The Ten Commandments for Successful Start-up Businesses

Is there a common denominator of successful businesses? Is there a golden rule that can be applied and will always be right?

Several years ago, I was approached by my mentor, Professor Shlomo Kalish, and asked to share with others my experience, proposing changes to the list of "Ten Commandments for a technology enterprise in Israel". Of course, I could not refuse.  Shlomo, a pioneer of the venture capital fund industry in the country, was one of my favorite lecturers in the Faculty of Business Administration in Tel Aviv and also helped in setting up my first start-up. The truth is that I was glad of the opportunity. I had recently concluded a long, tedious and stressful negotiation process for sale/merger of a business, and I found I had time to spare.   I thought it would be constructive to gather all the things I had learned over the years to a clear and concise list of insights.

The list of "Ten Commandments" for the technology entrepreneur in Israel was published by Shlomo in the 90's. The basic idea was to give entrepreneurs a list of "do's and don'ts" on the way to a successful venture. As a reminder, here are the main points of the ten golden rules:

1. Love the customer
2. Love your people
3. Focus, focus, focus
4. Speed and efficiency
5. A dwarf on a giant's shoulders
6. Raise money when you can
7. Always raise more but keep an eye on the money
8. Maximize the value of exits, not your share of the pie
9. Manage expectations
10. No personal investments

I rolled up my sleeves and started writing. I could very much identify with Shlomo's first golden rule. It referred to the importance of the customer: understanding the customer, the relationship with him, responding to customer needs and so on. But before I went on to the next golden rule, a number of cases came to mind where a non-typical customer took us to the wrong places and almost caused irreversible damage. There is no doubt that the customer is most important, but care should be taken not to stall the entire company resources for the benefit of responding to a particular customer, especially if its requirements are unique and unsuitable for other customers.

I continued; I also identified strongly with the principles of the second golden rule. People are the most valuable commodity in any workplace, and certainly in a start-up. There is no doubt that every effort must be made to recruit the best people and provide them with the best conditions to succeed. But what should be done in a situation where "the market went crazy" and salaries soared so high that it became almost impossible to attract the very best? What can you do if your financing situation is limited and it is simply impossible to hire the "brilliant young minds" that you would like? Should you give up? Should you surrender?

And so I carried on, until the last golden rule. I agreed that it is best not to invest personal funds, but what if there are no other investors and you simply have no choice? Should you give up on the idea or invest of your own private funds? What do you do then? (Personally, I always prefer entrepreneurs who go far with their belief, and are in no hurry to give up).

Alongside each golden rule I added a list of reservations of the kind that the "rule usually rings true, but in the case of A, B, and C a different policy should be considered." The document I had written became lengthy and cumbersome and didn't seem to achieve the goal: what good is there in presenting a list of "do's and don'ts" if it can be freely interpreted by everyone? I found myself modifying and deleting, looking for guidelines and adding "special cases". In the end, I was faced with a lengthy document, and I felt I couldn't make it more concise without committing an offense. I threw the document away.

What is the conclusion? Are the Ten Commandments for an entrepreneur not suitable in today's reality? No, that is not the conclusion. I think, in most cases, these guidelines are correct. I reached the conclusion that Shlomo's original list is excellent, probably the best that could be produced, but in real life, there is no precise prescription for building up a successful business. As evidence, we see entrepreneurs who succeeded in one business and fail dismally in another.  Every rule has its exception and inevitably cases can always be found in which the use of 'rules' does more harm than good. It seems that there is not only one win-win solution, and that ultimately, it is a person's good judgment that will determine whether the business will be a success or a failure.

Another decade has passed, a decade in which the world of start-ups (again) has changed dramatically (due to technological changes, economic and others). Has my opinion changed? No, Shlomo's list is still valid and correct. And equally, there is still a need to add a degree of discretion, there is no one prescription whereby a successful business can be "concocted".

And yet, is there a common denominator of successful businesses? Is there a golden rule that can be applied and will always be right? It's not for sure, and yet from my experience, there are three elements that I think are essential for any successful company:

• an excellent entrepreneurial team that can work well together; people are the most important; the entrepreneurial team, which constitutes the core of the company, must be excellent and be able to work together in cooperation.
• belief in an idea; a strong desire to succeed and a willingness to make sacrifices for success. Every company faces difficulties, ups and downs and moments of crisis. Without a real desire and willingness to make sacrifices, the company will not really be able to get through the crisis.
• the ability to enjoy the process. Yes indeed, you have to enjoy the process; despite the difficulties and perhaps because of them. If the entrepreneurs are suffering and waiting for the time to "pass", then in the end - with the first crisis the package will fall apart. Those who do not enjoy the process, will probably not last out until the end.

So enjoy the journey and good luck to all!

Kobi