With Facebook valued at $65 billion, you might be wondering how you can get in on this action. Maybe you’re ready to tap into the world of entrepreneurship to create or partake in the next billion dollar idea. So, what exactly does it take to get to this level? There isn’t an exact formula, and the chances of ever getting to this level are low-but as a proven, successful serial entrepreneur who have done well in his own entrepreneurial efforts, I can shed some light on what you’ll definitely need to do to achieve startup success whether it’s a million $ or billion $.
Besides passion, resourcefulness, and depth of expertise, I’ve observed 3 critical success factors that are typical of the makeup of well known mega successful entrepreneurial endeavors, such Groupon or Google.
I echo the knowledge told to me by my techie and Silicon Valley friends who already know what it’s all about—-
First, all of these “mega successful” companies (back to Groupon and Google) are high growth, scalable, and technology based. This means that with the Internet, they have profound reach to millions of consumers with little additional investment or cost other than the initial development. Compare their situation with the business model of a corner deli, which is a brick-and-mortar business and growth, for the most part, is limited to that corner location. Even if you want to ‘scale’, each new deli will have its own set of fixed startup costs that can be very time consuming (plus the lower profit margins equals a smaller return). On the other hand, if you’re thinking of starting a consumer facing technology application, it could very well “explode” and grow exponentially like one of the aforementioned mega entrepreneurial successes. Of course, even if you can fund the ‘seed’ stage of this, realize that you’ll need lots of capital- in the millions- to make this happen at various stages of growth.
Second, leverage mentorship and community. Mentors and community feedback can help give a boost to bringing an idea to life and minimizing mistakes. Aspiring entrepreneurs- mostly “tech folks” who are coming up with these solutions- get guidance from dozens of incubators and accelerators throughout the country. You can find these accelerators in “tech startup” hot spots like Silicon Valley, San Francisco, Austin, New York, Boston, Boulder, and Seattle. TechStars is one such accelerator with top notch tech entrepreneurs and developers who can provide hands on mentoring and guidance. Stanford and MIT are leading centers of incubating mega tech stars. Work your magic to get connected in either of these places. If you’re going to be building a tech startup (and want to have the type of success that’s heralded on TechCrunch), you’ll need to have a technology partner/cofounder if you’re not a techie yourself. Such a partnership will enable you to more effectively create the prototype or a working version of your application.
Third, you need access to venture capital. VCs not only have the money but the relationships in place to help craft a top-notch management team and build key partnerships and relationships to help your application take off. There are lots of VCs out there who are looking to invest in the next scalable tech idea, like Blumberg Capital or the Founders Fund. While they may take a hefty stake in your business, it could be worth it for the potential return. Would you rather own 100% of a business that’s worth $100,000 or own 25% of a business worth $1 million or even $1 billion? Of course, you will need lots of cash to grow a scalable business (as mentioned in #1 above). VCs can help with that too!
So, there you have it- the 3 steps to create a billion dollar idea. Now, realize that there are many, many, many failures in the technology space. Perhaps the idea of starting a lower risk business, like the deli, is more appealing because you’ll have a more predictable outcome??? If you look at many VC portfolios, they’ve invested millions of dollars in 20 or more businesses, expecting only 1 or 2 stars. However, if you’ve got $1B plus as goal, consider following these three steps increase your chances of success. Good luck and let me know when you get to be a billionaire. I would be happy to partake in your success.