Case Study: Startup Lessons From a Dorm-Room Startup
Can English majors make a living as an entrepreneur?
If you are talking about Daniel Wallace, who earned a BA in English from Harvard and was a rower on its crew team, the answer seems to be yes. And his advice for other start-up CEOs is compelling, practical, and includes distinctive literary flourish.
Wallace’s NutraClick started in 2008 as digital marketing firm Hungry Fish Media and evolved into “a multi-million dollar supplement firm.” The interesting part of the story is that NutraClick was able to use its digital marketing platform to achieve such rapid sales growth that its product got the attention of bricks-and-mortar retailers.
Wallace launched Hungry Fish Media from his Harvard dorm room to deliver online marketing campaigns that yielded “millions of unique visitors per month.” At the same time, Wallace noticed that college athletes wanted high quality dietary supplements and he decided to make them in his dorm room and market them - products like Force Factor and Peak Life -- using Hungry Fish Media’s platform.
In August 2009, months after launching Force Factor, one of the world’s largest nutrition stores, GNC, asked to carry Wallace’s products. Today, Force Factor and Peak Life products are sold “in nearly 30,000 retail locations worldwide including major drug store chains,” according to Wallace.
Wallace offered five pieces of advice for those who are trying to achieve startup success.
1. Give customers what they ask for.
New products generally fail or gain traction after a fairly short period of time. If they grow fast, that growth rate eventually levels off as new products come into the market that offer consumers a better value proposition.
For a startup, this means that you have to keep introducing new products. But given your limited resources, you have to be careful to bet on winners since you don’t have enough cash flow to invest in many flops.
So how should you decide which new products are worth betting on? Wallace starts by looking into what his customers ask for and then tries to determine whether broader trends support a big enough market to invest and whether it can offer a better solution to the problem. And if so, he forms a cross-functional team to go after the opportunity
“Customers have inbound interest in a product. We do research to see how big that interest is. For example, 70 million people in the U.S. drink caffeine during the day and have trouble sleeping. We found that people are not satisfied with their options and that we could offer a competitively superior solution. We decided fast to go after the opportunity and formed a team, including product developers, marketing, retail sales, legal and manufacturing, to develop and execute our strategy,” said Wallace.
2. Be gritty.
Making a startup successful is “exciting and hard,” said Wallace. And he believes the popular psychology reports that suggest that grit is more important than natural ability.
If you want start-up success, you need lots of grit. According to Wallace, that means “you need the emotional strength and character to keep pushing through obstacles. You need resourcefulness to find solutions and the belief in your vision to keep trying until you succeed.”
3. Hire people who are smarter than you.
You have to win the war for talent. And you can’t do that if you are worried that the people you hire will try to take your job from you.
Clearly that is not a concern for Wallace. It is hard to believe that a Harvard graduate would be concerned that someone he hires would be smarter than him. But it is probably a fair bet that there are, for example, MIT computer science graduates who can do a much better job of programming computers than can Wallace.
And to hire smarter people, it helps to be in the Boston area. “We are close to great schools. We hire young people after they graduate and seek the kinds of people who used to aspire to work for investment banking or consulting firms.”
4. It’s easier to hire top talent than it used to be.
How can you convince top talent to work for a start-up? In the Boston area, it is not so difficult because of great stories about local college students--like Harvard dropout Mark Zuckerberg or MIT graduate and Dropbox CEO, Drew Houston--who started phenomenally successful companies.
It’s now acceptable among more families for talented college students to go work for start-ups. And entrepreneurs should tap into those changing family values to help attract top talent. “We are selling the dream that hard work and success will be rewarded quickly. We offer a better quality of life, a better lifestyle, more fun, and more responsibility than investment banking or consulting,” explained Wallace.
5. Leadership job change as start-up grows.
If your startup succeeds, the CEO job changes.
According to Wallace, “When we had one or two people, I was a contributor. With 150 people, we have a chief marketing officer. I need to lead the process of setting strategy, recruiting key people, and communicating. Everyone in the company must understand how their career development is tied to the company’s growth.”
For reading on how to lead, Wallace has some distinctive recommendations. “I liked Cyrus the Great and The Fish That Ate The Whale,” said Wallace.
Strategy consultant, start-up investor, teacher, corporate speaker, pundit and author of 11 books, Peter Cohan has invested in six start-ups, three of which were sold for a total of $2 billion. Before founding Peter S. Cohan & Associates in 1994, he worked with HBS strategy guru, Michael E. Porter.