Why creating a startup is like building a fire and how to pour fuel on it
Thursday, February 25, 2016/
By Holly Cardew
Recently my thoughts drifted to a few business-minded questions that typically come from an impatient startup founder — why do startups need capital? Why can’t we simply build our businesses without relying on capital? Why can’t we just generate tons of revenue and bootstrap our way to the top?
To successfully build a fire, you need heat, fuel and oxygen. These three components serve as a remarkably accurate analogy of what it takes to build a successful business:
- Heat (the team): According to Forbes, nine out of 10 startups fail. Managers and employees have to be passionate about their company if they want any chance at overcoming those odds.
- Fuel (the idea or product): Stale businesses don’t succeed. You need to keep coming up with new and awesome ideas, products, and services to separate yourself from the competition. You need to keep adding fuel to the fire.
- Oxygen (the money): Without oxygen, there is no fire. Without capital and revenue, there is no business. Maintaining an A-team and developing exciting products and services is expensive — as they say, you need money to make money.
I’m no stranger to building fires. When I’m not in Sydney or San Francisco, I spend my time in the small town of Cowra, where it gets quite cold in the winter. Each June we collect firewood for our fireplace, warming the whole place up.
For the past few years I’ve been the acting “fire chief” of our family. I know how to make a good fire. As the founder of a startup, I know and am still learning how to grow a business as well.
The relationship between fires and startups goes far beyond that aforementioned heat/fuel/oxygen comparison — you can extend the metaphor to explain each step of the business-building process.
Light your fire starter with a match: Your business has to start somewhere. To begin, all you need are the initial founder/s, an idea, and some capital. Depending on the idea, this initial amount could be as little as $500, or even less — or a lot more.
Once your fuel cube is alight, add scrunched-up newspaper to grow the flames: This is analogous to the early steps of using marketing and promotions to build your base of recurring customers (without loyal customers that can be counted on to make purchase after purchase after purchase after being initially courted, your business will not succeed).
A lot of first-time business-owners and startup founders have a ‘build and they will come’ mentality. They seem to think that if their products or service are good, potential customers will naturally realise this and flock over.
But this is often not the case. Time and time again you see businesses that have lower-quality products or services than their competitors attract more customers — even when those low-quality products or services aren’t much cheaper than what their competitors are offering. Such businesses are successful because they know how to market themselves, despite lacking objective value.
Marketing and traction is one of the most important things in a startup. It gives your investors, mentors, advisors and yourself confidence that this actually what customers want.
To gain some initial traction, some of the ways I gained my first customers was cold emailing, cold calling, social media and blogging both on the company’s site and guest blogging on other sites that have a correlation to our product.
Once there is enough heat and momentum, throw on the bigger branches and logs: As your business grows, you’ll have to hire more people to continue doing what’s working. You will find that the extra wood – more employees and other resources – helps the fire (your startup) grow bigger and stronger than what you first started with a fuel cube and kindling.
Like a fire, you also need each of the components to be in balance, otherwise your fire will go out. At times, you will feel that you have a great idea (fuel), but not enough workers have the expertise needed to turn that idea into reality (heat), so nothing comes of that great idea (the spark doesn’t catch and the fire never starts).
Other times, you will have a great idea and the right workers to carry out the project, but you just don’t have enough money (oxygen) to make it happen.
Ultimately, you want to build a raging, self-sustaining fire that burns high and bright without much effort. You want a fire that no firefighter (your competitors) can put out. But you always need to be in control of it.
While my startup is doing well, I don’t claim to be a Michael Baum-type with millions of dollars to splurge on my dream Chateau in France and helicopter. I’m still sitting around the campfire learning. I’ll let you know when I get there.
But I do know that when building a fire, you can’t just light the fuel cube and then immediately throw on your biggest log. That’s a recipe for disaster.
You need to start small and grow gradually, or you’ll have no business at all.
Enjoy building your fire – enjoy growing your startup.
Holly Cardew is the founder of Pixc, a San Francisco-based ecommerce startup. This piece was originally published on LinkedIn.