto the main Harvard servers and your training as a young entrepreneur begins.
Facemash shows you how an idea can go wrong and how an idea can be snuffed out – not because people don't like it. They did it. Its first four hours online attracted 450 students and 22,000 photo views. Facemash was suppressed because it was deemed inappropriate in several respects by the Harvard administration.
As the Harvard Crimson reported in November 2003, the charges against you relate to security, copyright and privacy violations and you are looking down the barrel of expulsion from Harvard. There is also an angry reaction from women in particular, including the Harvard Association of Black Women.
The charges are then dropped, but experience teaches you that an idea is only the beginning. While Facemash isn't a startup per se, if it had been, regulatory issues and backlash from women would have strangled it at birth. The idea he generated, Facebook, would have to overcome significant obstacles, regulatory, financial, staffing, competition and much more.
This also applied to startups.
Zuckerberg and Facebook have continued to achieve great things, but why do nine out of ten startups fail?
You have solid ideas and you know your markets. You know your ideas can make money. So what happened to your vision?
Neil Patel offers an insider's look at what happens in his article, 90% of Startups Fail:Here's What You Need to Know About the 10%.
Patel sums up that if a startup is already getting a lot of customers, like Facemash, you don't really need a business plan until you've secured funding. Otherwise, it's vital.
Planning from the start is one of the biggest reasons your start-up business will fail early. It stages your whole vision. Know your market universe. Know your strategy.
Bill Gross of IdeaLab also wanted to know why so many companies fail. He reflected on some of his own successes and disappointments at IdeaLab and some of the where are they now companies of recent times. He discovered something he didn't expect.
Your timing when you get started, at 42%, was by far the most important factor between a successful project and one that didn't.
“Your timing is vital, said Gross. “Are you too soon? Do you need to educate the market first? Or are you on time? Airbnb was launched during the height of the recession when people found it very useful to rent a room or two and earn a little extra money. Or are you too late, there are already too many competitors? »
Second in the list was your team at 32%. Your people. The people who make it all work, their adaptability, the paramount customer experience. Gross says a business must be prepared to be yelled at by disgruntled customers. Things will go wrong.
It is how a business responds that defines the business. Gross quotes Mike Tyson, former world heavyweight boxing champion, "Everyone has a plan until they get punched in the face."
The uniqueness of the idea came in 3rd at 28%.
Gross said he wasn't surprised by business planning (24%) and funding (14%) if a startup already had some traction. If your customers demand what you produce, you can plan later and intense funding can easily follow.
If you don't yet have traction in the market, like the vast majority of startups, the elements of business planning and funding are critical to your survival.
Your business plan will tell an investor if you and your idea are up to snuff. But, more importantly, it will tell you if you are up to it. “It’s at this point,” said Gross, that “… Sensible people see a bad idea unfolding on the page and just leave it there. »
In three years, what are your startup's sales forecasts? How much do you have to spend to get those sales? How many people will you need to employ and train, how much server space? What are the costs of offering the free version before monetizing it?
"You'll find there's a lot more to it than you thought," said Gross.
So there is a real business opportunity. Your business plan covers everything:revenue models, ad campaigns, and how to design a seamless customer experience.
It will tell an investor two things:
So now that you're funded, you take a moment to enjoy the feeling. You hug someone. Are your dreams coming true? You are dazed by the buzz it gives you. As Chris Herd writes on Hackernoon, “Welcome to the most exciting time of your life.”
Now it's time for you to start the engines. You do everything you said you would do in the business plan. There are deadlines, people to find, marketing agencies to meet, and prices to negotiate.
Neil Patel says “Now is the time to focus more than ever. Ideas are popping up all over the place but unless it's a free energy idea or London to Sydney in six minutes, don't mess with your current strategy with it. Focus. Keep your eyes on the ball. You still have so many obstacles ahead. »
Before long, your idea will be copied. Products will hit the market that are cheaper than yours, maybe you have some great ideas. It's inevitable. That's why you've gone the blitzkrieg option, saturate, colonize, and hang on to your market share with whatever you've got.
Any good ideas on these other sites? You were the first to market. You are the market leader. Integrate them into your future releases.
You were the first to define yourself as the first from the start. Keep improving it, inventing and creating new products with your brand everywhere.
There is another factor that so many entrepreneurs ignore or simply do not consider important. This is the fundamental essence of “survival of the fittest”.
If you invent a machine that can produce free energy, what are the big power companies going to do? Are you insistent enough to sell them all of this? Tie you up in chases until you lose the will to live?
It doesn't matter if it's the biggest energy company in the world or just a little bigger than you. If they are losing market share, they will want you to stop. Life was fine before you arrived.
Patel says,"This is the stage where all your vision can be torn and imprinted and this is the stage where it's most damaging. This is where all that hard work can disappear overnight.
Your competition is fighting for its survival. You are attacked. That photo of you on Facebook doing something nefarious? Your academic record less than exemplary? It all ends up in the media and your brand suffers.
When Facebook co-founder Eduardo Saverin underwent a week-long induction ritual at Harvard, he had to take a chicken with him wherever he went. He couldn't imagine later being accused of animal cruelty, but eventually the negative publicity was used as one of the reasons to write him off Facebook. Zuckerberg had learned well from his Facemash experience.
This is survival of the fittest in its most corporate form.
It's not fair, you say. Everything is going so well. Everything is as expected. You did nothing wrong.
Where have you? You didn't see it coming but you should have. And where in the business plan did he mention something was right?
Have you ever heard of a CDO? He is a chief of defense.
In Sean Lyon's book, Corporate Defense and the Imperative to Preserving Value, Lyons explains how to protect your company's defenses. “These problems are very real,” he says. "If you haven't solved it, you have a significant weakness."
Your CDO should initiate anti-piracy measures and set up strategic contingencies for whatever comes after you. It could be industrial espionage, a negative public relations campaign. The fatter you are, the meaner the things they say about you. You'll even have to watch out for sabotage from within.
Lyons says, "It's not paranoid. It happens. It's true. If you want your baby to go beyond childhood, realize what kind of world we're in and get ahead of it.
According to some of the world's most successful entrepreneurs, including Neil Patel and Bill Gross, that's bad planning. You took your eyes off the ball and natural selection was ignored.
Bill Gross said, “Startup is one of the best ways we have to make the world a better place. If you take a group of people with the right equity incentives and organize them into a startup, you can unlock human potential in ways never before possible. And to do this, you must not miss anything.
Mark Zuckerberg's human potential was unlocked with Facebook, but Geoffrey James, writing for Inc.com, had one more piece of advice for all future Mark Zuckerbergs.
“There is one thing and only one thing that every great entrepreneur absolutely must possess:courage. In the end, you can plan, strive, and do whatever you can, but if you don't also have the pig-headed courage of an entrepreneur, you won't be an entrepreneur.
If Mark Zuckerberg had a business plan for Facemash in 2003, he would have learned of the misfortunes that will befall him.
If he would have done anything differently, only he can tell.
See also:10 unstoppable entrepreneurs share their tips for success
