Levinson's Top 10 Must Have For A Start-Up

 Frank Levinson, a successful Entrepreneur, investor, and teacher has highlighted the top 10 must have for a start-up in a talk at MIT. The following list is from a recorded video session.

Number 10: Comfortable/Cheap Furniture: 

Spend everything you have on great people and great product. It does not matter how you look, but what and how you do it. 

Number 9: Put up a Sign

If you’re in business, put up a SIGN! Tell the world that you’re in business 

Number 8: Too little money

Extremely important -- not having enough is a good thing since you will have to innovate rather than spend money. Growth happens best in lean startups, having too much money will not necessarily guarantee success. 

Any money in the company is YOUR money; even if you get it from friends/family/angles/VC’s etc… treat it like it was out of your own pocket. 

 Best sources of money:

1. Customers 

2. Personal bank account 

3. Bank money – borrow against your house or receivables 

4. Angel 

5. VC’s – go to them last because you’ll have a need for their expertise/knowledge and believe me you will pay in ownership for it. 

Number 7: Common Sense 

Businesses must have:

- Customers 

- Products

- Sales 

- Profits

- Taxes to pay 

Based on Levinson’s discussion, they did a study during Jimmy Carter’s presidency to “determine if rich people or poor people were happier” guess what? It was the rich guys : ) 

Businesses do not necessarily need:

- CFO’s – in the early stage of a company, you're only spending money. Use an excel spreadsheet or quicken to manage your expenses

- VPs (of anything) – don’t need them, it’s a fluff word and position

- Market studies – don’t need to go out and purchase studies, get customers! 

- Ad campaign – since you don’t have a full fledge product theres really nothing to market

- Business Plan & Forecasts – the best business plans come from working with your customers not creating a document of what you think will happen

There are plenty more of things that you don’t need but these are a few examples of things that sometimes come too early. In Levinson’s company which was in business for 14 years and was profitable for all 14 years, they ended up recruiting a CFO the last 6 months before going public. 

Number 6: The pride of a Fat BABY! 

What dont fat babies have? A sense of pride… what does that mean? 

Levinson explains that you shouldn’t have a sense of pride because you’re doing everything for your customers! He explains that by listening to customers, the company innovates, expands on technology, and grows faster. 

Number 5: Supportive Friends/Family 

Having the support of the ones close to you truly helps in building and growing a venture. At the same time, Levinson explains that you can start and run a company while still having a family, or being a member of the Church,etc… DO NOT give up the things that make you happy and that are important in your social life. 

Number 4: Like surfing real waves… Do not try to make your own

There are too many Entrepreneurs that ‘think’ they know what the world wants. 

Levinson explains that real waves are defined in: “Standard bodies and broad groups of customers” he further explains that if your company has a hard time working with these groups then there is a serious flaw with the firm. 

Niche/small markets are one thing but getting the masses to use your product requires millions of people agreeing on the specifications. Working / understanding those groups will ensure your longevity. 

Number 3: Confidence you will have 1000s of great ideas! 

Don’t plan to build a company around 1 single good idea. You have tons of ideas that worthwhile but giving your idea away in exchange for money – to your customers – will help you come up with new ideas. A lot of Entrepreneurs are so tied to their idea that they fail to see what their customers really want/need. 

Develop a culture that promotes/fosters new idea generation and growth. 

Number 2: Sales……. (DUH!) 

Funding the company through sales and not through VC or Angel funding. As Levinson put it, having all money in world in some cases just does matter, “its like having 9 women in one room and wanting to have a kid in a month… its just not going to happen”. Build the company through sales, more sales, and continued sales. 

Always have sales from the beginning. 

Love the tough customers, they are the ones providing feedback and making your product better. Stick with them. 

Always listen to your customer – NEVER discount what they have to say. 

Definition of a customer: someone who actually sends in a check or pays after they have placed a purchase order.  A customer is NOT someone who likes your idea and talks about it. 

Number 1: A Great Partner 

Choose carefully – a partner is not the same as you but is complementary. Don’t need two of the same people to get things done.  

Make sure they are fanatically ethical. 

Be loyal to your partner no matter what! As you go through the cycles (up or down), your partner is someone that will stand by you. Make sure that you stand by them no matter what. 

It helps if he/she is smarter than you! In the case of Greenhorn Connect, we all know that’s true : ) 

You can also watch the full version of the video at: http://academicearth.org/lectures/top-10-must-have-for-start-up

If you have any other suggestions for a start-up, please share them below. 

Have a suggestion/comment? You can reach me at: 

Ashkan [at] greenhornconnect [dot] com 

photocredit: http://www.internetradiosyndicate.net/podcast/images/2010-01-12_512009top10.jpg