24 Steps to a Successful Startup

I have had the great honor and fortune to teach entrepreneurship for over a decade at MIT, and it has been a journey of continuous learning and improvement. While I could write books on what I have learned about how to teach entrepreneurship, here is a selection of 13 key lessons learned that I encourage you to consider incorporating into your teaching strategies.

Bill Aulet is in Europe in spring 2019 to launch the new editions of the Disciplined Entrepreneurship books in French and Italian. Meet him in Luxembourg, Paris, Rome, Milan or Bologna.

Valuing a company is always a mix of science and art, especially for startups.  Historically the science has been pretty simple: Find comparable companies and do a multiple of earnings or revenue. However, three drivers of startup valuation have emerged that are changing the game. “Acquihire,” is the act of buying out a company for the skills and expertise of its staff. When Facebook buys a company like Hot Potato, it’s not for the revenue stream or products — it’s for the employees. Companies…

When I heard the news that GE is considering breaking itself up into smaller units, I was overcome with sadness. I started my career at IBM in the early 1980s and saw that company brought low, and now a similar scenario is playing out with another venerable firm.

To inspire today’s generation of company builders, entrepreneurship education needs a common language and apprenticeship opportunities. In my 20-plus years as an entrepreneur and seven years as an entrepreneurship educator, I have explored whether starting successful companies should be thought of as a science or an art. If entrepreneurship is a science, then I could easily teach my students that if they perform actions X and Y, they will get a result of Z. If it is an art, then it can be…

In the fall of 1977, the aspiring Harvard varsity basketball players used to play pickup games every afternoon. All of us were vying for the limited spots on the team. The competition was fierce. I remember one not particularly athletic guy, less of a thoroughbred and more of workhorse, a Clydesdale. I did not see him making the team, but Charlie Baker surprised us. He not only made the team, but turned out to be a terrific teammate.

The single most overrated, and yet common, belief about entrepreneurship is that the idea is paramount.Yes, an idea is necessary, but it is so much less important than the discipline and process with which the idea is pursued. And, interestingly, all of these are even less important than the quality of the founding team.

I used to think corporate culture didn’t matter. Discussion of vision, mission, and values was for people who couldn’t build a product or sell it! We had work to do and this MBA BS was getting in the way! And then my first company failed. Cambridge Decision Dynamics did not fail because we didn’t have a great technology or a great product or customers. It failed as a sustainable, scalable organization because we had no meaningful purpose to create team unity to fight through the tough times.…

Interest in startup accelerators and incubators has exploded in the past several years, but how effective have they been? One thing that has become clear is that “incubator” and “accelerator” refer to two very different models for startup workspaces, and the distinctions may have significant effects on startup success.

Building stuff does not make you a startup. “But don’t we need to build stuff and iterate quickly?” I get asked a lot. Well, sure. Once upon a time, when companies used the “old-school” waterfall model to develop products, pushing entrepreneurs to think in terms of building a minimum viable product as quickly as possible made sense. It substantially accelerated the development process. By narrowing the product scope to core features, you start the customer feedback loop quicker and you can more…