Well by now you may have heard of the latest in a series of disappointments coming out of the infamous Coolest Cooler fiasco. The latest report in a long line of delays, missteps and failings says the company is running out of cash. This from the company lauded as one of the most successful crowdfunded Kickstarter campaigns of all times. There is something wrong here.
When a startup is able to raise a substantial amount of capital so early and without a completed product, many of us that come from the startup world tend to cheer. However, when millions of dollars raised have not been able to produce a completed product that can scale, deliver on-time and capitalize on its fundraising notoriety, we must also point out failure. At this point, it appears Coolest Cooler is becoming just that. Without a massive influx of capital and a change in their current situation, the email from the founder hints at where this story is headed.
Many people are going to write about Coolest Cooler in the future, but I want to focus on the average startup and what they can learn from this fiasco. I want to change the conversation from startup funding toward execution, as that is clearly where Coolest Cooler went wrong. I want to outline some priorities that tech startup founders need to really focus on getting right, in order to ensure the success of their business.
Why Funding Isn’t The Biggest Challenge For Your Startup
Many tech startups, B2B brands or startup SaaS companies begin with a focus on raising money, obtaining massive investment and a search for funding, and this is understandable with the silicon valley startup culture that has been glorified. But startups need to heed the lessons that Coolest Cooler teach us about sound business practices that hold true regardless whether your company is a startup or not. Startups need to understand that obtaining venture capital, angel investors or other funding are NOT the biggest challenges a startup faces today.
Most startups will ever see the likes of Coolest Cooler’s early stage funding. Most startups will never attain millions of dollars from a tier one venture capital firm located in San Francisco either. And certainly the majority of startups will likely not obtain investment of any notable amount that makes the news. So if we know that only a tiny fraction of all startups are able to raise millions in funding, their focus, time and resources need to be set on the things that will make their business successful, whether or not funding is obtained.
The Top Challenges Facing Startups
If you follow my blog, you likely know I write extensively on digital marketing for startups, B2B brands and SaaS tech companies. I have some experience in these markets and have know the impact that mistakes have on a startup, as well as the things that work. Here are some challenges that face tech, internet and SaaS startups that every founder, executive and even team member should focus on.
As alluded to in the previous paragraph, I have written on startup marketing quite extensively. Marketing your startup in today’s highly digital world comes with massive challenges. Expecting or relying on a viral explosion that will magically occur to propel your new brand to fame and success, will leave you embarrassed, exhausted and beaten. I truly mean that, it will.
Startup marketing must be looked at separate from any potential funding you may luckily obtain in your startup. Startup leadership must (and I can’t emphasize enough the word MUST) be every bit as savvy with marketing as they are with writing code and being an expert in their niche market. In all areas of marketing from messaging, content, content distribution, traffic and most importantly conversion of that traffic, need to be incorporated into your business plan and execution. Startups that succeed will understand that these detailed startup marketing components must all be executed and established well before you launch your product to the world if you intend to survive, let alone thrive.
Want more detail on startup marketing? Read my article on The Top 5 Challenges For Startup Marketing for everything you need to know about startup marketing.
Technology, Internet and B2B SaaS startups need to change the way they look at their new business. The startup culture of the 90’s still exists and needs to migrate away from being professional fundraisers that can only execute with millions in venture capital to something more grounded in reality. Startup founders need to establish a business culture within their companies that is about creating innovative technology products that are based on sound business practices that will quickly achieve revenue. A startup culture that understands the company goals and requirements to become profitable immediately must prevail.
Startups can no longer build a culture that is focused on raising money. If this is where your focus is, your business model, product and team will be way off course and get mired in the mud. The culture and mindset your startup has day one will determine its success, NOT attempting to raise millions of dollars in funding. Where your time, resources and efforts are spent, is where your culture will be. Make your culture about a real business, and not about getting lucky in some fictitious fundraising dream. Build a business with real business as its culture.
Innovate Amazing Solutions
When a startup focuses on raising money as its main focus, the product or solution they are developing is ALWAYS sub par. When a startup has a focus on developing amazing, innovative solutions that the marketplace needs and wants, money follows.
I can’t emphasize the importance of this enough!! If your internet startup develops ground breaking solutions for your prospective customers, I can assure you that not only will your revenues reflect it, investment money will find you, not the other way around.
• Make the focus of your startup to be on rapidly developing incredible products that fill a massive need in the marketplace.
• Be sure the need you are solving is big enough to support rapid market adoption and scalable revenue.
• Focus on the value you are delivering with your product. Cool doesn’t mean it will generate revenue. Required solutions your customers have to use will!
Know What You Don’t Know
Lastly, if there is one thing that should be clear to you about the Coolest Cooler story is their clear lack of understanding of everything involved in making their dream a reality. They went to fund a great idea that had legs in the market, without fully understanding what it would actually take to build the product itself. They didn’t fully understand the intricacies involved in manufacturing, scaling and delivering their product to their very motivated customers. These things will be their downfall, not the lack of money to execute. Don’t ever forget that!
Your startup founders and team members must be sure that you step away early on and analyze your assumptions and the holes in your product, business model and pricing. If you do not know what you do not know, you are taking a massive and unjustified risks. You must look at everything you are assuming, from every possible angle and challenge everything you think to be true and make sure it actually is. Operating your startup based on your gut, is a recipe for disaster. This I can assure you.
Let me leave you with some final thoughts that I implore you to digest and meditate on. In the early days of the startup phenomenon, crazy ideas on a napkin got funded, with little regard for sound business practices. Those days are gone, yet so many would be startup founders are still operating with a similar dream of millions in the bank like some kind of venture capital wild west exists. Let me assure you that it does not.
Once again, the voice of reason in a very noisy world of creative and talented business startup geniuses who take their eyes off what is really important. The story and quote from the Coolest Cooler piece saying “in some ways, the explosion of interest did more to hurt the company than help it”….hmmmm, can anyone say Groupon???
I remember when companies rushed to sell coupons before they had the slightest clue about how to serve (much less maintain) the influx of customers through their business “doors”. And some even went OUT of business. What a shame. Needless waste of dreams, energy, resources, and good will…
I’m glad we have sane business practitioners like Robert Caruso to lend a helping/coaching voice to those who have ears to hear the qualities and characteristics and practices REALLY necessary to grow a wildly successful business endeavor. Because, Robert, you are exactly spot on and I find time and again that most founders and teams don’t know what they don’t know, and what makes that a cryin’ shame is that they refuse to hire objective, talented people who DO – and could help them fill those gaps. Sometimes, it all comes down to ego, sadly.
Great post, Robert. I’m saving and sharing this one frequently with my modest audiences across the inter webs (all organically grown). ;)
Couldn’t have said it better myself Lynn! Thanks for jumping in on this one!