Wonders never cease. Last week I met for coffee with a startup entrepreneur
who’s doing a lot of things right. Maybe it’s because he’s not fresh out
of school; in his mid-30s, he has held operating positions at companies
big and small, so he’s seen what works and what doesn’t. Or maybe it’s
just because he has good instincts and laser focus.
Bruce bootstrapped his business. He created a company that doesn’t need venture capital or angel funding. Too many startups waste too much time trying to attract picky, demanding venture capitalists. Bruce put his energy into getting his low-cost business model into local markets throughout North America. With break-even point already in sight, Bruce seems to have avoided the high cost of selling equity early. If he needs growth capital later, his early success will help him raise more money that most startups do, with less dilution.
He has a plan. Bruce is tackling one under-served vertical market with a unique solution that links buyers and sellers more efficiently. Although he started off with a laundry list of niche markets he would like to disrupt, he is content for now to challenge just one market. If business picks up, he is quite prepared to tackle another market or two — next year.
He knows his business isn’t perfect. He deliberately launched without knowing everything he needed to know, and without working out all the bugs in the system. He figures you learn the most when you’re battling it out in the trenches, so why over-think your startup? Let customers point out the flaws that matter to them. “I’d rather have a pretty good business now,” he says, “than a perfect business that still isn’t ready for launch.”
He understands the paradoxical role of innovative upstarts. At one point in our conversation, Bruce referred to the challenge of “disrupting the industry and helping businesses get stronger.” Innovative entrepreneurs create value for some customers and disadvantage others. If Bruce’s business is successful, the winners will be those market players who adapt best to his model and continually improve their offerings to win over the new prospects he brings their way. As usual in this Darwinian world, those who prefer the way things used to be will find themselves struggling even more.
“I told you so” isn’t in his vocabulary. Like most startups, Bruce met rejection often when he asked target companies to join his referral network. Some of those companies, having seen his initial success, are now knocking on his door to sign up. He welcomes them gratefully, and does his best to help all succeed.
He has a bold, confident revenue model. Bruce’s company takes a commission on every deal that customers and suppliers make on his network. When he told me his pricing policy, I was shocked. He knows he’s bringing his best suppliers new business they wouldn’t have seen otherwise, so he’s not afraid to charge for that, especially on big deals. He knows his solution is much less expensive than hiring sales reps to scrounge for new business. In an era when many entrepreneurs underprice their services, Bruce understands the value he’s creating and isn’t shy about claiming his piece of it.
He’s surrounding his partners with value. Not only does Bruce create new business for his system partners, he also charges customers upfront — taking the responsibility for collections away from his supplier network. It’s just another way Bruce makes life easier for his partners.
He’s in touch with his customers. When working in the evening, or even watching TV, Bruce monitors his site and often jumps in to answer customers’ requests for help. They don’t usually know he’s the boss (although sometimes he says, “Let me escalate your concern to the CEO”). Getting real-time customer feedback helps him identify what’s working well and spot instant opportunities for improvement.
He reaches out to potential advisors and mentors. To stay in touch with fresh perspectives and new ideas, Bruce regularly contacts other technology entrepreneurs for feedback and advice. You can’t build a great business in a vacuum.
He thinks ahead. As we discussed his business’s future expansion into other market verticals, I learned Bruce has already registered an armada of dot-com URLs to cover potential future services. He seemed to have covered all the bases. But when I suggested a market he hadn’t considered, he immediately thought up a cool name to fit his brand, and made a note to buy the URL.
Thoughtful entrepreneurs know how to tell their story. But they also know when to listen.
