StartUp Survival Guide 101



Over the years I’ve noticed that most of the time that I’ve spent building a startup – any startup – has actually been spent surviving. The ideas that have worked have usually come out of left field, by accident, or a result of a side project. They’ve never been things I’ve started out with. What’s allowed me to act on those ideas – given me the possibility to – has been the fact that my startup wasn’t already dead or dying. It was surviving.

And I’ve noticed this with most entrepreneurs I know. The thing that works is rarely the first thing. But somehow they find a way to stick it out – some way to pay the bills, to keep the team together, to keep things running – until they stumble upon the stuff that works.

The point is that most ideas will NOT work. The losers will give up and go home. The winners will find a way to keep chugging along – to keep surviving – until they find their big hit.

I believe that 80% of your days as an entrepreneur are spent in this state – surviving. It happens each time you start a new company. It will never go away. It is the #1 skill that all new entrepreneurs need to know before they start.

So I’ve put together a quick Start-up Survival 101 Guide with key practical tips that have helped me get through the survival stage over the years.

I – Start in College or High School

In School your food and shelter problem is taken care of. Whether you’re staying at home, or in a dormitory, someone has provided for your basic needs. You don’t have to fork up money to pay yourself a salary for these things. Let’s say food and shelter costs a minimum of $20k a year. That is $20k in startup funding you don’t need, just because you’re in school or college. Awesome, isn’t it?

Once you graduate you’ll have to pay for these things, and as trivial as it sounds, there will be enormous pressure to earn immediate income through a safe job to pay for your basic needs. In college I knew that if I didn’t have a startup up and running before I graduated, I would likely take a finance job on Wall Street (JP Morgan hates me).

II – Don’t Quit your Job

This may seem counter-intuitive. You might say, “I have to leave my job otherwise I’ll never start my own business.” Dumbest fucking idea in the world. The moment you leave your job, your salary is gone. Suddenly every day that you spend failing on your startup is coming out of your own pocket, not someone else’s. Unless you’re already rich, or have a seven-figure funding in place for your business, don’t quit your job. Your Job IS your startup funding.

The practical way to play this is to work on your business at night and on weekends. Get it to a point where it can at least partially support you. This will typically involve a long period of failing and discovery and it takes months, sometimes years. The good news is that your former employer has funded the launch of your startup, not you.

III – Cash is King.

If you run out of cash, your company will die. Cash is King. This means keeping your expenses as low as possible and your team as small and cheap as possible, until you’ve found a way to make money. Sounds obvious doesn’t it? Yet every single business that shuts down does so because liabilities (current or expected) have exceeded assets like cash.

Things I’ve done over the years to keep my startup alive (and they’ve all worked):

– Fire 80% of your employees in a single day. You’ll be surprised to learn that most of your productivity is coming from a very small number of people on your team.

– Get a lot of people to live together to save on rent. You could argue that I still do this, living with my co-founders. The savings are just too good.

– Mooch off corporate or college resources. My first server was hosted (without permission) on my college’s ultra-fast broadband network.

– Double (or if you’re really baller, TRIPLE) your current prices. Price is usually not a big decision in software startups. If people really, really want your dog food, you can bet there are some that will pay 2x more than whatever you’re charging them. I’ve built idiotic products then charged people $99 per year, and it has worked. I’m now convinced that price has very little to do with the purchase decision in technology and software startups. The exception: if you’re selling a commodity. But usually, raising prices is the fastest and most immediate way to keep your company afloat.

– Move to a different country to lower the costs of building and running a tech team. Argentina, Chile, India, Pakistan, Singapore, most of Asia and Eastern Europe are all potential places with excellent English and an excess of technical talent.

IV – Learn how to Code

If you’re doing a tech startup, this is a must. I wish someone had forced me to do this 10 years ago. In the past year, we’ve saved over $250,000 and tripled our speed by hiring less designers/developers and doing more ourselves. If you already are coding your own products, imagine how much it must suck if you didn’t know how to code, and had to spend tons of $$$ hiring people to do this for you more slowly and frustratingly.

If you need more motivation, see this http://www.code.org/

V – Learn how to Sell

This is perhaps the most important one. In a startup, there are really only 2 roles as PG puts it, “You’re either building stuff, or selling stuff. There really is nothing else.” If you’re not good at coding and building things, you absolutely must be good at hustling and selling.

Hustling by emailing hundreds of college alumni is how we raised our first seed investment. A friend of mine hustled his company to profitability by just picking up the phone and cold-calling hundreds of prospects a day. A good hustler can make all your startup problems go away.

Reprinted by permission.

About the author: Ali Moiz

Ali Moiz is passionate entrepreneur that has built and sold 3 companies in the past 6 years – Xuqa, Peanut Labs and HiGear. He muses about the next big thing and share funny stories about startups at his blog here.

You are seconds away from signing up for the hottest list in New York Tech!

Join the millions and keep up with the stories shaping entrepreneurship. Sign up today.