Venture capitalist Josh Elman knows a thing or two about successful startups. His company, Greylock Partners, was an early investor in a staggering number of top tier companies such as Facebook, LinkedIn, and Airbnb. Elman himself manages Greylock's investments in Meerkat, Medium, and Musical.ly. So when we sat down to talk about what makes startups successful, you'd better believe my tape recorder was rolling.
#1: Have an audacious vision
When Elman reflects on the startups that Greylock has been particularly excited about, it's always the ones that tried really ambitious things and attempt to change the way that people behave and the way the world works.
"I think audacity is a great word," he says. "That is part of what supports the startup ecosystem - people with truly audacious goals."
After all, if you are going down the road of raising money from venture capitalists, the basic contract is that you are going to build something great, and that your product has a chance of being a massive multi-billion-dollar company. In order to succeed, you should be aiming for that level of greatness every day.
But successful founders also have the ability to clearly articulate what that world could look like 5 or 10 years in the future, when their company has made its mark. The ones who have the full package can both paint the vision and then get into the details. "You see a lot of people who are great strategists but if they're not product people, they don't have that innate product engineering sense. When we do go into those details -- why did you this, how did you do this -- they have to be able to provide more than just a grand vision."
That grand vision is part of what will help you attract your early evangelists. "The first right move is to find a small cluster of people who love your product and the thing you're building" stresses Elman. It can't just be an incremental change; it has to be demonstrably better than what's come before. For your users, it has to be a "top three thing" they use, something that provides real value and improvement to their lives.
The way companies get to that point is by constant self-evaluation, self-improvement, and a commitment to improving their processes. They get there by learning.
#2: Always be learning
In successful startups, the founders are fundamentally learners. In fact, according to Elman, "It's the first thing we really look for."
Founders who are learners can gather new information, absorb it, and act on it. They are constantly iterating on their entire thought process so that their story gets better and richer, and as they learn, they adjust their aim. All of that generates compounding momentum that ends up taking them all the way through to success.
A learner's attitude makes founders willing to test things, and drives them to constantly evaluate their product and their processes. When a VC asks a founder why they made that part of the product red, or why this button works in this particular way, that founder has the knowledge of 30 user stories and 10 data points that inform them and have colored all of their decisions. Every decision that a successful founder has made is usually deliberate.
That mindset provides the foundation for the next critical factor in startup success, which is when they have to take action on these ideas.
#3: Take Deliberate Action
After identifying a founder as a constant learner, Elman looks for "a step I call 'Deliberate Action,' which is they don't sit around and deliberate that much. They think about what they want to do and move very quickly."
Not every startup has to launch with a massive leap forward; in fact, plenty of great ideas start with that very one thing that is just a "micro step" towards that big vision.
Elman believes that detractors might deride a founder who has articulated a big vision for focusing on a "micro step." Yet, the people who are building it see that micro step representing a key step towards their big vision, and they keep going.
But little by little, with every action they're taking, they are measuring, considering, and taking productive steps. Founders who believe in Deliberate Action constantly test steps that they believe will have significant impact, says Elman.
After a week or a month, you can look back and go, "did we see the impact that we thought [we would]?" says Elman. "When we hired this person, did we think that this was going to take care of this action in the company? Is it actually doing that?" The trick is to take every single thing you do and break it down.
In the end, this approach sets the stage for the fourth, and perhaps most crucial element of startup success.
#4: Treat everything as an experiment
Today, everybody is constantly talking about failure, and how you have to fail. But if you treat everything like an experiment, then nothing is truly an out and out failure.
"As long as you learn and did what you said you were going to do, review the impact analysis, and do the next thing on your list, you're actually learning and never failing," believes Elman.
Today's startup culture (and indeed, wider society) seems to have developed an obsession with "failing." But in Elman's opinion, you learn a lot more from winning and from being around winners. The key is to find those wins: "Out of the ten things we did, nine of them didn't work but this one did - why? When you get the one that does work, then you actually learn so much more about all 10."
Elman believes in compounding returns: which are the ideas that do work? How do you find the things that compound? How do you build off of those successes? Use the information you gather from those successes to iterate, refine, and improve.
All of these elements of successful startups hinge on their mutual effects. You need the founders with audacious vision, who love learning and understand how to apply that learning to deliberate actions. Experiment, test, and measure. Have a sound basis behind all your decisions, and use those outcomes to improve the process, again and again and again. Create that "top 3" product that grabs people's attention and adds real value to their lives, and your company just might make it.