The classic scene is set.
A brilliant innovator has an idea that’s positioned to change the world as we know it. He’s tired of being overlooked and underappreciated. In a fit of emotion-driven determination, he storms into his manager's office, quits remorselessly, and dashes off to build a billion dollar startup.
In the movie version, there’s theme music and a mantra of scenes depicting our hero pulling all-nighters, shooting crumpled paper into a wastebasket, and pounding coffee like it’s water.
After several setbacks, he manages to land a huge account, and *climax* his software saves the day. He’s glorified by his peers and old bosses, finds fame, and quickly acquires F-you-style fortune.
The reality is: entrepreneurship is never that easy.
This narrative is crafted by the media and promoted by our favorite famous entrepreneurs. It’s the story we want to believe- but it’s far closer to a fairytale than a biography.
“Can You” and “Should You” are 2 Different Questions
There are many practical details to consider when you’re thinking about leaving a job- for any reason.
Can you afford to be without income for several months?
Can you find health insurance outside of your employer?
Can you provide a stable life and home for your family if you quit?
All of the above questions are valid and must be addressed before any decision is made- but the goal of this article is not to persuade you one way or the other nor is it to list all the risks of leaving a stable income.
The goal of this article is to explain the key elements of your startup that need to be in place before you quit your day job.
The question we’re exploring here isn’t can you quit- it’s should you quit.
The Minimum Viable “2-Week Notice” Feature Set
When it comes to asking if you should quit your job to launch a startup, there’s a lot of advice out there. Some say you should have a business plan developed first, others say you should get funding first, and some even say you should quit simply because you’re unhappy where you are.
While all of that advice is interesting, none of it is helpful or tactical.
When you’re considering quitting your job to go out on your own, you need to know what pieces of your business must be set firm and which can be fluid.
Every entrepreneur must take a leap of faith to launch before they’re ready and find the courage to figure it out as they go. But, successful innovators don’t just jump off a cliff hoping their gear will come through- they pack a parachute (or two!) and double-check it’s in place before the free fall.
Your startup should have these 3 elements firmly set in place:
- Validation that there is a real problem to be solved.
- Validation that your offering actually solves the problem.
- You have an unfair advantage (preferably) related to growth.
1. You’re solving a real problem.
As I’ve written in the past, “no market need” is the number one reason startups fail early on. In other words, entrepreneurs fail because they are building things no one wants. While the solutions are often cool, they fail because they do not actually solve a problem that anyone has.
If you’re not solving a real problem, your startup will fail.
The first job of any entrepreneur is to validate that there’s a problem to be solved. Most experts will tell you that the best, most efficient, and most accurate way to get that validation is by “getting out of the building”.
You need to talk to people (yes, actual human beings) and ask them about the problem they experience and how it impacts their life.
If talking to potential users seems scary, hard, or confusing- I understand. While some entrepreneurs are extroverts, others (like me!) are introverts and dread this part of the journey. I wish I could tell you it’s optional, but realistically, this kind of “problem discovery” is critical to success.
Here’s an article that can help you with this discovery. It provides an overview of the goals, method, question flow, and even gives you a sample script you can use. Always keep in mind that the point of this activity is to learn about the problem (assuming there is one) and understand how painful, frequent, and urgent it is to your potential customers.
Before doing anything else- validate that there is a problem to be solved. Validate that it’s a painful problem, it needs to be solved urgently, it occurs frequently, and that many people have the problem (if 2 out of the 100 you talk to say it’s a problem- it’s not a problem worth solving.)
2. Your offering actually solves the problem.
Once you’ve validated that there is a problem to be solved, you’ve taken a huge step toward derisking your venture. Congratulations!
Take a moment to celebrate, but just know that this next part is hard too. You certainly have your work cut out for you in the solution space.
The good thing is, there are about a hundred ways to solve any given problem. This means you have a bunch of solution options and if one thing doesn’t work you can try something else.
The bad news is, there are about a hundred ways to solve any given problem. It’s your job to figure out which solution works best for your potential customers and it’s on you to figure out how to deliver that solution as frictionlessly as possible. Fun right?!
