What makes a successful startup? That is the million-dollar question. As at Nordic Law we are part of our startup clients’ life cycle, we have had a rare opportunity to observe both failed and successful startups. Most startups unfortunately fail, but we have plenty of successful startup clientele. And we have observed that they consistently have in place essential key elements that determine the fine line between success and failure. Here below I will present from a quite unlawyer-esque perspective the elements all our successful tech startups have in common.
It all starts from the team
The significance of the team should not come as a surprise as it is a no-brainer for all startups. You either make it or break it with the team as there is no “I” in a startup. Successful startups without exception know how to set motivating and committing milestones to the employees. With the help of the milestones, the employees are given more responsibility and the employees are willing to go the extra mile to achieve success for the startup. As normally startup employees are committed to the startup with an option arrangement, they are often highly motivated as they are working for a startup they can receive equity in. In such a rewarding environment, individual employees feel like being part of something important, which adds to the excitement of creating something new.
The lesson to be learned is that successful startups should from the get-go always invest heavily in finding good employees and once found, the employees should be committed to the startup with various compensation mechanisms. You can read more about suitable compensation mechanism in our previous blog post regarding how to commit the employees of a startup.
Evolve or perish
It is no secret that successful startups learn rapidly from feedback and other signals from customers. Based on the signals received from customers, the startup should have a constant desire to evolve and adapt to new circumstances in order to satisfy the customers. Traditionally, larger SMEs have grown accustomed to developing digital services for months or even years, but for successful tech startups, the products or services should be further developed in days or weeks if the signal from the customers is mixed or negative. Fortunately, in startups where the core teams are small, agile as well as motivated and there is no burdensome corporate bureaucracy, the further development and scaling of business operations is easy to achieve. You just need to listen to the customers and the market development. In other words, just get your service or product out on the market – naturally combined with the relevant terms and conditions as you always want to cover your back. If you want to know more about the terms and conditions for a tech startup, check out our previous blog post!
It’s all about the user experience
Even though your startup would have a great and unique business idea and concept, the success of the startup greatly depends on the actual user experience. For tech startups, it’s pretty much all about the user experience and the general goal is to create a product or a service which is very simple to use.
When you have been able to create a product or service with a great user experience, your customers will not only want to use it themselves, but they will also most likely recommend it to other people. On the other hand, if the user experience is lacking, your startup will have a hard time attracting new customers as well as to retain current customers. Also, when you finally have created the perfect user experience and product, it is at the latest time to think about IPR aspects as you want your baby to be protected from unlawful exploitation. Even though the IPR aspects should be a priority for all tech startups as of the get-go, sometimes the development of the startup is so rapid that the IPRs are unfortunately left to the background. You can read more about the various forms of IPR in one of our previous blog posts.
Information – who needs it?
One essential cornerstone of all successful startups is the smooth information flow and transparency within the startup. You should never strive to the traditional “low-level/middle- level/top-level management” as that is a sure way to prevent information from flowing. Instead, your startup should create efficient ways to administer and share information within the startup meaning, for example, digital sharing tools and team chat apps.
When essential information is flowing freely within the startup, you will have a team in possession of all relevant information. That will enable all team members to react quickly to issues, which will, in the end, have a positive impact on the startup itself.
Besides the internal information flow, another essential information-related aspect is the protection of customer information – in other words, the processing of personal data. As the new General Data Protection Regulation (GDPR) will become applicable in May 2018, it is essential that all startups collecting personal data will make sure that the current MO is up to par with the GDPR. To exemplify, if your startup has got so much as one customer or one employee, the GDPR will be applicable. If you are uncertain of the current status quo of your startup’s personal data processing, you can try our newly-launched GDPR Starting Package with which you can make sure that your startup is on the safe side. As all lawyers say, it’s all about risk-mitigating.
So, there you go – above we have described what we as startup lawyers consider as key elements of all successful startups. As you see, we are not talking about any big secrets – it is more like the basic elements, which can sometimes be forgotten when the startup is rapidly developing and scaling the business operations. That being said, if your tech startup has got the best product or service on the market, you are ready to evolve and adapt rapidly and your employees are highly skilled and committed, your way to success is just around the corner. If you hit legal bumps along the way, you know where to find a startup- friendly law firm.
Editor’s note: This is a sponsored post written by the Nordic Law. The author of this blog post is Jon Hautamäki, a partner at Nordic Law.