by Manuel Stagars, CFA, CAIA, ERP

What primes startups for success is a question of heated debate. There is obviously no sure-fire recipe, no ten-step plan that makes a fledgling venture the next Google. Here are some thoughts about a simple checklist if a startup gravitates towards success or failure. This may be helpful for entrepreneurs and universities themselves, and investors alike.

On their journey, successful entrepreneurs need three main ingredients as fuel in their tank: A wild idea, bold execution, and persistence. These three ingredients combined will make or break the project. With a wild idea, I mean a slightly controversial hypothesis. If the idea is so mainstream that everyone will accept it, then chances are high someone else is already working on it. As explained by author Derek Sivers, a brilliant idea with weak execution may still yield profits, and so does a weak idea with strong execution. To find a superstar, all three ingredients have to be of top pedigree. The quality of execution and persistence is in turn influenced by an entrepreneur’s decisions about how to approach them. These decisions can be good (green dots) or bad (red dots), and they will influence execution and persistence.



Once he had an idea, the entrepreneur must transform it into reality. This is where execution and persistence come in. Startups success often boils down to why and how founders are doing something, rather than to what exactly they are doing. This book has addressed the what sufficiently up to this point. Instead of locking on to the words “execution” and “persistence,” let’s therefore examine the forces that influence them (the how and why).

Success Parameters

Startups move along a so-called J-curve, where we expect a return on investment later down the road after early losses. The pace at which they move along the x-axis depends on a tug-of-war between the entrepreneurs’ good and bad decisions, the green and the red arrow, respectively. As described by author Jeff Olson, a series of small good decisions, followed up persistently, will yield good results in the long term, while small bad decisions, followed up persistently, will yield weak results.



Every entrepreneur and investor will of course prefer good decisions, which I believe are a result of the following underlying factors: Strong intrinsic motivation, an open mind, and a can-do attitude. What exactly is this supposed to mean?

Strong Intrinsic Motivation

In contrast to extrinsic motivation where external factors like money or punishment are the driving forces behind taking action, intrinsic motivation comes from within a person. It is a burning desire to reach a goal, no matter what it takes. There is a difference between wanting to succeed and committing yourself to success. If you have the motivation to achieve a goal, there is no reason why you cannot make it happen. A desire to prove yourself, a competitive drive for excellence may push you to aim for the gold. Entrepreneurs give themselves every reason to get up in the morning. The desire to do and achieve always trumps fear or a feeling of obligation.

An Open Mind

Invariably there will be roadblocks in a startup. Certain technology the main idea builds on may flounder. There may be legal hassles, or blatant flaws in the original business model have emerged after working on your startup for a while. To admit you were wrong and to change your mind is easier said than done, as most humans feel they must be consistent with whatever rules they have set up for themselves. But this is definitely not for the entrepreneur: If he or she had a change of heart, pivoting will move the startup forward. Resisting the pivot will set the startup on a negative trajectory. Keeping an open mind will allow you to look past conventions and strict rules. You will see what others don’t. If you can only get there with a pivot, then embrace it despite conventions or prior commitments.

Can-Do Attitude

This is the entrepreneur’s hallmark. Strongly related to keeping an open mind, the can-do attitude takes it one step further. Assume an employee has volunteered to do a task over the weekend and shows up on Monday with the task uncompleted. The excuse is that he really tried, but simply could not finish it. This is such a normal event in mediocristan that it won’t even register. However, this mindset is incompatible with startups and entrepreneurship. “No” means “maybe” and “maybe” means “yes” is the way entrepreneurs approach things. If you have been an employee previously, then this shift may not come naturally. You will need to take full responsibility for all your actions. Henry Ford knew that “Whether you think you can, or you think you can’t – you’re right.” You are thinking anyway, so better think you can.

The success factors may not seem all that important to you right now. Be aware that entrepreneurs compete with other entrepreneurs, not with other employees, and not with other university students or researchers. A different mindset is required in both worlds to succeed. Of course, you cannot simply take the three recommendations out of context and apply them here and there. This would be sufficient to lift your startup off the ground. There are, however, a few roadblocks that prevent success from taking place. Those you must stop and avoid. So what puts the brakes on startup success?

Financial Desperation

As we already know, intrinsic motivation always trumps extrinsic motivation. If you desperately need to earn an income fast, this may work to you the disadvantage of your startup. When you have heavy impending overhead or debt payments, then better find a high-paying job and follow entrepreneurship on the side. The same goes for partnering up with co-founders. If one of them has money woes, better stay clear. This may sound insensible, but ignoring this advice has led to trouble later down the road for many founders. A startup needs much goodwill along the way to succeed. There is of course nothing wrong with following a profitable idea just for the sake of profit. But if a founder display money-mindedness as their leading motivation, this will alienate honest backers and attract people with questionable motives. A simple rule is: If you do not like to trade places with somebody, then do not ask them for advice and do not work with them.

Analysis Paralysis

Especially in academic circles, analysis paralysis runs rampant. Have you already spent so much time analyzing a situation that you do not know what to do next? How many more Powerpoint presentations and data visualizations do you need to convince yourself and take action? Academics often confuse a startup with a thought experiment. Entrepreneurship has nothing to do with writing an academic paper, where at the end of the process a group of experts either approvingly nods or rejects the idea. Startups are often irrational endeavors whose fate is decided by market forces, not all-knowing gatekeepers. Most worthwhile ideas were at some point rejected by experts. If you must convince others, then let it be people on the same wavelength like you. If you have so little conviction that you must convince yourself to the degree where it is hampering your ability to take action, then check if you are on board with the idea first. Entrepreneurship is not for everybody. Should you come to this insight, I congratulate you. There is nothing worse than a “wantrepreneur” in denial. However, if your environment has dragged you into a negative feedback loop, then read the next point.

Can’t-Do Attitude

If you think it cannot be done, then you will prove yourself and your peers right. This belief may have grown in you over the years. Be aware of the fact that in an unsupportive environment it is hard to thrive as an entrepreneur. Influence is a subtle process: Peers will never be outright hostile. Slight criticism, a raised eyebrow, or a smug remark here and there when you speak about your ideas will have enough cumulative abrasive force over the years to grind your entrepreneurial spirit away. This of course happens without your knowing, and you will yourself become an ambassador of discouragement to other entrepreneurs. Be very selective with your associations and make sure they are encouraging and positive.

If a startup starts on a wild idea, followed up with strong execution and dogged persistence, the main ingredients for success are in place. If an entrepreneur repeatedly made good decisions, the have set the gears in motion to reach escape velocity. To understand how he or she is thinking, find out whether the entrepreneur displays a strong intrinsic motivation to make the idea succeed, an open mind to pivot when necessary, and a can-do attitude to combat adversity. Look at factors that may hamper success, namely whether there are extrinsic motivators that are not in line with entrepreneurship, a lack of conviction to run with the idea, or a negative attitude that turns the entrepreneur into his own worst enemy.

Use this checklist to assess your own situation. Be also aware that venture capitalists look at similar factors to assess you and your idea. Of course, making better decisions is desirable not only for startup success. If you can enable positive forces in your life that automatically guide you towards making better decisions, both you and your startup will be happier.