Ed Hallen
I’ll tell you a (not so well-kept) secret that’s probably not a surprise to any of my former bosses: I wanted to become a founder because it sounded a lot more fun than getting a job and having a boss. I’d previously worked at a fast-growing startup and seen founders up close, but to say I knew little about what really went into building a company would be an understatement.
Looking back on the past 10 years my co-founder, Andrew Bialecki, and I have spent building Klaviyo, a unified customer platform, it’s clear just how lucky we were with some of our choices. But it’s also clear that if we had known more upfront, we wouldn’t have had to luck into those choices in the first place. And for a founder, less luck means you’ll encounter less risk.
In addition to being chief product officer at Klaviyo, I now also have the honor of getting to speak to a lot of new and hopeful founders. Here are the three pieces of advice I start with:
Identify a problem
It’s commonly accepted in the startup world that what you start with isn’t what you’ll end up with. Slack started as an online game, Facebook began as Facemash, a hot-or-not for Harvard students, and Apple came into the world as a home computer kit that didn’t have a case.
This idea is somewhat at odds with the conception of the brilliant founder who relentlessly pursues an idea until it’s reality. It’s also at odds with the reason so many don’t found a business — because they don’t have an idea.
The world (and its problems) are incredibly complicated, and it’s almost impossible to get any solution exactly right. Instead, we test and get actual results of what works, then refine. In science, we have a term for this — the scientific method — and successful businesses are founded in the same way.
In my opinion, for any entrepreneur, the least risky way to start a business is to do what my co-founder and I did. Rather than focus on telling a story, we found a problem and came at it hard because we knew if we found enough people with the same problem, we could build a company.
My biggest piece of advice here is to pick an idea where the riskiest parts can be tested to determine whether it will work. Fundamentally, the goal is to evolve an idea until it becomes a business — a sustainable, profitable entity — so identify an idea that lends itself to evolution.
Reduce risk
When it comes to entrepreneurship, a poor strategy can, unfortunately, waste thousands of human hours and years of life. If there are ways to reduce the risk of a startup venture, then more people will be successful, more problems will be solved and more people will be able to consider starting a company.
While starting something new inherently comes with its own risk, there will be risks you can decide to take or leave, and you should be selective of those. If starting a company is something you’ve done before, learn from that experience, and if not, look at other entrepreneurs, thinkers and available data to make better choices about the risks you are taking on.
If you’re like most entrepreneurs, you’re not going to stop at one company. But the key to starting your second company is maximizing the success of your first. That means you might start with a market that is bigger or has a more acute problem than the market that aligns most closely with your personal passions. Or you’ll pick a market with a clear buyer for your product rather than one where the buying process is opaque and takes longer. Or you’ll pick a product you know how to build so you don’t have to hire others to get started. In short: You’ll reduce risk because you want to maximize the chances of successfully starting a business that meets your goals.
Many of the best entrepreneurs I’ve met are more passionate about solving problems and leaving a better world than a particular subject matter.
Provide something of value
To succeed, a product has to generate value for the end users, and there must be a way to pay for it that brings in enough revenue to make up for the all-in cost of producing the product (and all the mistakes you’ll make along the way).
At the end of the day, a company’s existence is driven by whether it makes enough money to pay for its expenses consistently — and there are really only two ways to do that: One, customer funding, is solving someone’s problem and then having them pay you for it, and the second is burning cash from someone else — either your own savings or venture capitalist’s money.
Customer funding makes you almost unkillable — you are only dependent on your ability to keep building a great product that solves a real problem in the world, not building slide decks, making up stories of where you’ll be in five years or worrying about the current funding market.
If you can figure out how to pay for expenses and achieve one of these ways of making money, you can focus on your relationships with your customers and building a great product. If you are willing to focus purely on this, consistently pivot and avoid major mistakes, you’ll eventually build a business. Of course, this is easier said than done.
If you’re considering starting a business, know that entrepreneurship is mostly unglamorous — the highs are higher and the lows are lower and, remarkably, they happen almost at the same time.
It’s also a career choice, not something magical. While some people will be better than others right out of the gate, it’s a craft you can consistently develop. There’s a healthy dose of privilege in being able to do it — having the good luck to be able to afford to save enough money to start working on a new venture or to set aside your nights and weekends to get started. But the idea shouldn’t be the limiting factor.
So, to get moving: What problem do you want to solve?
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