The best startups are usually pretty easy to spot. They tend to have a noticeable impact on their industry and they do things different than their competitors. On a more granular level, great startups can be identified by things like profitability, growth, ability to scale, and quality of work.
In addition, great startups tend to share common traits which help drive their success.
9 Traits Shared by the Best Startups
Taken at face value, traits are just a bunch of buzzy keywords and terms that don’t really hold much worth. They only become valuable when startups put them into practice and adapt to the ones that complement their brand identity.
Here are nine traits that some of the most successful startups in the world have in common:
1. Providing What the Customer Wants vs. What They Need
It’s common to hear business professionals talking about the importance of meeting customer needs. However, research shows that giving customers what they want as opposed to what they need is much more effective.
A study by CB Insights even showed that 42% of failed startups believed the single biggest reason they failed was because they focused on solving interesting problems “rather than those that serve a market.”
Providing products or services that the customer wants is all about finding the right product-market fit. Solutions that fulfill product-market fit criteria should:
- Be scalable and have products and services with repeatable growth
- Focus on satisfying the wants of the customer that your business can actually fulfill
A successful product-market fit should be well defined and focused on combining what your startup can bring to the table and what will make your customers happy.
2. An Authentic Brand Culture
Most startups come from small beginnings and have a core group of people who truly sacrificed to grow the company. Eventually, the company begins to reflect the values and personality of that founding group of people.
Startups are often successful and popular in part because people appreciate brand personalities that feel authentic.
When Ryan Hoover first started Product Hunt, he spent hours reaching out to people on Twitter, taking the time to chat with them, answer questions, offer solutions, and build relationships in order to drive audience growth.
His authenticity paid off and Product Hunt now has more than 350,000 followers on Twitter:
3. Some of Their Ideas Are Easy to Dismiss Up Front
The best startups often have some of the most innovative—and sometimes strange—ideas. However, those ideas are often so new or different from the normal workings of the industry that people readily dismiss them.
In 2007, Brian Chesky and Joe Gebbia had the idea to rent out three air mattresses to convention-goers because they were struggling to pay their San Francisco rent. When they created a business based on their crazy idea, it was met with skepticism and dismissal. The founders were even rejected by seven VCs. The company they started was called Airbnb and today it’s estimated to be worth approximately $31 billion.
Clearly, strange ideas have some merit.
4. Focused on Building a User Base, Not Monetizing
One of the biggest challenges startups face is becoming profitable and maintaining consistent cash flow. 82% of businesses ultimately fail due to cash flow problems. Because of this, many early-stage companies focus on monetizing their products and services instead of growing their user base.
A dedicated user base is extremely valuable because it provides access to potential customers who are interested in your company, products, and services. In addition, satisfied users can eventually become brand advocates that actively promote the company and its solutions.
Facebook is the perfect example of a business that focused on building a user base before monetizing. First, they created an exclusivity factor by making Facebook accessible only to Harvard students. Then the user base expanded to all people with a .edu email address. Still exclusive. Finally, they opened the platform to the general public and people eagerly signed up.
Today, Facebook boasts more than 1 billion users worldwide and is one of the most valuable companies on the planet. Focusing on early audience growth can pave the way for profitable monetization opportunities down the road.
5. Collaboration is Key to Success
Many startups begin as a one-person workforce. But, the needs of the business quickly outgrow the capacity and talents of just one person. That’s when collaboration becomes vital to the success of a fledgling business. When one person can no longer move the business to the next level on their own, it becomes necessary to form a team that can drive success.
Collaboration can energize your startup workforce and set a good precedent for teamwork. Also, collaboration is often tied to an increase in productivity and work efficiency.
WeWork has become extremely successful by basing their operations on the principle of collaboration. Their shared community workspaces embody the concept of interaction between people and the way it goes hand-in-hand with productivity.
Look how focused their mission page is on the practice of community and connectivity:
6. Disruption is the Name of the Game
For the longest time, there was a common misconception that startups could only reach profitability if they entered a niche market and avoided competition in large categories. That may be true in some cases, but startups in today’s economic environment have become extremely successful by targeting highly competitive markets with disruptive products and services.
Netflix is the perfect example of a business that disrupted a massive industry; movies and television. When Netflix released the entire first season of House of Cards in one fell swoop, it singlehandedly transformed the way people consume shows and movies and it also revolutionized the way studios deliver media to their audiences. Remember when binge watching didn’t exist and movie rental stores did?
Becoming a disruptor means being different. Disruptive startups either reinvent the wheel or—better yet—create a superior one. Often, the most successful and disruptive ideas are the ones that sound a little crazy at first.
7. Scale Up Using Small Test Markets
It’s easy to come up with a good idea, but not all good ideas translate into good products or services. The best startups in the world include market testing as a vital component in launching new products, services, and features that their audience will want and pay for.
Take Shopify for example. Established in 2004, Shopify first offered tools that made it easier for small merchants to build e-commerce websites. Their customer base was very small at first and they generated just $8,000 a month in revenue during 2007. In 2008, brands like Tesla Motors, Yahoo Stores, and Microsoft Commerce began to notice Shopify’s products and the company realized it was time to expand.
They slowly began testing new markets that helped them identifying four categories of Shopify customers:
- First-time sellers
- Web designers
- High-volume sellers
- Customers of e-commerce sites
Their early market testing strategy worked. Shopify has gradually replaced their old tools with new, streamlined tools and services that assist a wide range of clients. In 2015, Shopify went public and was valued at $14.6 billion.
Sometimes it pays to analyze and test the smaller categories before jumping into deeper waters.
8. Collect Customer Feedback
Customer feedback is a great way for startups to receive an unambiguous review of their company, and their products and services. The feedback may not always be fair or accurate, but it can tell startups how satisfied—or dissatisfied—their customers are.
In early 2016, Facebook announced the launch of Reactions as an extension of the like button. First, however, the social media giant rolled out Reactions in a few select countries to gauge user response. Needless to say, the customer feedback on Reactions was resoundingly positive.
A large factor in Reaction’s success is due to the way Facebook rolled it out. First, they tested specific markets. Then, they solicited feedback and showed users that Facebook was committed to honoring the experience people had come to enjoy. Then came the wider release.
9. Risk-Taking is Second Nature
Taking risks is an essential part of being a successful startup. Risk is inevitable in business, but it can be especially high for startups.
In 2008, Dropbox was just beginning to see the light at the end of the tunnel when founder Drew Houston was approached by Steve Jobs with an offer to buy his young company. Despite being confronted by one of the most powerful icons in the tech industry, Houston turned down Jobs’ offer.
Was his decision risky? Definitely. Did it pay off? Absolutely. Dropbox is currently valued at $10 billion.
Startups have to take risks in order to thrive and grow.
Adopting Successful Traits
It almost goes without saying that startups who display obvious traits typically have key players within the company who exhibit many of the same traits. This is especially true for risk-taking, collaboration, authenticity, and outside-the-box thinking.
Traits can be learned just like everything else in business. That’s good news for startups that want to identify and encourage traits which can help them develop and grow their businesses. After all, it takes time to get established, scale your company, grow your customer base, raise funding, and make sure operations are running smoothly.
Fortunately, great startups can adopt productive traits that go hand-in-hand with the success of their business. Start by identifying the traits that fit your company’s brand personality and support business goals. Then put them into practice.
