The startup slog

A how-to of successful startups

There comes a time in many people’s lives when the concept of working for someone else depresses them and they are inspired to start their own business.

In an essay on his website, Paul Graham advises that you need three things to create a successful startup — good people, a product customers actually want and a budget that involves spending as little as possible.

Graham says most startups that don’t work fail at one of the above.

“A startup that does all three will probably succeed," Graham says. "That's kind of exciting, when you think about it, because all three are doable. Hard, but doable.”

He says Google’s plan when it started was to create a search site that didn't suck and there are plenty of other areas that are just as backward as search was before Google.

“I can think of several heuristics for generating ideas for startups, but most reduce to this: look at something people are trying to do and figure out how to do it in a way that doesn't suck.”

Graham believes that in nearly every failed startup, the real problem was that customers didn't want the product.

“For most, the cause of death is listed as ‘ran out of funding’, but that's only the immediate cause. Why couldn't they get more funding? Probably because the product was a dog, or never seemed likely to be done, or both.”

He warns that an idea is only the beginning.

“What matters is not ideas, but the people who have them. Good people can fix bad ideas, but good ideas can't save bad people.”

He says who the right people are depends on the job. “A salesperson who just won't take no for an answer; a hacker who will stay up until 4am rather than go to bed leaving code with a bug in it; a PR person who will cold-call New York Times reporters on their cellphones; a graphic designer who feels physical pain when something is two millimetres out of place.”

And what if the entrepreneur simply isn’t the right person to start a company?

“More people are the right sort of person to start a startup than realise it,” writes Graham. “That's the main reason I wrote this. There could be ten times more startups than there are, and that would probably be a good thing… It's not something you have to know about ‘business’ to do. Build something users love, and spend less than you make. How hard is that?

Well, harder for some than others. According to Business Week, starting a business is so stressful that it can affect your health. Michelle Dammon Loyalka writes that a study by MYOB in Britain found that nearly 70% of the 400 entrepreneurs surveyed felt their companies were adversely affecting their health or personal lives.

They believed they would control their own destiny, make more money or have a lifestyle change but quite those benefits did not eventuate.

The article tells the story of Thomas and Susan Pray who purchased a three-employee custom-installation company in 1995. Thomas Pray then got cancer which his doctor said was probably triggered by stress over the company's early cash crunch and other headaches. At the time he underwent chemotherapy his wife was pregnant, but they had to keep working to keep the business going. (It has a happy ending – his cancer is in remission and the company has grown to 15 staff which has eased the workload).

The top worry for those surveyed was money. More than half did not feel in full control of their company’s finances.

“One problem is that many entrepreneurs start out knowledgeable and passionate about their product or service but lack experience in handling day-to-day business functions.”

This is where mentors can help, according to the article, which quotes stress-management expert Kathleen Hall as saying that people should not assume that they can relax once the company is up and running.

“Staying successful can be even more stressful than striving for it.”

Mills is a Dunedin writer. Contact her at

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