Aim for the stars ... 10 lessons learnt building my start-up

As we live through these unprecedented times, I can’t help but be thankful for everything we have. Remember that many folks are not as fortunate and as a community we really need to band together and help each other out during these difficult times. It is in this spirit that I wanted to list out the top 10 crucial lessons I learnt (and unlearnt) building Entreda from the early days with a handful of folks to profitability and then a successful PE exit in the middle of a pandemic. I am hopeful that some part of this would be helpful to my entrepreneur or founder brothers and sisters out there that are thinking about embarking on their next start up journey or looking forward to making a mark on society.

DISCLAIMER - Please note that these lessons are based on my own experiences and certainly NOT the end all. Follow them or not at your own risk!

Lesson #1 Don’t focus on TAM (Total Available Market) on day-one.

As an entrepreneur or an intrapreneur you are told that it is all about big markets and large TAM’s. In fact, one of the Fortune 500 companies I worked for had a rule - If you can’t show getting to $300M in 3 years, it’s NOT that interesting. Well, don’t focus on amplifying the total addressable market (TAM) for the sake of attracting funding. Solve a problem that many people or businesses actually care about. Sounds counter intuitive? Start micro-segmenting early on. Find your niche. Appeal to human emotions - Fear, happiness or greed, for example. 

Lesson #2 Test and re-test your core assumptions. 

Many entrepreneurs are fortunate to find the right business plan on day one and never have to tweak or pivot. I can tell you from personal experience, this is extremely rare. So, focus constantly on evaluating and distilling out the friction points in the business that prevent it from becoming a predictable and sustainable growth business. Constantly optimize and then optimize some more. This includes taking a hard look at product components and packaging and re-evaluating key assumptions. Get down to the absolute minimum must-have’s and perfect those. Remember, the world or business situations work in simple ways, it’s the humans that complicate it. So, if something sounds too complicated or difficult to comprehend, it probably is.

Lesson #3 Genuine thought leadership is important. 

I have seen the following line on many quarterly goals worksheets - "Establish CEO or CTO as a thought leader in ... space". This is NOT something that just happens because it’s on your marketing communication or PR goal list. Build your business brand and focus on truly making your business, the team and yourself a thought leader in your market. Don’t just do it for the sake of doing it but CARE. Find purpose.

Lesson #4 Know your end customers cold. 

It is popular to hear that customers don’t always know what they want particularly in the consumer arena. In B2B, i have found things to be a bit different. Listen and understand your customers needs from day-one. Customers may not be able to articulate what the solution needs to be but they can certainly articulate the problem. Read between the lines. And, don’t worry about distribution or partnership channels early on. Those will come later.

Lesson #5 Don’t focus on distribution or international markets early on.

This is one that I hear a lot. “We are about to land a 7 figure distribution deal in the UAE. This deal is going to change the trajectory of the company.” Guess what? It’s easy to fall into the trap of thinking that a distribution deal will save the day. Remember that most distribution deals are “sell through” and contingent on the distributor getting their end customer to buy your product. In my experience, if you as the creator of the product or company can’t sell the value of the product to an end customer in a repeatable manner, it is difficult (nay, impossible) for a distributor with lot less focus to do so for you. And, banking on a distributor to make market for you is quite dangerous for your stakeholders. So, focus on selling direct initially and build a sales recipe that is repeatable. Then train others.

Lesson #6 Value is more important than price initially.

All too easy to set high prices. If your goal is $1M in year 1, all you have to do is set the price at $100K annual and get 10 customers, right? Wrong. Get pricing right-ish but don’t overcharge customers initially. Understand the competition and figure out your value. I’d rather get 50 customers at $20K per year, if the clients are happier and stick with you longer. Remember, you can always find ways of raising prices or A/B test new pricing models later. Get the customer first, understand the market and then expand the scope of your services.

Lesson #7 Look out for the wave.

Look out for business inflection points - new regulations, or other market dynamics that can catapult your business. Take advantage and ‘ride the wave.’ Timing is everything. If you can predict these inflection points a-priori, more power to you. If NOT, don’t worry just be aware and always be opportunistic.

Lesson #8 Small teams are better than big teams.

Small is better than big when it comes to teams. Get your initial team right in order to build that initial cult like mentality that fuels success and helps you and your team get better. A winning team is always more productive, enthusiastic and eager to take on the next challenge. So, don’t focus on hiring big teams but go for small highly functional team’s that deeply care about the cause. Founder with a committed team to complement your passion will get you through much farther than just patents, number of features or even price. Always hire for attitude not the resume. It is easy to sit around a table and talk strategy. In the early days you need folks to be resourceful and make things happen on a non-existent budget.

Lesson #9 Entrepreneurship is a mental game. 

Never give up. You are a founder. Don’t accept failure or mediocrity from the team. Always push harder. Think of yourself as a Navy SEAL dropped in to enemy territory with no weapons and you have been asked to take down a hill. Plan your win strategy based on that and believe in yourself! You have to be resourceful, smart, agile and strong. If it was easy, anyone would do it.

Lesson #10 Build solid industry relationships. 

Always be enthusiastic, passionate and humble when seeking advise or getting great advisors to help. Being a blowhard doesn’t help anyone and will turn off any advisor interested in helping. Also, remember that you will get a lot of advise along the way. Some good and some not so good. Don’t get defensive because someone doesn't agree with your $B dollar vision. Remember, everyone has a right to their opinion. Pay attention and keep optimizing your attack strategy. Don’t loose hope. Keep fighting and optimizing.

Bonus Tip - Trust the universe! We can plan for many things but faith, hope and a positive attitude is an intangible and plays a crucial part in the overall success of many a venture.

About Sid Yenamandra

Sid is the Co-Founder and CEO at Entreda - #1 Provider of Cybersecurity Risk Software for Wealth Managers sold to Smarsh and K1 capital, a multi $B PE company. Sid is the CEO of Entreda which is a wholly-owned, independent subsidiary of Smarsh. Smarsh is a Leader in the Gartner Magic Quadrant For Enterprise Information Archiving for Four Consecutive Years.

Sid spent the first decade of his career working on embedded networking, storage and security technologies including 2 tours of duty at Fortune 500 company - Broadcom, product line executive in 2 venture-funded start-up’s (totaling $4B+ in exit value) and program head on an NSA-funded Suite B crypto acceleration project to bridge Type I (highly classified) military-grade networks with commercial-grade security solutions. Sid has degrees in Electrical Engineering and Computer Science from UC Berkeley.