There's no shortage of discussion in the startup world about accelerators—why to work with one, how to get in, life after demo day, whether they're sort of a scam, and so on, ad nauseum. But the bottom line—from my experience and in the opinions of many entrepreneurs—remains that if a good one lets you in, you do it.
With a dismal acceptance rate of less than 3%, we knew that getting LawTrades into 500 Startups would mean something big for our future. To put that into perspective, consider Harvard's more promising acceptance rate of 5.1%.
It's true that 500 Startups opens doors to some of Silicon Valley's finest, cuts you a check for $125,000, and throws in some great free shit, too. But if you're a founder looking to start a new company, (spoiler alert!) that might not be enough.
Instead, one theory that's resonated with me since joining up with an elite startup accelerator is this: There's no accelerator or investor out there that can make your startup better or worse than it already is. All it can do is speed up the path you've already decided to take your business down.
To be fair, that realization wasn't especially mind-blowing. It's just about the exact caveat you'd expect to hear in the startup world. But the simple truth, though, is that it has the benefit of being true.
The hype around accelerators and unicorns alike may be dimming, but that hasn't extinguished the prevailing sense of opportunity that still grips legions of entrepreneurs, especially in tech. If those changing expectations have any upside, it's that they're placing the responsibility for a startup's success or failure back onto founders' own shoulders (where they've arguably always been in the first place)—no matter who your patrons, partners, or mentors might be.
Armed with that understanding, my team and I decided to meet every Monday after being accepted to 500 Startups. Rather than sit back and let the accelerator work its magic for us, we wanted to gather whatever new information we needed each week to execute on our evolving ideas about business.
Otherwise, we reasoned, we'd risk not getting the most out of the program. And in retrospect, it was that simple routine that contributed to growing our gross merchandise volume by over 550% since starting it. Here are a few lessons we picked up in the process.
The fact is that many of the most successful startups today didn’t require technical expertise to get off the ground. Especially in the tech world, many people will push you to learn code, but I think that's one of the worst ways to spend your time in the early days—whether you’re in an accelerator or not.
The most badass software companies solve huge human problems using boring technology. And what drives their innovation is a deeper understanding than anyone else of what humans (your customers) desire. That's why they're delivering a better solution than anyone else—not their technical chops.
How can you you do that in your business? Start the analog way by talking to people who run their own companies. When you speak with them, pick up on bits and pieces that can test your assumptions:
- How are they getting their customers (versus how you're getting yours)?
- What's keeping those customers from leaving?
- Which feature caused the most push-back?
- So they’re a transactional-based marketplace. How do they keep users from going around the platform? What percentage does the company take from each transaction? Why?
But don't just talk to investors and fellow entrepreneurs. Solicit some input from professors, teenagers, mentors, you name it. Treat each conversation as a learning opportunity about how your product and business is seen from the outside, and you’ll start making better business decisions by improving your intuition.
Most companies will probably plan to raise a Series A. That being the case, one of the first questions you should be asking yourself at the pre-seed/seed level is what traction you need in order to reach that fundraising milestone.
For e-commerce startups, it might be $1 million in monthly recurring revenue. For consumer apps, maybe the benchmark is 50,000 daily active users. There are a lot of numbers floating around the Internet, but I’d recommend taking your best guess on what yours might be, and sharing that with investors to see if it squares with their own expectations.
Next, be realistic about how long it will take to get you there. You’re a startup, so it’ll probably take you longer than you think—even if you are in a top-notch accelerator. Connecting these dots for investors will lead to a more productive conversation and better results.
First, don't die.
If you don’t die, you learn. If you learn, you’ll make smarter decisions. If you make smarter decisions . . . well, you get the picture.
Then, prioritize growth above all else. This was drilled into us hard since Day 1 at 500 Startups. There’s a lot that can be said about growing your company, but it’s important to get the process down first before going into tactics. My company used OKRs, the well-known system made famous by Google that asks all employees to outline their main objectives and the key actions they need to take in order to accomplish it. It helped create a scalable and predictable machine for growth.
Here’s how it works: First, set up an objective (for instance, increase transactions by 30%), then write down three "key results," or quantifiable actions to help you hit that objective.
If it sounds really simple, it is—that's the beauty of it. But once you've done that, you can figure out which of the OKRs you've set up are the most effective and reliable drivers of growth. Then rinse and repeat this process.
What I love about 500 Startups and Silicon Valley in general is the unparalleled level of positivity around here. Our office is filled with posters like "Follow your gut," "Experiment, fail, learn, repeat," "Believe in your fucking self," and dozens more. Sure, that kind of thing can turn some people off—every startup has its own style and culture—but as a rule of thumb, positivity is entrepreneurs' default setting. And I think that’s pretty cool.
It’s probably one of the reasons why so many startups flock to the Valley in the first place. The biggest hater you probably have out here is the one that lives in your head.
And that hints at something else I've learned while working with a top accelerator: if you don't get into one, or don't get into the one or two or three you like best, your business isn't necessarily dead in the water—far from it. What arguably matters more is how well you remember that.
After all, if anyone's ever told you that your idea sucks, you know how far a little bit of positivity goes. Even if it is just a stupid poster on a wall.