What makes one startup successful versus another? As a business student at NYU Stern, I was curious about this question and have explored it two different ways over the past year. Last semester, I used data on startups to create a regression model exploring this question. From my data, I learned that a lot of it had to do with success during venture capital stages. However, this seemed a bit obvious and did not truly answer what it takes for a startup to be disruptive and become successful. This semester, I worked with Professor Bhatia at NYU and analyzed some of the existing research on entrepreneurship. Based on my semester immersing myself in some of the latest academic research, four strategies stand out as critical for my fellow Gen-Z entrepreneurs to be more successful.
Find the right environment
The college-dropout-turned-billionaire archetype has had a grip on younger generations for some time now. Indeed, Bill Gates, Steve Jobs, and Mark Zuckerberg do not hold a college degree, and it is very much possible to be successful without one, however, academic institutions now provide more resources than ever to help students kickstart their ventures. Depending on the stage of their startups, it may be helpful for students to seek out universities with curriculums that emphasize search activities. For example, UPenn’s Wharton School of Business pushes product and market research in the early stages of a venture. On the other hand, a school like UToronto’s Rotman gives students opportunities to work with early stage startups, providing them with more hands-on experience but relatively less research skills (Bhatia & Levina, 2020). Young entrepreneurs with fresh startups who are looking to advance their entrepreneurial knowledge and skill set should determine which institutions will offer them the best opportunities and tools to improve upon their search activities, while more experienced founders may benefit from an education that teaches execution activities.
Perfect your research, not your product
A study on pre-launch and post-launch learning activities in relation to venture performance found that, to avoid costly post-launch market pivots, entrepreneurs benefit from investing in their pre-launch customer learning activities (Marvel et al., 2022). It is impossible for entrepreneurs to predict the future; a venture idea may seem groundbreaking today, but may have no practical use in a year from now. On the other hand, extensive research may reveal an opportunity to introduce a venture that has not yet been done. Research has the ability to create opportunities in a world of uncertainty, and it can also help founders predict problematic market conditions that may be preventable. For this reason, it is important to truly understand the behavior of both the product’s market and intended customers. This can help entrepreneurs avoid unnecessary expenses that may arise if the product has launched but needs to be adjusted to address customer interests.
When resources are scarce, use them wisely
For young entrepreneurs, money might be limited. While there is no need to have a perfect product before release, there is no harm for founders to release the best possible product given their time and resources. The best possible product does not need to be perfect, but founders should aim to release something that will not need a lot of revision. For this reason, young entrepreneurs can adopt Lean Startup Approaches (LSAs). LSAs enable founders to test their business models and products before officially launching them. LSAs provide an opportunity to launch a trial product or minimum viable product (MVP) for a certain group of potential customers who can then provide feedback to the company. Research has revealed that having this feedback, along with the possibility to test product-market fit, can save founders a lot of material, time, and money, all of which may be very limited (Ghezzi, 2019).
Get comfortable with failure and learn how to overcome it. Most successful founders are not unicorn founders, and most successful founders did not make millions off of their first venture. For example, Reid Hoffman, LinkedIn co-founder, first founded a networking/dating site which failed miserably. GoPro’s co-founder Nick Woodman had several unsuccessful startups before getting lucky with GoPro. Kathryn Minshew co-founded an unsuccessful media company before co-founding The Muse. Overcoming failure can be difficult, especially if a founder is super passionate about their startup idea, but having a good idea is not nearly enough to become successful– especially in a world with so much uncertainty. One thing that young entrepreneurs can be certain of is that failure is normal and arguably probable. It is necessary to become comfortable with failure and learn from it as opposed to letting it bring you down. Successful entrepreneurs are successful because they had the “entrepreneurial hustle” (Fisher et al., 2020) to overcome the challenges of failure and/or an unseeable future, not just because they had a pretty good idea.
Lastly, as I’m sure most young entrepreneurs know, there is no formula for success. However, recognizing what traits have made founders successful in the past– and understanding what skills they need to hone and develop to begin their entrepreneurial adventure– is a great starting point for young innovators. Gen-Z has the power and the resources to create something successful, you just have to be willing to innovate and create new opportunities where none seem to exist.
Written by Rebecca Poznanski, an aspiring founder and student at NYU Stern School of Business
Sources
Bhatia, Ashish K., and Natalia Levina. "Diverse rationalities of entrepreneurship education: An epistemic stance perspective." Academy of Management Learning & Education 19.3 (2020): 323-344.
Fisher, G., Stevenson, R., Neubert, E., Burnell, D., & Kuratko, D. F. (2020). Entrepreneurial hustle: Navigating uncertainty and enrolling venture stakeholders through urgent and unorthodox action. Journal of Management Studies, 57(5), 1002-1036.
Ghezzi, A. (2019). Digital startups and the adoption and implementation of Lean Startup Approaches: Effectuation, Bricolage and Opportunity Creation in practice. Technological Forecasting and Social Change, 146, 945-960.
Marvel, M. R., Wolfe, M. T., Kuratko, D. F., & Fisher, G. (2022). Examining entrepreneurial experience in relation to pre-launch and post-launch learning activities affecting venture performance. Journal of Small Business Management, 60(4), 759-785.