Top 4 Things to Improve Each Week to Prevent Your Startup From Failing
Y Combinator’s Startup School started this week and I’ll be advising over 50 entrepreneurs to help them change the world.
During each week of Startup School, we’ll offer Office Hours for companies and ask each of the startups to answer these four questions in order to help them stay on track each week.
If you’re following along as part of another Startup School group or want to build a better company, these are the questions you should be asking yourself repeatedly each week:
1) Test Your Company Description Weekly
What does your company do?
This is incredibly important because, if a prospect doesn’t understand what you do, he/she can’t buy your product.
This can be a lot harder than most people think especially if you’re working on a product that’s the first of its category. For example, imagine explaining the concept of “the cloud” to people with in-house servers or AirBnB to someone in a single sentence before it was okay to stay at a stranger’s house.
Pro Tip: ask the person you’ve described your startup to to, in his/her own words, explain your startup to you. This will test how effective your explanation is and you might also want to try using the words that your listener used to described your product.
Depending on the complexity of your startup and audience, you will typically iterate on the description of your product dozens of times throughout the lifecycle of your company. Most people start with product descriptions that require multiple sentences and over time reduce the number of words and sentences it takes to describe their product.
Pro Tip: At Y Combinator, we repeatedly improved our product descriptions until we were able to explain it in 5 words or less.
2) Measure Progress Against This Week’s Goals
What were your goals for the week? And, what have you accomplished?
In the past, I’ve seen many founders struggle with the second question. Typically, the better a startup is doing, the shorter the answer. For example:
Good Answer Format: “My goal was to increase revenue by 10% and I grew my revenue by 11%.”
Bad Answer Format: “My goal was to increase revenue by 10% so I set up a new landing page, ran some ads and shared social media posts. Everything is set up for this week but I didn’t increase revenue this week.” (This is especially bad if founders justify why they’re not growing each week.)
The great thing about measuring metrics is that numbers don’t lie. There’s always an objective answer for each question. If your goal was to increase revenue by 10%, how much did revenue actually grow? If your goal was to increase MAU (monthly active users) by 10%, how much did MAU actually increase?
Pro Tip: If your answer is more than one sentence, it’s likely that you haven’t made stellar progress and you’re justifying why you’re not growing (i.e. this is a red flag!)
3) Set Up Clear Goals for Next Week
What are your goals for next week?
Figure out your one metric for growth (e.g. revenue, MAU, subscriptions, etc.) and have a steady growth goal. For example, I typically aim for 10% growth each week in the early stages of a startup.
Pro Tip: The number of units goal changes each week. For example, with a 10% revenue growth goal and $1,000 revenue, week 1’s goal would be to increase revenue by $100, Week 2’s goal would be to increase revenue by $110, Week 3’s goal would be to increase revenue by $121, etc.
Pro Tip: If you haven’t launched yet, your goals could be to launch a small piece of the product, or get a beta going, or grow a waitlist.
4) Identify the Most Important Problem Each Week
What is the biggest problem that you need help with?
In a growing startup, there will always be a growing number of problems. When you fix a leaky hole in your startup, multiple other holes appear. Over time, you need to get better at identifying the most important problem(s) to fix each week to maximize your startup growth.
Pro Tip: Advisors are only as good as the context they’re given. If you don’t ask the right questions, then it’s nearly impossible to get an answer that helps you.
Typically the problem you face will be something blocking you from achieving your revenue goals. This could be as simple as needing introductions to specific companies in an industry or as complex as applying for FDA approval.
- Test Your Company Description Weekly
- Measure Progress Against This Week’s Goals
- Set Up Clear Goals for Next Week
- Identify the Most Important Problem Each Week
It’s incredibly easy to get stuck “in the weeds” but asking yourself these questions each week will help you focus your efforts on the right tasks. It’s important to be honest with yourself and ensure that you measure your progress objectively.
For the next 10 weeks, I’ll be sharing advice based on the common problems encountered at YC’s Startup School. Feel free to subscribe to Founder Knowledge and follow along.
Lastly, have you checked in to see your progress this week?