My advice is to take a look at the competitive landscape from a potential customer's point of view.
Use the insight you gained from your problem discovery to inform your exploration. Because you now know what the problem is and how it makes your potential customers feel, you can look at all of the existing alternatives and ask questions like:
- Does this really solve the problem?
- Is this the best way to solve the problem? Can this offering be faster, easier, or more delightful to use? How?
- What would I do differently?
- Which features of this solution are critical and which are unnecessary?
In addition to competitor research, you should also hit the drawing board on your original idea.
Given my experience, I am willing to place a big bet on the fact that you have a solution idea in mind already. If you’re like most entrepreneurs, you got the solution idea before you even identified the problem to be solved. This is okay because it’s almost inevitable- but you must try to combat your own bias.
Challenge yourself to step away from your original idea and use what you now know about the problem space to come up with at least 2 alternative solutions. This exercise will force you to confront your original idea head-on and help you make any necessary changes. The goal is to be sure that the solution you build actually solves the problem your customers have.
There are so many ways to solve a single problem- your job is to find the best way. Use the insights from your problem discovery interviews to think objectively about what a solution should look like. Try to shed as much bias as possible about your original idea and keep the customer problem top of mind.
3. You have an unfair advantage related to growth.
According to Paul Graham of Y-Combinator, the most prolific and successful accelerator in existence, “A Startup is defined by very, very quick growth.”
As a startup founder, your job is to develop an unfair advantage related to very, very quick growth. From my experience, this is the part entrepreneurs always regret skipping over. It’s the section of their Lean Canvas they’ll “come back to later”. It’s the one question they skip during Demo Day prep.
It’s a mistake to disregard the “unfair advantage” question.
The unfair advantage is your saving grace when your startup takes off. Developing a great unfair advantage helps set the stage for your success. Startups with growth-related unfair advantages move quicker, raise more money, attract better talent, and acquire more market share.
- Founders — top 10% in the world. Are you 1 in 10 of all the people in the world who can solve this problem? If not, it’s not an unfair advantage.
- Market growing — 20% y/y. Is your market growing 20% y/y? If not, it’s not an unfair advantage. Also, if this is your only advantage, this is the “weakest” advantage.
- Product — 10x better. Is your product 10x better than the competition? 10x faster, 10x cheaper. 2x or 3x is not going to cut it. If it’s not 10x, it’s not an unfair advantage.
- Acquisition — you get users for $0. All the best companies acquire users through word of mouth. If it’s >$0, it’s not an unfair advantage.
- Monopoly — Networks effects and Marketplaces. As your company grows, is it harder for you to be defeated? If not, it’s not an unfair advantage.
Depending on who you talk to, a growth-related unfair advantage from one of the above categories is non-negotiable. You must have it in place by the time you head out to raise VC money. Personally, I think it’s high on the list of priorities for a startup, but it’s not exactly a line in the sand.
I believe an unfair advantage can be developed- meaning you don’t have to start with it. What I will say, however, is you do need to start thinking about it from the very beginning and don’t stop working on it until you’ve got one.
As a startup founder, your job is to develop an unfair advantage related to fast growth. Y-Combinator lists their top 5 above. Some think having a clear unfair growth-related unfair advantage is non-negotiable and needs to be in place from the start but I believe it can be developed and honed over time.
You don’t HAVE to quit your job
It’s worth noting that quitting your day job is not a requirement for startup success.
Herb Keller, the founder and CEO of Southwest airlines held his job as an attorney for over a decade after he launched Southwest Airlines.
Daymond John, founder of FUBU and infamous shark on the hit TV series Shark Tank kept his job as a waiter at Red Lobster for years after he launched his fashion brand.
Phil Knight launched Nike while working full-time as an accountant.
The point is- it’s possible to keep your job and launch/ run a startup and, according to many successful entrepreneurs, you should. There is no need to put anxiety and stress on an already fragile situation
But you should have a plan
There are a few key pieces of the startup puzzle that should be in place before considering quitting your job to pursue a venture full-time. You need to double down on solving real problems, develop a true growth-related unfair advantage, and be able to sell potential customers on your vision.
If you can do all of this, you have a shot at real startup success!