Everybody loves top 10 lists and every startup loves advice from renowned Silicon Valley entrepreneurs.
Reid Hoffman, Executive Chairman and co-founder at LinkedIn, just voiced his 10 rules of entrepreneurship on stage at SXSW. As part of the closing events of SXSW Interactive in Austin, Texas, Hoffman first presented on data’s role in Web 3.0, but then shifted his talk to tips for entrepreneurs.
Here are all ten:
1. Disruptive change: Is what I’m doing massive and different?
If you’re just building a widget, don’t expect to change the industry. Hoffman’s rule of thumb to see if you’re doing something disruptive: “If it takes $10 revenue and replaces it with $1 of revenue.” Skype, for example, removed very expensive cross-border phone charges, allowing organizations to build entirely new business practices on top of it.
2. Aim big
The bigger your idea, the more ways there are of navigating it. Tying in with rule #1, if you don’t aim big, you won’t change the industry. As an example, shopkick, which provides a mobile service that rewards consumers right when they walk into stores, wants to change all of retail shopping.
3. Build a network
Hoffman’s not talking about integrating your business with Facebook, Twitter, LinkedIn and everything else. Not exactly. He simply suggests that we open our eyes to the network of people around us because they are the ones that enable us. From the board level (investors, board members) down to early employees and advisers, everyone around you matters.
4. Plan for good and bad luck
Sometimes you come across something you weren’t expecting and you pivot. PayPal drifted through a bunch of variations of encryption and cash transfer on mobile phones and Palm devices before finally finding an ocean of customers in eBay.
5. Maintain flexible persistence
Entrepreneurs get pulled in both directions. On one hand, they’re told to keep a vision, struggle through the criticism and make their company go. They’re also told, on the other hand, to be flexible, listen to what the data is saying and change to the customer’s desires. The seasoned entrepreneur has mastered the art, Hoffman argues, of maintaining flexible persistence.
6. Launch early enough to be embarrassed by your product’s first version
“Unless you’re Steve Jobs, you’re most likely partially wrong” about your product, Hoffman says. Leverage the network of your friends and the smart people around you because, even if they’re wrong, you need to hear their opinions.
7. Keep your aspirations and aim high, but don’t drink your own kool-aid
Referring back to a few of his own rules with this one, Hoffman believes it’s important to know when your head’s in the stars.
8. A great product is a good thing, but a great distribution model is essential
If your product doesn’t reach millions of people, then it’s not relevant. Ouch. Hoffman also made fun at startups that say they’ll “add social features later,” as if that’s just an extra layer you can add on.
9. Pay attention to culture from the beginning
Your co-founders, your investors, your advisers and, perhaps most importantly, your employees in the early stage. Guess who will be hiring the next round of employees? The first round.
10. These rules of entrepreneurship are not laws of nature
The beauty of entrepreneurship is that “we are doing something for the first time,” Hoffman argued, so if someone makes fun of you for trying something that has never worked before, that’s okay because it may work this time.