What makes startups fail or succeed? Is there a foolproof plan for aspiring founders? It is not only important for you to have an idea that you believe is amazing, but also your innovation has to fulfill an unmet need. Having a vested interest in startups and the venture capital space, I interviewed Professor Jeffrey Hollender, whom I took a social entrepreneurship course with called Innovations and Strategies for Building a Progressive Social Enterprise during my time at NYU Stern. Jeffrey Hollender is a co-founder and former CEO of Seventh Generation, adjunct Professor of sustainability and social entrepreneurship at New York University, and serves on the Kimberly-Clark and the Morgan Stanley Sustainability Advisory Boards. He shed some insights on how to create a successful startup, including how to come up with a startup idea, whether to take an entrepreneurship course, and the importance of creating a business plan.
Seventh Generation was acquired by Unilever for $700 million and is distributed across major retailers in America including Target, Whole Foods, Kroger, Safeway, and Amazon. As a co-founder and former CEO of Seventh Generation, Hollender defines startups as a “business born of vision and passion.” It is no doubt Hollender is a serial entrepreneur and a visionary, having started six startups, all in the social entrepreneurship space. After Professor Hollender wrote How to Make the World a Better Place, he started Seventh Generation to actively make a positive difference in the world. Hollender’s original goal was to create products that promote water and energy conservation, and then Seventh Generation expanded into 100 product lines such as household items, laundry, personal care, and so on, now generating an annual revenue of $200M. Hollender points out that when an entrepreneur tries to come up with a startup idea, they have to make sure that there is an actual demand or market for their product at the price point they provided, often called “Product-Market Fit”. One way to determine the product-market fit is to conduct extensive customer research. Another of Hollender’s startups is called Sustain Natural, which is the first company to provide sustainable, fair-trade, and non-toxic condoms. Hollender surveyed 1,000 people with specific questionnaires to derive the benefits, features, and product positioning for Sustain Natural. Based on the same beliefs, sky incubator helps startups in its portfolio determine product-market fit through assistance in research strategies, engaging with potential customers and strategic partners, surveying, and testing prototypes and MVPs on the target market. In the first phase, sky incubator helps founders gather feedback and iterate their product/prototypes based on customer feedback.
As a founder who has attended a lot of entrepreneurship conferences and interacted with many other founders, I have learned that one of the questions we often wonder about is whether to take an entrepreneurship course, or more precisely, whether entrepreneurship could be taught. Hollender personally doesn’t believe that entrepreneurship could be taught. Instead, he encourages aspiring entrepreneurs to start by building a network of other founders, and even find mentors that are willing to help along the road, as creating a startup is a hard thing to do alone. Many programs provide close mentorship and help for early entrepreneurs, often for a very low or no cost at all. sky incubator, for example, connects founders with expert mentors in their related fields, and eventually, to investors as well, so they can raise money for their pre-seed rounds. For entrepreneurs who are adamant about taking an entrepreneurship course, Hollender recommends they take it from someone who has been through the same entrepreneurial journey.
In a generation obsessed with success, it is important to remember that while there are no rigid criteria or the “best way” to start a successful startup, there are things you can do to reach your business goals faster and more efficiently. Hollender advises that founders create a brief business plan that will help them understand their costs, competitive landscape, customers, and the capital they need to raise. Additionally, knowing your financial projections will help your pitch with investors, and will bring you one step closer to your goal.
So, is there a foolproof plan for an aspiring entrepreneur to start a startup? Professor Hollender doesn’t think so, and neither do we. However, there are a few things one could do to significantly increase success rates early on. Founders should make sure there is product-market fit for their product, so they don’t waste time and resources on something that will not work. They should also work hard to create a network of fellow entrepreneurs and mentors since, as Hollender points out, building a startup is a hard thing to do alone. And finally, every entrepreneur should create a business plan to understand the inner-workings and future projections of their startup. All of this could be done alone, with friends/co-founders, and through programs like sky incubator, which help entrepreneurs develop their startups into successful companies.