Interpretation of four elements of entrepreneurship

Interpretation of four elements of entrepreneurship

Entrepreneurs are hesitant and lonely, but persistent. It's a long way, but it's worth it to the end. This road will encounter many obstacles, and these obstacles will often disrupt your rhythm and even be defeated, but they still insist on going further and further on the road of starting a business. Here I tell you the four elements of starting a business. Welcome to read.

To build a great company, we should make a fuss about the following four aspects: concept (entrepreneurial concept), product (product), team (team) and execution (execution). In other words, an outstanding idea, executed perfectly by an outstanding team, will become a great product and shape a great company.

Many VCS actually look at these when investing, such as whether there is a large enough market (whether the idea is good enough), whether it is a suitable and good team (how to implement it) and so on. ).

First, ideas

A popular saying recently is: It doesn't matter what you think. Since the book Lean Entrepreneurship became popular, a word has also become popular, and that is Pivot. This word means constantly changing direction, looking for the right market, etc. But the word Pivot is not used well.

Now basically any "unsuccessful" can be described as "fulcrum", and many people also encourage everyone to start talking first. Don't be afraid of difficulties, just fulcrum. But in fact, according to Sam's observation in YC, most successful companies have a good foothold and idea from the beginning.

Although anyone with entrepreneurial experience will know that what the whole team does at the beginning must be quite different from what it eventually forms, the general direction can actually be grasped. For example, beavers who do nail art O2O, such as grapefruit and aunts in women's communities, and singing on entertainment social platforms are all things that sound very likely to be popular from the beginning. Even though the core and details of the products may be completely different, the people they face and the problems they solve are the same.

In addition, when thinking about Idea, we should not only consider products, but also consider many other factors, such as market size and growth space, company development strategy, future growth barriers and so on. Since I became a VC, I have a great feeling that if you think you are a good talent and have a good team, you must choose a large enough market to play, otherwise it will be a waste of resources.

In a big market, if you can occupy about 5% of the market capacity, you may have been very successful and the future is full of possibilities, but in a small market, even if you have occupied 80% of the market capacity, few people will be optimistic about your development. Ma Yun and his 18 meeting, if they had chosen not e-commerce, but, for example, to serve people with certain diseases, even if they succeeded, they would not have the current momentum.

Of course, there is a problem in China. Big companies will soon enter the profitable market and eat all the small fish. Moreover, if you want to start a business, you may find that many people are already doing any obviously feasible idea. So Sam's advice to us is to choose a vertical small market.

But isn't this contradictory to what I said at the beginning? Actually, it's not. Sam means to choose a promising small market, which can be copied and expanded quickly. For a fast-growing small market (the company and the market develop together, just like Alibaba in the field of e-commerce) and a slow-growing big market, the former is the most suitable for starting a business and favored by YC.

Therefore, when you start an idea, you should have a long-term vision and a vision to see the changes in the market in the next few years. In addition, there are still some questions to consider, such as why now? Why wasn't this thing made a year or two ago? Why is it too late to make this thing after a year or two? Wait a minute.

Finally, a good idea is better to be a completely new thing, not an improvement on the existing thing. For example, many people say that I want to be Airbnb in the pet field, Airbnb in the white-collar field, Airbnb in the high-end business field and so on. According to Sam's experience, such things will fail most of the time.

To sum up, the best idea is to start from itself, preferably from a very simple minority demand, and it is a product that can be described, understood, copied and expanded very simply.

Well, if you want to start a business, there are two things you should do now: 1) Good idea; 2) find a partner (keep going out to chat with people, boy! Partners are almost as hard to find as life partners. )

Second, the product.

Sam classifies anything related to products and customer experience, such as patents and after-sales service, into the definition of "product". Because for customers, the product is a package and the whole transaction behavior.

He believes that products should be made to make a few people particularly like and loyal, not to make most people feel a little like it, because the former is well done and it is easier to expand to everyone; The latter is more likely to be tepid. The near-death state is actually what entrepreneurs are most afraid of.

He also told us: Keep communicating with customers, they will tell you how to make a product that they are willing to use, recommend to others or pay for, and constantly modify the product according to their suggestions, forming a closed loop of the whole process.

In addition, few startups die from peer competition, and the general way to die is not to make products that best meet customer needs.

Personally, I once had an idea that if you make something that you are willing to recommend to your best friends and relatives, and if you want to spend money to buy your own products or services for your good friends and relatives, then this product must be a very good product to some extent and in a certain sense, and it is a product that meets the real needs. On the contrary, if you have a little hesitation and concern when recommending this product to your parents and good friends, then you should think about whether your product is really available.

In addition, Sam also shared some indicators to measure the company's growth, such as: the total number of registrations; Number of active users; Active level user retention rate; Income; Net referral value.

Among them, Net Recommended Value (NPS) is a relatively new definition, which is translated into Chinese as "Net Recommended Value". If everyone advises you not to use this product, the index is-100, and if everyone spontaneously recommends this product, the index is+100.

The third point: Team.

1) co-founder (partner)

Let's start with the co-founder, the co-founder of Team. Because co-founders are the most important part of the whole entrepreneurial process, we also mentioned in the last lecture that few startups die because of competitors, so what is the most common way for startups to die? It is the dissolution of the co-founder (personally, the other most common reason is the cash flow break).

Finding a partner is really a very painful thing, so that many people, especially students, will eventually choose someone they didn't know before as a partner. This is actually a very ironic thing, because everyone knows that it takes two or three rounds of interviews to recruit employees, but co-founders will have the so-called "hit it off", which is definitely not so realistic and long-lasting.

