The Top 10 Reasons Your Consumer Startup Will Succeed

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I’ve been working in consumer tech for 20 years, first as an early employee and operator, then starting in 2008 as an angel investor and now a VC. I’ve been fortunate to work with 3 unicorns ($1B+ startups) and have earned a 10x return on the cash I invested from 4 great exits to-date, and several companies in my portfolio are still privately held and doing great. Since then, my team and I at Maven have invested in another 22 startups over the last two years — all of which are still operating and one of which has been acquired. I am proud (and lucky) to have these results and have looked at literally thousands of companies to select these investments. Over the years, certain patterns have emerged that I’ve distilled in the following top 10 reasons consumer startups succeed:

#1 Vision Worth Fighting For:  What are you planning to bring into the world that is worth all the time, effort, and money required for success? We back passionate founders solving novel problems that don’t already have an existing solution in the market that’s “good enough.”

#2 Founding Team: You’re more likely to succeed with a passionate team of 2-3 founders, one of whom has great technical expertise. It’s an added benefit if the team has worked together for a while.

#3 Culture: Even with a small team, a company culture already exists. Take the time to document it early, live it, then hire for culture fit first and skills next.

#4 Product/Market Fit: The biggest recurring obstacles to product/market fit are that the product doesn’t solve a real need, that it’s not hitting the right audience, or that it’s just not ready for ‘prime time’. Set the right metrics and track them closely to identify and solve these issues if they arise.

#5 Language/Market Fit: All of the language you choose — company name, product features, company description — needs to describe what your company does while connecting with your customers on an emotional level.

#6 Growth: Study known growth techniques, and creatively adapt them to your specific business. Make the product great for your core base of users.

#7 Focus: Whether it’s deciding to target enterprise or consumer, or prioritizing product features, you need to focus, or risk spreading your resources too thin.

#8 The Right Mentors: To prevent mentor whiplash — conflicting advice between mentors — choose individuals who have relevant experience to your business, rather than general success at a tech company. Hold regular advisory board meetings to talk through conflicting ideas as a group.

#9 Fundraising: There are a number of factors to consider in a Seed round; take the right-sized amount of capital, protect your cap table, and be wary of raising too many convertible notes & party-rounds.

#10 Luck: Each of these nine requirements is necessary, but on their own or collectively are still not sufficient. To achieve massive success, you will also need some good luck and great timing to succeed. But here’s the good news: you can influence your luck by laying the groundwork, making good decisions, and acting fast when luck strikes and great opportunities arise.  Louise Pastier appropriately said, ‘luck favors the prepared mind.’

If you follow the first nine steps, sprinkled with the right amount of luck, you can build a massive consumer company that improves the world for its customers. Which of the top 10 reasons do you think is most important? Are we missing any?

Reason #10 Why Your Consumer Startup Will Succeed: Luck

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This post is the finale in a series of ten posts about the 10 key reasons your consumer startup will succeed.

I speak with hundreds of aspiring consumer entrepreneurs and review thousands of executive summaries and pitches each year. From all this activity, certain patterns emerge that remain consistent with successful consumer startups. In this series of 10 blog posts, I will list the top 10 reasons consumer startups succeed. Note that all seem necessary, but none on their own are sufficient.

#10 Luck

There is a dirty little secret to building billion dollar consumer startups: you can find product/market fit for a vision worth fighting for, assemble an amazing team, draw on intense passion, and work incredibly hard… but at the end of the day, you’ll also need a fair share of good luck for your startup to achieve massive success. The last nine tips I shared for consumer startup success are necessary — but on their own, are not sufficient. You will also need good luck and fortunate timing.

The Bebo Story 
I’ll share a favorite memory from my time at one of the largest social networks at that time, Bebo, which illustrates just how much luck can influence the trajectory of a company. Not only was Bebo blessed with a great team, talented founders, and a vision worth fighting for, but it was also one of the luckiest companies I ever worked at.

A quick background: I had lived through a nightmare scenario just before Bebo where the tech team couldn’t get new, unproven technology to scale for massive consumer growth. It was a disaster. At Bebo, we decided we weren’t going to make that same mistake. When it came time to choose our database server provider, we stayed with Oracle at the beginning, a more established provider. It was an unconventional move, but less risky if we hit product/market fit and started to grow quickly. And that’s exactly what happened for Bebo. We started to grow like crazy in Europe and became the largest social network in the UK and Ireland and third largest in the U.S.

Crisis Mode
This database decision served us well, until one day, the site just stopped working. Our engineers were working around the clock to uncover and fix the problem with little success. There were millions of Beboers at the time, and if our site stayed down, we knew we’d lose them and it would kill the company. As one of the only emerging tech players still using Oracle, we reached out to our senior contacts there. They knew how important this was for us (and for them) to fix ASAP. They couldn’t fix the issue locally, but routed us to a very sophisticated Oracle database consultant based in the UK. We thought our prayers had been answered! We emailed him and he replied almost immediately… but not with the response we were hoping for. He knew how to fix the problem, but he wasn’t going to, because he was “too busy”. At this point, the site was still down, and we truly felt we had exhausted all of our options short of showing up at his office in person. We went to bed that night with a plan to fly to the UK the next morning.

Our Lucky Fix 
Very late that night, we received an email from this Oracle consultant that included the code to fix to the problem. We implemented it, and like magic, the site was up and running. Disaster averted, company saved!

We just had to know what changed his mind, and here’s what he shared: he woke up the next morning and was having breakfast with his teenage daughter. She was in a terrible mood and stomped into the kitchen, complaining that her favorite website, Bebo, was down. Her dad recognized the name and told her our team had reached out asking for his help — to which she responded that he better get on it immediately, or she was going to leave the family! And that, a thirteen-year-old girl from across the globe, was who saved our business. We sold the company a year later to AOL for $850M.

What I Learned
Here’s the silver lining to this “dirty secret”: you can influence your luck. We didn’t just wait for Oracle to come up with an answer to our tech problems. We didn’t repeat prior mistakes. We were relentless in building the right relationships and exploring any means to success.

My advice is to keep your eyes open for those special, lucky opportunities and take action when they present themselves. You cannot control your luck, but you can help to create it. Hustle, do your best, and always be prepared to take advantage of new opportunities. You’ll be surprised at how the groundwork you lay now will prepare you to make the right decisions and move quickly when great opportunities arise. Be fearless to take calculated risks when you see the openings created by luck.

As the old adage goes: “better to be lucky than good.” It’s so true. But even better when you’re both, like Bebo. I wish you the same good fortune as you go on your journey to build a lasting and successful company!