Secrets of successful startups

If you want to understand startup business culture you could do a lot worse than listen to Dave McClure, founder of 500 Startups and someone who has contributed to a new philosophy that has disrupted the VC industry.

If you want to understand startup business culture you could do a lot worse than listen to Dave McClure, founder of 500 Startups and someone who has contributed to a new philosophy that has disrupted the VC industry.

McClure was part of a fascinating Q&A with This Week In Startups online TV presenter Jason Calacanis that I attended recently, and the interview highlighted a number of prescient observations about startups and the way they develop themselves.

Of his 450-plus investments, 50-60% are in consumer ventures, with 20% in enterprise or business-to-business startups. And he claims “no-one's doing a better job than I am.” “It's an arrogant statement but I can back it up,” he adds.

But first of all, McClure cautions that “most things fail” and you “can't predict a hell of a lot.” His successes are coming from getting in on early trends, building scale quickly, women's enterprises, international investments, marketing, and design.

Growth markets for smart investments include Brazil, Mexico, the Middle East, Southeast Asia, and, possibly still, China. He finds the right people to hire in those geographies that have the right culture to help him open up those territories.

He accepts that there is still an unintentional bias against female founders but points out that over 100 of his investments are women-owned and run.

It's not all plain sailing in the startup world though, as illustrated by the tragic example of Jody Sherman, co-founder and CEO of Ecomom, who took his own life at the end of January. “The stress of being a founder is a first-world problem,” says McClure. “But it's still very stressful.”

Mobile is no more difficult to crack than it was two years ago. It is still just getting started and monetization and distribution are hard, but no more than it has been. The iOS operating system is still dominant, but it's “just starting to get interesting” for Android.

McClure's advice is “don't leave mobile if you're committed to it – figure it out.” And if you're not committed…? Then you shouldn't have been there in the first place.

The entrepreneurs 500 Startups is looking to invest in will generally have done two or three startups previously – it takes that before “you understand the game” – and have 3-10 years of experience. That's the “sweet spot” according to McClure.

If you're over 35 the portents are not good, despite the fact that McClure himself was older than that before he got his startup investing career off the ground. “As much as I appreciate the opportunity to invest in people over 35, very few had the late bloomer opportunity I had.”

One of the key elements for any startup is how it communicates and markets itself while not taking the eye off the main tasks at hand of running the business, and this is a subject that we will come back to as part of PRWeek's soon-to-launch sub brand.

Suffice to say that McClure is a former marketing executive at PayPal, Simply Hired, and Mint, and now the custodian of a multimillion dollar venture fund, and he advises startup founders to “show a level of transparency that breeds trust, not a level of desperation that breeds concern.”

You can see the full interview with McClure here, though a word of warning, if you are offending by curse words this is not an interview for you – you will be VERY offended.

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