According to Sam's observation, there is a high probability that such a company will eventually dissolve. Therefore, it is better to have no partner than a bad partner (even if the top 20 most successful projects invested by YC have more than two partners).

It is very important to know your partner when looking for a partner. So the best way to find a partner is to find an old classmate or colleague. If your school is not so good, try to go to a good company. When you go to Baidu, Tencent and Ali, you can always find outstanding talents who also want to start a business.

2) Try not to recruit (try to recruit fewer people)

Of course, not every company is suitable for taking the route of fewer people all the time, but at least in the initial stage, the goal should be to recruit as few people as possible. Airbnb recruited the first person, spent five months interviewing, and only recruited two people in the first year. (One of their abnormal interview questions is: If you are diagnosed by a doctor with only one year to live, will you still come to work at Airbnb? Later, they felt crazy, so they changed the year in this question to ten years ...)

In the early stage of starting a business, the biggest reason for recruiting fewer people is that the cost of recruiting people in the early stage is high if they make mistakes. For example, transferring shares in advance, the damage to the team if employees leave early, and so on. In addition, many people talk about the importance of shaping corporate culture, but what is corporate culture in fact?

I think the style of the earliest employees directly shaped the corporate culture, so I remember hearing a saying that early teams should not pursue diversification or differentiation too much, and their skills can complement each other, but their work styles must be unified.

3) Get the best talents.

A CEO said that my duty is to find someone to exchange money, but it is actually true in essence. Personally, I always think that finding the best person (or the most suitable person) is the most important thing for a startup company. Sam advises entrepreneurs to spend 25% of their energy on recruitment, and I personally judge whether an entrepreneur or a company is really reliable and always ask entrepreneurs a question, that is, "Did you attend the interview for everyone who got the Offer?" Do you know everyone in the company? " .

Here I want to take Yu Jun in pea pods as an example. I heard him say in an interview that even if there are hundreds of people in pea pods, he will take the time to interview everyone before making an offer. I think only those who truly understand the importance of people and respect job seekers can really do a good job in an enterprise. So entrepreneurs, please take every applicant seriously. They may not be your employees, but they may also be your customers, or at least your word of mouth.

Besides, Sam has a more radical point of view. He said that even if one of the top five people recruited by a startup is not the best but just a middleman, the startup is likely to die. Of course, I heard that it can be very difficult to put the best people together in management.

But in any case, the way to find the best candidate is usually an acquaintance introduction. The criteria for selecting candidates for startups are more attitude than experience.

Sam only looks at three points when recruiting: a) Is he smart? Can he finish the task? C) Do I want to spend a lot of time with him?

These problems can sometimes be seen in the interview, and sometimes it may be necessary to do small projects together for a day or two before the formal employment to see how it feels. In particular, many founders are not necessarily good interviewers, and many applicants are not necessarily eloquent.

In addition, mark zuckerberg examined two points during the recruitment: a) Do I want to spend a lot of time with him? B) If the roles are reversed, will I report to him, and will he be a good supervisor? The second point here is interesting.

4) Equity (shares)

A general principle in equity distribution is that the top ten employees should probably get 10% of the company's shares, usually in the form of four-year options, that is, 2.5% in the first year, 2.5% in the second year, and so on.

In addition, I personally talk about the equity distribution of co-founders and employees in the middle and late period.

For the co-founders, I think there are three principles for equity distribution: first, let everyone be happy, and it doesn't matter how much each person takes. As long as you are happy, everyone thinks that fairness is the best way to divide shares (it is clear from the beginning that the longer this matter drags on, the harder it will be);

Second, one party must have the majority and the right to decide, because quarreling is inevitable, and finally one party must be able to make a decision.

Third, the equity of co-founders should also be issued in the form of options, usually for four years. Because anyone can leave halfway, accidents will always happen. You don't want your co-founder to leave with half of the whole company the day after he gets the shares, do you?

For employees in the middle and late period, it is not necessary to overemphasize the percentage of shares, and they can directly convert shares according to the company's valuation. For example, your company has been worth100000 after angel investment. You don't need to tell the applicant that I will give you 1% of the shares, which is meaningless to the applicant. You have to tell him that my company is now worth100000, of which you can get100000, and it may grow to 65433 after financing next year.

5) Quick dismissal (dismissing the wrong person as soon as possible)

Dismiss mercilessly those who create office politics and people with wrong attitudes, and dismiss them as soon as possible. Otherwise, the whole team will soon be led astray. A negative person will make everyone negative.

Fourth, Execution (execution)

Compared with large companies, the biggest advantage of startups is the speed of execution. Execution can include landing or turning, which cannot be overemphasized.

The five responsibilities of the CEO of a startup company are: setting vision (setting vision and goals); Raise funds (fundraising); Evangelize (publicize); Recruitment and management (recruitment and management); Ensure the implementation of the whole company (ensure the implementation and operation of the whole company)

Execution can be divided into two important parts, one is whether you can think clearly about what to do, and the other is whether you know what to do. We assume that a qualified founder knows what to do, and the focus is on the second question.

For an entrepreneur, there are too many important things to do, and concentration is very important. Because time is limited every day, focus on the two or three most important things. To focus, you must know how to choose and set priorities, that is, you must have clear goals.

There are short-term and long-term goals, which need to be repeatedly emphasized with all team members, because the original focus and goals of the founder are also the focus and goals of the company's development.

In addition, maintaining growth should be a major problem. Because no matter how other things change, only by maintaining growth can enterprises grow and gather people's hearts. When an enterprise grows up, all problems are not problems. When the enterprise is stagnant, all problems that are not problems will appear. (Of course, you can't blindly expand quickly before the pattern verification. )

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